The experience of France with bimetallism between the years 1803 and 1865 is most instructive because the obstacles which tended to obscure its action in the Middle Ages had by that time been swept away. Though the modern practice of making silver coins subsidiary was foreshadowed as early as 1577, it was not introduced until late in the nineteenth century, and the numerous proclamations and recoinages of the seventeenth and eighteenth centuries exhibit the application of no principle except that involved in the attempt to adjust the legal to the market ratio of the two metals. In 1785 the ratio was finally fixed at 15 1/2 to 1, where it has remained until the present day, and in 1803 the present unit of value, the franc, and the decimal system of reckoning were introduced. Thus in France, since 1803 at least, and until the discontinuance of the free coinage of silver in 1874, the bimetallic system had every opportunity to exhibit the normal effects of its action. The ratio remained unchanged during the entire period, the mints were opened freely to the coinage of both metals, and both were legal-tender in unlimited amounts.

Since it is the belief of the bimetallists that the compensatory action of the double standard will prevent any marked divergence between the legal and the market ratius of the two metals, we are chiefly interested in noting what French experience teaches us regarding this matter. The following table * gives the yearly fluctuations in the market ratio of gold and silver from 1803 to 1893: -

Year.

Ratio.

Year.

Ratio.

Year.

Ratio.

1803

1833...

15.93

1863....

15.37

to

1834...

15.73

1864....

15.37

1804....

15.41

1835...

15.80

1865....

15.44

1805....

15.79

1836...

15.72

1866....

15.43

1806.......

15.52

1837...

15.83

1867....

15.57

1807....

15.43

1838. . . .

15.85

1868....

15.59

1808....

16.08

1839

1869....

15.60

1809....

15.96

to

1870....

15.57

1810....

15.77

1840 . . . .

15.62

1871....

15.57

1811....

15.53

1841......

15.70

1872....

15.65

1812....

16.11

1842.....

15.87

1873....

15.92

1813....

16.25

1843...

15.93

1874....

16.17

1814....

15.04

1844.......

15.85

1875....

16.62

1815....

15.26

1845...

15.92

1876....

17.77

1816....

15.28

1846.......

15.90

1877....

17.22

1817....

15.1

1847...

15.80

1878....

17.92

1818....

15.35

1848......

15.85

1879....

18.39

1819....

15.33

1849......

15.78

1880....

18.04

1820....

15.62

1850.......

15.70

1881....

18. 24

1821....

15.95

1851.......

15.46

1882....

18.25

1822....

15.80

1852......

15.59

1883....

18.65

1823....

15.84

1853...

15.33

1884....

18.63

1824....

15.82

1854...

15.33

1885....

19.39

1825....

15.70

1855...

15.38

1886....

20.73

1826....

15.76

1856...

I5.38

1887....

21.13

1827....

15.74

1857...

15.27

1888....

21.99

1828

1858...

15.38

1889....

22.09

to

1859...

15.19

1890....

19.17

1829....

15.78

1860.......

15.29

1891....

20.92

1830....

15.82

1861........

15.26

1892....

23.72

1831....

15.72

1862.......

15.35

1893....

26.49

1832....

15.73

It will be observed that at no time during the entire period was the legal ratio 15 1/2 to 1 realized upon the markets. From 1803 to 1807 an ounce of gold was worth sometimes more and sometimes less than fifteen and one-half ounces of silver; during the next seven years it was worth persistently more, at one time, in 1813, as much as sixteen and one-fourth ounces; then for six years less; and since the latter date, 1819, always and increasingly more. The movements of gold and silver to and from the country was precisely what one would expect. Since from 1819 to 1850 gold was undervalued at the French mint and silver overvalued, it was profitable to import the latter metal and either to export the former or use it for other than currency purposes. Up to 1822 the precious metals were not distinguished in the public records of imports and exports, and, hence, it is possible only to give figures for the last twenty-nine years of the period. The table on page 324 covers a longer period, but is inserted in full for future reference.

* Shaw, p. 157. Figures taken from Hamburg Exchange Ratio to 1832, from 1833 onwards from the London Bullion Brokers' Ratio.

Table Of The Movement Of Silver To And From France (1822-1875)

Year.

Net Imports (Francs).

Net Exports (Francs).

Year.

Net Imports (Francs).

Net Exports (Francs).

1822..

125,000,000

. . . . . . . . . . .

1851..

78,000,000

1823..

114,000,000

. . . . . . . . . . .

1852..

. . . . . . . . . .

3,000,000

1824..

124,000,000

. . . . . . . . . . .

1853..

. . . . . . . . . . .

117,000,000

. . . . .

. . . . . . . . . . .

1854..

. . . . . . . . . .

164,000,000

1830..

151,000,000

. . . . . . . . . . .

1855..

