The History of Currency, 1252 to 1896 Part 17

As safeguards against the evils of that system which she had felt with such bitter experience, and which had culminated in the crisis closing the Thirty Years' War, Germany could only feebly employ the mechanism of ineffectual Mint conventions. For a century she persevered in the effort to establish a common standard and Mint system, but in vain. The attempt had to be abandoned, and the reeling system left to its own process of disintegration; and when at last the events of 1871 came to give her unity in her coinage, as well as political life, there were not less than nine distinct and independent coinage systems in existence.

Hardly had the crisis of the Thirty Years' War pa.s.sed out of mind before again the currency system had begun to work its baneful effects.

[Sidenote: GERMANY: THE ZINNAISCHE STANDARD]

In 1665 complaints were loudly made of the corrupt and debased state of the coin, due to export and culling. There is, indeed, quite a literature of these same complaints. The language of the _Reichstattisches conclusum_ (Ratisbon, 12th September 1666) expressly attributes this export to the higher value set upon the gold in foreign countries, especially Venice. And the statement of the warden of the Mint of the three corresponding circles--Franconia, Bavaria, and Swabia--delivered in his _Gutachten_ of the preceding May, was that the place of these good German ducats had been taken by very depreciated coins of Italy, France, England, and Holland. The three higher circles, accordingly--Franconia, Bavaria, and Swabia--met in conference and determined on a thorough investigation. The advice submitted to them was to raise the thaler from 90 to 96-kreutzer (see account of German coinage, Appendix V.), implying a lowering of the ratio from 15 to 14-1/8. This proposed scheme was accepted, _in comitia_, in 1667, the fifth article of the resolution specially mentioning the infliction of numerous intruding base foreign divisional money. From this scheme Brandenburg and Saxony held off, maintaining that the ratio had not been sufficiently lowered, considering the condition of the production of gold; and, in the same year, by a Mint treaty between Frederick William of Brandenburg and the Elector of Saxony, the so-called _Zinnaische_ standard was adopted for those two states. According to this standard, the Reichs thaler was raised to 105-kreutzer (1 florin 45 kreutzers) and a ratio of 13-5/9 was established.

The result of this action of Saxony and Brandenburg was to strip the three higher circles of their silver, and in two years (1669) they anxiously met again to consider the question, not only of the foreign base coin everywhere prevalent, but also of the damaging exchange "and ceaseless melting down and exchange of proper coin from the circles."

By a strenuous effort the three circles carried through the Reichstag of 1680 their resolution to reduce the Reichs thaler to 90 kreutzer (ratio 15-1/4). From this decision the Emperor stood apart, with Bavaria and Salzburg, in putting the Reichs thaler at 96 kreutzer.

In view of such contrariety the impossibility of any general regime for the empire became apparent, and further attempts at it were practically abandoned. It was the perception by the mercantile community, as well as by the various Governments, of the consequences of such disorder, that led to the establishment of the so-called Leipzig standard in 1690. This standard was promoted by John George III. of Saxony, and established by treaty between Saxony, Brandenburg, and Brunswick-Luneburg. According to it the Reichs thaler was raised to 120 kreutzers, or 2 florins, the mark being minted into 12 thalers or 18 guldens.

The result of the introduction of this standard was that in a few years the raising of the Reichs thaler to 120 kreutzers prevailed all over the empire. Sweden accepted it in the same year, 1690, and three years later the three upper circles acquiesced. At the same time the gold gulden was advanced to 2 florins 56 kreutzers. The previous ratio of 15 was thereby advanced to 15.1 (15-128/1278).

In 1738 the Reichstag determined on the adoption of the Leipzig standard for the whole empire; no alteration was made in the Reichs thaler, which was still retained at 2 florins and minted at 12 to the mark fine; but a graduated scale of agio was adopted for the divisional coins, which were minted at an equivalence of from 12-3/8 to 13-2/3 thalers to the mark fine. The difference (varying from 3/8 to 1-2/3 thalers) represented the agio.

