The History of Currency, 1252 to 1896

by William Arthur Shaw

Another point. At the time that England was shaking off the mediæval system France, too, was accomplishing a reform of her money system. It stopped half-way. The old kingly prerogative of altering the coinage was taken away, the unit of the currency was declared definite and unchangeable, and the seigniorage on minting was abolished. So much was accomplished by her law of 1803. But no further application was made of the law of tender than to throw the sanction of legal enactment over that mediæval system which had been the bane of France since first two metals found circulation in her bounds. As far as tender is concerned, there is no difference between the practice of the French monetary system in 1726 and that of 1803. The system was bimetallic in both cases—in the first case, legally by recognition and as resting on the royal jurisdiction; in the second case, legally by direct legislative or parliamentary enactment. The idea that the law of 1803 created a new system and a new heaven for France is doubly absurd. It was a continuation of a very old and a very danger-fraught system, with its roots deep in mediæval ignorance and practice.

In addition to this—and quite as demonstrably—there was no conception of a theory of bimetallism in

1803, nor any conception of a bimetallic function to be performed for the good of the human race by bimetallic France. This is a conception of the schools, and bred of later needs and hopes and fears. The modern theory of bimetallism is almost the only instance in history of a theory growing not out of practice, but of the failure of practice; resting not on data verified, but on data falsified and censure-marked. No words can be too strong of condemnation for the theorising of the bimetallist who, by sheer imaginings, tries to justify theoretically what has failed in five centuries of history, and to expound theoretically what has proved itself incapable of solution save by cutting and casting away.

Such a verdict as this of history, negative as it is, must strike many a serious mind with dismay. The following of bimetallism would not be what it is were it not for the despair of any other remedy for the situation at the moment. We are thereby left apparently hopeless and remediless. But the first step to the discovery of a true and possible remedy, if any exists, can only be the casting away of the false and impossible.

The difference between the monetary problem of the seventeenth century and that of to-day lies in this, that while there has been continuity of history and development there has been a change of needs and circumstance. The danger of arbitrage transactions to the mediæval legislator lay in the fact that they stripped the country, which suffered from them,

not, or not merely, of a bullion reserve, but of her actual currency, and rendered even internal trade impossible. He accordingly tried to arrest the drain by threatening imprisonment and death.

To-day the safety and supply of the internal currency of the various states is provided for by a monometallic system or by note issue, while, conversely, trade in the precious metals has become free, and bullion flows automatically from land to land in accordance with the dictates of a now rightly-conceived theory of international trade. Just so far the monetary problem has changed—becoming a question of the evolution of a stable international exchange system. The theoretic pretensions of bimetallism have correspondingly widened, but on any ground, wide or narrow, the only material for the study, comprehension, and judgment of such pretensions lies in the actual experience of Europe during the past five centuries.

A few words of more particular explanation are necessary.

1. To the student of money and monetary standards the perpetually recurring phenomena of reductions of the unit and standard weights and contents of coins will present no difficulty. Three causes underlay the process—(1) the practice of alloying, (2) the competitive and dishonest action of governments, (3) the ideal nature of the unit itself, which permitted, literally, anything in the way of arbitrary manipulation (compare, e.g., the very

different depreciations of the English shilling and the French sou, being both descendants of the solidus; or again, of the French livre and the Italian lire, being both descendants of the libra).