TITLE XX.

MONEY.

ARTICLE 495. Adjustment of accounts between nations, and between members of different nations.

496. The money of account to follow the law of decimal sub

division.

497. Gold to be the standard.

498. The standard of fineness prescribed.

499. Definition of the money unit.

500. What gold coins shall be legal tender.

501. Silver coinage.

502. What silver coins shall be legal tender.

503. Limits of variation from standard weight or fineness within which coins shall be current.

504. Standard weights.

505. Scrutiny of the coinage.

506. Coins may be called in by proclamation.

507. Uncurrent coins may be destroyed.

508. Coins of base metal not to form a part of the international

currency.

Adjustment of accounts between nations, and between members of different nations.

495. All accounts and transactions between the nations, and between the members of different nations, involving money, shall be rendered and settled in terms of the unit of money established by this Code, and of its subdivisions.

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The first of the propositions agreed upon by the international monetary convention held in Paris, in 1867, declared that an identical unity" ought to be established between the gold coins of all nations. Identity in the common money unit does not necessarily require uniformity of coinage, though the coins should stand in such simple relations to the unit that all the larger national coins may have an international circulation. In this manner the system of coinage which is found to be practically the most convenient will ultimately prevail, and secure universal acceptance.

The money of account to follow the law of decimal subdivision.

496. The denominations of money higher and lower

than the unit, shall be decimal multiples and submultiples of the unit.

The conclusive argument in favor of the decimal system of money weights and measures is, that this is the system of our arithmetical numeration, and that by its adoption abstract and concrete values are reduced to a common form of expression. If it were practicable, in abstract arithmetic, to introduce a different law of increase, a more convenient ratio might possibly be found than the decimal, but no advantage which could be secured by the adoption of such a ratio in the affairs of life, can be a compensation for the great disadvantage which accompanies any departure from the law of numbers. This consideration determined the adoption of the decimal division in the metrical system of money, weights and measures, and in the American system of money.

Coins may be struck, according to convenience, of multiples, and submultiples, of the unit, not decimal.

Gold to be the standard.

497. The monetary standard shall be gold only. The principle of a double standard is illogical. It assumes that law can make a relation permanent which nature has made variable. In defense of the double standard it has been argued by some authorities, and notably by Mr. Wolowski, at the international conference of 1867, that such a standard tends to maintain greater stability in the measure of value, by preventing a serious disturbance of prices on occasion of an abnormal scarcity of one or the other of the precious metals. Practically, however, where a double standard has existed, the effect has been to induce a debasement of the coinage in that metal of which the market value exceeds the legal. Accordingly, though at the time of the international conference of 1867 a double standard actually existed in a number of the States represented, the conference was unanimous in favor of a single standard; and though in all but two of these twenty States the existing standard was either silver, or both silver and gold, the conference pronounced with equal unanimity for gold only. This metal is recommended by its superiority of value over silver of equal bulk or weight, and its consequently greater portability, and by the fact that it is practically already, in Europe and America, the medium of all large monetary transactions. The standard of fineness prescribed.

498. The standard quality, or degree of fineness, of the metal employed in coinage, shall be nine parts of pure gold to one part of alloy.

The existing diversity among the coins of different nations, as it respects alloy, is very great. For gold coins, the standard fineness above proposed has been adopted by France, Belgium, Switzerland, Italy, the United States, Prussia, Bavaria and Spain; also by Austria, for her crown and half-crown, and by Holland, for her double William, and its submultiples. For her ducat and double ducat, Holland employs an alloy con

taining fifty-nine parts of pure gold out of sixty of total weight. Austria, for the coin of the same name, prescribes a fineness of seventy-one parts out of seventy-two, which is the quality of metal used also by Würtemberg for her gold coins.