[Sidenote: GERMANY: THE CONVENTION STANDARD]

From the first, however, the Leipzig standard had no more real success than any of its predecessors. Although theoretically accepted by all North Germany, and adopted in the Reichstag in 1738, it could obtain no actual general adoption through the empire. Even from the moment of the inception of the system in 1690, the process of compet.i.tively raising the course of the coinage had still continued, and pieces of 30, 20, 15, and 10-kreutzers were struck on a basis of from 20 to 21-1/3 gulden to the mark. The result was to put upon the _carolus_, which from 1730 onwards was minted in great quant.i.ties in South-West Germany, an agio of 10 per cent., a differentiation which was much increased by the disorders of the war of the Austrian succession. Such an agio swiftly drove the larger, full-valued specie out of currency, and during the continuance of that war the currency of Austria and South Germany was almost entirely reduced to depreciated fractional pieces, while the exchangers reaped untold advantage. It was on the close of this war, in 1748, that, with characteristic Austrian selfishness, though also with a boldness none of his predecessors had approached, the Emperor, Francis I., determined on the erection of the 20-gulden standard as a separate Austrian independent system, minting the mark of fine silver into 13-1/2 Reichs thalers, or 20 guldens. This latter system, after the accession to it of Bavaria, obtained the name of the Convention Standard, and the 2-gulden pieces minted under it are styled the Species or Convention Thaler. The convention system remained in force in Austria until the Vienna Coinage Convention of 1857, a period during which the _Convention Thaler_ found wide circulation through South Germany.

The currency was eked out by the Austrian gold ducats and by vast quant.i.ties of foreign silver, French _6-livre thalers_ (current for 2 florins 48 kreutzers) and the _crown_ or _Brabant thaler_ (current for 2 florins 42 kreutzers). From 1807 onwards this latter coin was imitated by the South German States, Bavaria especially, in their _crown thaler_, minted on a fresh basis of 24-1/2 guldens to the mark of fine silver.

The selfish initiative of Austria was followed by Prussia and the South German States. The latter, the Rhenish and South German States, adopted in 1761-65 the 24-gulden; subsequently changed into the 24-1/2-gulden standard (see Appendix VI.). The overvaluation of the _Kronthaler_, which led to that latest development from a 24 to a 24-1/2-gulden standard, was the result of the immense circulation of French 6-livre pieces (known in Germany as _Laubthalers_) in South-West Germany.

Graumann quite discredits the theory that the overswimming of South Germany by these French pieces, with all the confusion in the currency which resulted, was due to the wars and the progress of French arms, and directly attributes it to the depreciation of the French specie, and to their quite deliberate departure from the standard of French coinage as fixed in 1726.

[Sidenote: SOUTH GERMAN AND PRUSSIAN SYSTEMS]

In Prussia the reform of the coinage system was undertaken by her first King, Frederick I., father of Frederick the Great. In 1750 the latter adopted the 14-thaler or 21-gulden standard, subdividing the thaler into 24 groschens of 12 pfennige each. The measure was undertaken expressly to stop the export of gold which was going on. The adoption of a standard lower than the Convention standard effectually prevented the outflow of Prussian money, and it was not until the beginning of the present century, through the new Mint confusion which arose from the French Revolution, that Prussian money spread into Saxony, Hanover, Hesse, and even into the south-west. The second idea of Frederick's reform was to buy gold cheap, but in this it did not succeed. The intention was to obtain for five Prussian thalers the gold _pistoles_, which were purchasable for five convention thalers. This rate, however, never prevailed in the market, as from the first the _pistole_ was valued at 5-1/4 Prussian thalers. During the Seven Years War, when Frederick was driven to a depreciation of his coinage, his system went to pieces. But an active reform was undertaken upon the conclusion of the peace of Hubertsburg, 1763. The 14-thaler system was re-established, although, as far as the smaller divisional silver coinage was concerned, the depreciation, in which Frederick had been imitated by the pettier states round him, continued into the present century.

