drain recommenced. The reserve of 5-franc pieces and the stock of divisional coins of lower denomination fell rapidly, to so low a point indeed as to become quite insufficient for the ordinary trade and small change demanded of the country. After a slight recovery in September 1865, the same downward course continued. The smaller coins, of 1-franc piece, and 50 centimes became so scarce that the bank could not supply the demands of manufacturers for the payment of wages, and the Government had to have resort to the coinage of nickel for small divisional money. The simultaneous experience of Switzerland and Italy is not so capable of statement and exact expression. But it was similar in kind. Previous to 1865 a net balance of over 12 millions sterling (consisting almost if not entirely of silver) had left Italy, and it was known to be the danger of entirely losing her silver which led Italy to the suspension of cash payments on 30th April 1866, and to her acquiescence in the Latin Union. It was not, however, Italy, but Belgium who first raised the note of alarm. Conscious that her monetary community with France made any independent efforts quite futile, the Belgium Government proposed to France a monetary union for all the countries which had adopted the franc as the basis of their currency. Taking up the proposition France invited Italy and Switzerland, together with Belgium, to send delegates to a monetary conference at Paris. At this conference Belgium proposed the adoption of the single gold
standard—the silver pieces including the 5-franc pieces to be lowered by an agio, and made divisional money. Italy and Switzerland were of the same opinion, but their scheme failed before the opposition of France, and the final outcome of the conference was the establishment of the convention of 23rd December 1865.
This convention, which instituted the Latin Union, came into force on the 17th of August 1869; and under it one slight change was made in the internal currency system of France. The hitherto full-valued silver coinage from 2 francs downwards was changed into token money (being reduced to .835 fine), the 5-franc piece remaining as full legal tender.
The union was to last for fifteen years. It established an identity in the monetary system of the four powers, as far as weight and standard were concerned, and prescribed free coinage for any individuals bringing metals to the Mints—of gold into any form, and of silver into 5-franc pieces; and reciprocal acceptance of those pieces in any of the States of the union. Finally the minting of each State for national or currency purposes was limited to 6 francs per head.
This limitation, together with the regulation adopted, that the divisional coins should be issued at a rate inferior to that of the monetary standard, must be regarded as a measure of mutual defence against the sapping of the small coinage which had previously been experienced. According to this
clause the maximum of mintings for national or currency purposes was presented thus—
| Francs. | |
|---|---|
| For Belgium | 32,000,000 |
| France | 239,000,000 |
| Italy | 141,000,000 |
| Switzerland | 17,000,000 |
For a time everything bloomed, the minting went merrily on, and private individuals (foreigners) reaped a profit at the expense of France. With the heavy fall in the ratio which made itself marked in 1873, however, events became too strong even for the Union, and Belgium took the initiative by passing a law enabling her Government to suspend or limit the coinage of the 5-franc piece. This principle was subsequently adopted by all the states of the Latin Union. During the years, 1874-76, three annual conferences of the Union were held at Paris, with the result that the limitation of the coinage of the 5-franc piece was fixed thus—
| 1874. | 1875. | 1876. | |
|---|---|---|---|
| Belgium | 12,000,000 | 15,000,000 | 10,800,000 |
| France | 60,000,000 | 75,000,000 | 54,000,000 |
| Italy | 60,000,000 | 50,000,000 | 36,000,000 |
| Switzerland | 8,000,000 | 10,000,000 | 7,200,000 |
| Greece (which had acceded to the Union in 1868) | 12,000,000 | ||
Of these states Switzerland alone did not coin up to her total, and at the conference in February 1876 her delegates pressed strongly for the entire cessation of the coinage of the 5-franc piece, and for the adoption of a gold standard. In this she was