Great Britain, Portugal, Brazil and Turkey employ a standard consisting of eleven parts of pure gold out of twelve in total weight; and Sweden, one of thirty-nine parts out of forty. Elsewhere, the standard falls below nine-tenths; being lowest in Egypt, where it consists of seven parts of pure gold out of eight of total weight. Official Report on the International Exposition of Coins, Weights and Measures of 1867. The fineness of silver coins is equally various. For their larger coins, France, Belgium, Switzerland, Italy, Prussia, Bavaria, Würtemberg, Baden, Hesse, Austria, Spain and the United States adhere to the standard of nine-tenths. England employes thirty-seven fortieths, and Holland 945-1000. Elsewhere, generally. a lower standard, of varying fineness. prevails; and as a rule, in all countries the subsidiary silver coinage is debased below nine-tenths. Report above cited.

Some of these irregularities will necessarily disappear, in the natural course of events. A single monetary system will no doubt soon replace the diversities which are at present found in the German States; and the standard of Prussia and Bavaria will prevail throughout the empire. By far the larger part of the coinage of the world (that of Great Britain being for the moment put out of the question) is therefore now, or will shortly be, conformed to the standard fineness of nine-tenths, as it respects both gold and silver. The delegates of Great Britain, at the international conference of 1867, assented to the expediency of conforming the British coinage in future to the same standard. Report of the British Delegates to the International Monetary Conference.

It is in favor of this compound, that it is superior to most others, and to the pure metal, in point of hardness, and is therefore conducive to the durability of the coinage.

Since the value of coin is estimated according to the weight of fine metal which it contains, the base metal forming the alloy being accounted as worth nothing, it would be quite possible to have coins identical in value while differing both in appearance and in weight. Such coins would lack the qualities essential to secure to them an international circulation: and beyond the limits of the States by which they were issued, they would be regarded as foreign, and would be received with hesitancy.

Their variety would also increase the difficulty of distinguishing the genuine from the spurious. Moreover, in making payments it would be impossible to transfer coin from hand to hand by weight, in case the coins of different countries were mixed; a circumstance which in itself would be found to be a great disadvantage.

In order, therefore, that there may be created a coinage truly international, it is indispensable that there should be universally adopted an uniform standard of fineness in the metal employed.

In these considerations there is likely to be found an obstacle to the probably successful working of a plan proposed in 1870 by the govern

ment of the United States to the governments of Europe, through a circular dispatch of the Secretary of State to the ministers of the United States resident abroad, the object of which was to avoid the difficulties attendant on the immediate creation of an international coinage for universal and exclusive use, by effecting, what is called in the dispatch, an assimilation of the several national coinages. In order to this, the plan proposed that the existing gold coins of all nations should be retained under the same denominations as at present; but that they should be slightly modified in weight, so that the weights of fine gold contained in them should be exact multiples of a certain assumed unit weight. The unit weight suggested was one decigramme of fine gold. This plan would make the values of the gold coins of the several nations commensurable with each other; but the ratios of commensurability which it would introduce would lack the desired simplicity; and the diversity of the alloys in use would prevent any national coinage from securing an extensive international circulation.

Definition of the money unit.

499. The unit to be taken as the basis of the international monetary system, shall be called a dollar; and shall be of the value of one and a half grammes of fine gold, or five tergrammes' of standard gold.

1 The word tergramme, formed on the principles of the metric nomenclature, signifies one-third of a gramme.

In the determination of a unit to serve as the basis of the system, the choice lies between three possibilities:

1. To take for the purpose some value totally different from that of any existing coin or denomination of money, by the adoption of which all monetary systems at present existing will be superseded.

2. To take some coin or denomination of money actually existing; that is, to take some type which is at present simply national, and to make it universal.

3. To take some value which, in itself, or in its multiples or submultiples, shall so nearly approach the principal coins of the nations embrac ing the largest population, and most largely engaged in conducting the world's exchanges, that these, by means of inconsiderable changes, may be accommodated to it.