In 1821 a minor alteration was made in the Prussian system, by subdividing the thaler into 30 instead of as previously 24 groschen, the former being distinguished from the latter by the t.i.tle of _silver groschen_. To this Prussian or 14-thaler system Saxony acceded, as did also, in 1848, Mecklenburg and Oldenburg, with many minor differences of detail,--Saxony, for example, dividing the silver groschen into 10 pfennige; Mecklenburg dividing the thaler into 48 schillings of 12 pfennige each; and Oldenburg dividing it into 72 grotens of 5 schwarens each. The gold coin was supplied by the Prussian and Hanoverian 5 and 10-thaler pieces, the Friedrichs _d'or_, a favourite trade coin even in South Germany, and by Spanish _pistoles_ circulating at an equivalence of 4 6-livre thalers.

[Sidenote: CONFERENCE OF MUNICH, 1837]

The confusion of these various German systems was further increased by the uncertainty and difference which had come to prevail in the unit of weight. In Austria alone there were 2 marks in use, the Vienna mark (= 288.644 grs.), and the Cologne mark (= 243.870 grs.). While in North Germany, and subsequently in the south-west, the Prussian mark (= 233.855 grs.) prevailed. It was as the outcome of a desire to remedy at once the evil condition and confusion of the currency, and the uncertainty as to weight standard, which led to the conference of Munich on 25th August 1837. At that conference, Bavaria, Wurtemberg, Baden, Hesse, Darmstadt, and the Free State of Frankfort, adopted the 24-1/2-gulden standard as the standard for their several states. At the same time the Prussian mark (233.855 grms. = half the Prussian pound), was established as the Mint mark for the contracting members. For the divisional coinage (6 and 3-kreutzer pieces) a standard of 27 guldens to the mark was adopted, the details of the various fractional pieces being left to the different states. To this convention Hesse, Hamburg, and the two Hohenzollerns acceded in the following years.

This movement of South Germany gave a new impetus to the idea of Mint unification, and led to the General Mint Convention of the States of the Zollverein, agreed upon in full a.s.sembly of delegates at Dresden, 30th July 1838, and ratified also at Dresden on the 7th January 1839. The Dresden Convention was practically the first renewed attempt at Mint unification which Germany had seen since 1738. The contracting members to this general Mint convention were Prussia, Bavaria, Saxony, Wurtemburg, Baden, Hesse, Saxe-Weimar, Eisenach, Saxe-Meiningen, Saxe-Altenburg, Saxe-Coburg and Gotha, Na.s.sau, Schwarzburg-Rudolstadt, Schwarzburg-Sondershausen, Reuss, Reuss-Schleiz, Reuss-Lobenstein, Ebersdorf, and Frankfurt.

Briefly, the articles of the convention were as follow:----

"1. The Mint mark of all these contracting states of the Customs Union shall be the Prussian Mint mark = 233.855 grms.

"2. On this common weight standard the coinages of the contracting states shall be in accordance with the two systems in existence among the said states, viz. by thalers and groschen, according to the 14-thaler (or Prussian) system; or by gulden and kreutzer, according to the 24-1/2-gulden (or South German) standard. For the purpose of a.s.similation or equivalating, the thaler to be reckoned = 1-3/4-gulden, and the gulden = 4/7-thaler.

"3. The 14-thaler system to be that of Prussian Saxony, Hesse, Saxony, and Saxe-Altenburg, Saxe-Coburg and Gotha (Gotha), Schwarzburg-Rudolstadt (Unterherrschaft), Schwarzburg-Sondershausen, and Reuss; the 24-1/2-gulden system to prevail in Bavaria, Wurtemberg, Baden, Hesse, Saxe-Meiningen, Saxe-Coburg and Gotha (Coburg), Na.s.sau, Schwarzburg-Rudolstadt (Oberherrschaft), and the Free State of Frankfurt.

"4. Each state will confine its mintings to such pieces as prevail in the system of which it forms part.

"5. In larger specie, and also in divisional coin, each state to bind itself to exercise the greatest care to preserve the standard and weight.

"7. For the purpose of the commerce of the contracting states _union_ or _convention_ coins (_vereinsmunze_) shall be minted seven to the mark of fine silver, at an equivalence of 2 thalers or 3-1/2 guldens, fully tenderable throughout the Union.

"8. Alloy to be .9 silver, .1 copper; so that 6-3/10 pieces = 1 Mint mark in weight; remedy = .003.

[Sidenote: THE DRESDEN CONVENTION, 1838]

"9. From 1st January 1839 to 1842, at least 2,000,000 of these _vereinsmunze_ to be coined, one-third part each year, and by the various states _pro rata_ of their population. From 1842 onwards, in case of no new treaty, the rate of minting to be two millions _vereinsmunze_ every four years, _pro rata_ as before; each state to give an account of its mintings.

"10. Also of their separate trials of standard and weight.

"11, 13. None of the contracting states to set its particular internal specie at any different value except on a three months' notice, and to renew its currency at face value in case of depreciation.

"12. The states bind themselves not to issue divisional coins in excess of such _pro rata_ requirements as above.

"14. For the divisional coinage the standard of the convention of Munich, 1837 (viz. 27 gulden), is adopted.

"18. The treaty to endure till the end of 1858. States intending to retire then to give two years' notice. From that date, if not discarded, the treaty to be periodically renewed (five-yearly)."

This treaty continued in force nominally until the later and still more famous convention of Vienna in 1857, before which date Hanover, Brunswick, and Oldenburg had also given in their adherence to it.

At the time of the Mint Conference and Convention of Vienna, therefore, there were, broadly speaking, three competing systems in Germany, viz.

of Austria, Prussia, and South Germany or Bavaria.

One aspect of this latter conference of 1857, viz. its deliberations with regard to gold coinage, will be referred to separately. As far as relates to its attempted systematisation of these three German currencies the agreement took the following form:--

1. The pound of 500 grammes decimally subdivided, to be used as the basis of the coinage.

2. The competing systems to be a.s.similated to this basis by the following regulation:--

The thaler (or Prussian) standard of 30 thalers to the pound of silver to take the place of the 14-thaler standard, and to prevail in Prussia, Saxony, Hanover, Hesse, and a string of minor states.

The Austrian standard to be on the basis of 45 guldens out of a pound of fine silver, and to prevail in the Empire of Austria and the princ.i.p.ality of Lichtenstein.

The South German standard to be on the basis of 52-1/2-gulden to the pound of silver (instead of the 24-1/2-florin standard formerly used), and to prevail in Bavaria, Wurtemburg, Baden, Hesse, Frankfurt, and a few other places of South Germany.

The equivalence of the systems was to be--

One-thaler convention piece (1/30 pound) = 1-1/2 florins in Austrian currency = 1-3/4 florin in South German currency.

All the coins to be of unlimited validity in all the states, divisional coinage to be of a lighter standard than the coinage standard of the country, but lighter only within limits fixed. The tender of these latter to be limited to 20-thaler or 40-gulden.

[Sidenote: THE VIENNA CONFERENCE, 1857]

The regulations adopted by this Vienna Convention as to the gold coinage are very significant, and deserve special note.

The advance in the gold price of silver, due to the Californian and San Franciscan gold finds, acted on the silver-using countries. As soon as the price of bar silver exceeded 60-7/8-pence per standard oz., there resulted a melting down and export of the silver, in the countries which had adopted bimetallism at the 15-1/2-ratio.

It was this experience in France, and the allied group of countries, which led to the formation of the Latin Union in 1865. In mere point of date, that union had been preceded by the Vienna Conference and Convention by a matter of eight years. And as far as the regulations of this latter relating to gold coinage are concerned, there is evidence that the bimetallic action of France had driven Germany to her union of 1857, as a mere matter of self-defence, just as it later drove the Latin states to their union of 1865. In both cases the underlying motive was a wish to protect that part of their currency system which was threatened by bimetallic law. The premium on gold, on its minting, i.e. the profit to be made on minting it at 15-1/2 in France, while its market value was considerably less in Germany and elsewhere, drew the gold to France. It is a mistake to think that France attracted gold simply from California and Australia. She attracted it by the action of bimetallic law from her neighbour Germany, and replaced it by 5-franc silver mintings. The circulation of French 5-franc pieces was so extensive in South Germany, in the period preceding the Vienna Convention, that the cash reserve of the Frankfort bank was at one moment composed almost entirely of them.