On purely theoretical grounds, the first of the expedients here presented is preferable to either of the others. Coins must be adjusted by weight; and in the absence of any actual system of coinage, it would be advisable to make the unit of money identical with the unit of weight, or with some simple subdivision of that unit.

Supposing the metric system of weights to be legalized, the absolute weight of any mass of standard metal, coined or uncoined, would thus have the same numerical expression as the absolute money value; or these expressions would differ only in the place of the decimal point.

In the actual state of things, however, it is to be borne in mind that the habits of thinking of all peoples, in regard to objects of value, have been

formed upon their existing monetary systems, and that the prices of all commodities have been adjusted in accordance with the denominations of money in daily use. While, therefore, it is desirable that the unit of money should be related to the unit of weight in as simple a ratio as practicable, it must be considered that any scheme which shall break up all these familiar associations, will be unacceptable to practical men; so that, whatever may be its merits in a point of view purely scientific, it will probably fail of success. It is also to be borne in mind that the amount of gold and silver coin now in existence cannot be less than $2,500,000,000 ;* and that if a plan of monetary unification can be de

The total amount of coin existing can only be matter of estimate. The amount assumed above is the estimate of Mr. McCulloch, in his article on the "Precious Metals," in the Encyclopædia Britannica. Mr. McColloch names, in a note appended to the article cited, the numerous authorities upon which he has founded his conclusion. He gives to Great Britain £70,000,000 or £75,000,000, as representing the gold and silver currency, and the reserves in the banks. Professor Jevons, in a recent communication (1868) to the Statistical Society of London, puts the gold coin in sovereigns and half-sovereigns, at £80,000,000; and Mr. Miller, of the Bank of England, cited by Dr. Farr, in his report to the international Statistical Congress at the Hague, (1869,) maintains that it cannot be less. As Professor Jerons puts the silver coinage of Great Britain at £14,000,000, his estimate for the total amount of gold and silver coin existing in Great Britain is £94,000,000, exceeding that of Mr. McCulloch very materially.

Mr. McCulloch gives to France £130,000,090, or £140,000,000; making for the two countries, Great Britain and France, £200,000,000; or £215,000,000; say $1,050,000,000. For the rest of Europe, for North and South America, for Australia, for the Cape of Good Hope, and for Algeria united, he supposes the amount may be in the neighborhood of £300,000,000; so that, for all the world, excluding Asia and the African States, except Algeria, the total is probably between £490,000,000 and £510,000,000; that is to say, £500,000,000, or $2,500,000,000.

Mr. S. B. Ruggles, of New York, delegate of the United States to the international monetary conference at Paris in 1867, in a written argument addressed to that body in favor of the coinage of a gold piece of the value of twenty-five francs, stated the total amount of the United States gold coinage up to 1866, at $845,500,000, of which he assumed that $300,000,000 still exists in the country. He gave the total of gold coin existing in France, Belgium and Italy, according to the estimates of M. de Paricu and other distinguished publicists, at $1,400,000,000; and he assumed that in all Europe the total would not be less than $1,800,000,000. This estimate seems moderate, when we consider that Mr. McCulloch cites as probable an estimate for Russia only, of about $270,000,000; and consider further, that there remain Spain, Portugal, Holland, Denmark, Sweden, Norway, Switzerland, Austria and Germany still to be accounted for. Taking, however, the estimates of Mr. Ruggles for continental Europe, at $1,800,000,000, and for the United States, at $300,000,000, along with those of Messrs. Jevons and Miller, for Great Britain, of say $500,000,000, we have already a total of $2,600,000,000; without considering Mexico, the British Possessions in North America, the West India Islands, Central America, South America, Australia, the Cape, and Algeria, for which it would be a low estimate to suppose that they have among them $100,000,000. The amount, therefore, assumed above as the total of the gold and silver coinage of European nations, and of nations and colonies of European origin, still actually existing, is probably considerably below, rather than above, the real amount.