. . . . . . . . . .

197,000,000

1831..

181,000,000

. . . . . . . . . . .

1856..

. . . . . . . . . .

284,000,000

1832..

60,000,000

. . . . . . . . . . .

1857..

. . . . . . . . . .

360,000,000

1833..

75,000,000

. . . . . . . . . . .

1858..

. . . . . . . . . .

15,000,000

1834..

101,000,000

. . . . . . . . . . .

1859..

. . . . . . . . . .

171,000,000

1835..

74,000,000

. . . . . . . . . . .

1860..

. . . . . . . . . .

157,000,000

1836..

27,000,000

. . . . . . . . . . .

1861..

. . . . . . . . . .

62,000,000

1837..

144,000,000

. . . . . . . . . . .

1862..

. . . . . . . . . .

86,000,000

1838..

120,000,000

. . . . . . . . . . .

1863..

. . . . . . . . . .

68,000,000

1839..

75,000,000

. . . . . . . . . . .

1864..

. . . . . . . . . .

42,000,000

1840..

96,000,000

. . . . . . . . . . .

1865..

72,000,000

. . . . . . . . . . .

1841..

117,000,000

. . . . . . . . . . .

1866..

45,000,000

. . . . . . . . . . .

1842..

92,000,000

. . . . . . . . . . .

1867..

189,000,000

. . . . . . . . . . .

1843..

103,000,000

. . . . . . . . . . .

1868..

109,000,000

. . . . . . . . . . .

1844..

82,000,000

. . . . . . . . . . .

1869..

112,000,000

. . . . . . . . . . .

1845..

90,000,000

. . . . . . . . . . .

1870..

35,000,000

. . . . . . . . . . .

1846..

47,000,000

. . . . . . . . . . .

1871..

15,000,000

. . . . . . . . . . .

1847..

53,000,000

. . . . . . . . . . .

1872..

102,000,000

. . . . . . . . . . .

1848..

214,000,000

. . . . . . . . . . .

1873..

181,000,000

. . . . . . . . . . .

1849..

244,000,000

. . . . . . . . . . .

1874.

360,000,000

. . . . . . . . . . .

1850..

73,000,000

. . . . . . . . . . .

1875..

194,000,000

. . . . . . . . . . .

* Shaw, p. 184.

It will be observed that in every year of the entire period, 1822 to 1851, the net imports of silver were large, and that the opposite movement quite as persistently characterized the next period.

The net importation of gold in the period 1851 to 1867 is quite as striking, that metal being overvalued at the mint during the entire period. The figures are as follows : - Table of the Movement of Gold to and from France (1822-1875).*

Year.

Net Imports (Francs).

Net Exports (Francs).

Year.

Net Imports (Francs).

Net Exports (Francs).

1822..

4,000,000

1851..

85,000,000

. . . . . . . . . . .

19,000,000

1852..

17,000,000

1824..

37,000,000

1853..

289,000,000

. . . . . .

1854..

416,000,000

1830. .

10,000,000

1855..

218,000,000

1831..

10,000,000

1856..

375,000,000

1832..

. . . . . . . . . . .

39,000,000

1857..

446,000,000

1833..

24,000,000

1858..

488,000,000

1834..

. . . . . . . . . .

7,000,000

1859.

539,000,000

1835..

. . . . . . . . . . .

20,000,000

1860..

311,000,000

1836..

. . . . . . . . . . .

14,000,000

1861..

. . . . . . . . . .

24,000,000

1837..

. . . . . . . . . .

6,000,000

1862..

165,000,000

1838..

. . . . . . . . . . .

4,000,000

1863..

12,000,000

1839..

24,000,000

1864..

125,000,000

1840..

49,000,000

1865..

150,000,000

1841..

. . . . . . . . . .

5,000,000

1866..

465,000,000

1842..

. . . . . . . . . .

12,000,000

1867..

409,000,000

1843..

. . . . . . . . . .

41,000,000

1868..

212,000,000

1844..

. . . . . . . . . . .

6,000,000

1869..

275,000,000

1845..

. . . . . . . . . .

14,000,000

1870..

119,000,000

1846..

. . . . . . . . . . .

9,000,000

1871..

. . . . . . . . . .

214,000,000

1847..

. . . . . . . . . . .

13,000,000

1872..

. . . . . . . . . . .

53,000,000

1848..

38,000,000

1873..

. . . . . . . . . .

108,000,000

1840..

6,000,000

1874..

431,000,000

1850..

17,000,000

1875..

454,000,000

* Shaw, p. 183.

The exports of the precious metals are less significant than the imports, because it is not necessary that they should leave the country when they are undervalued at the mint. They may be sold on the bullion markets at home and absorbed in the arts, or hoarded. Neither do statistics of the gold and silver coins struck at the mints always tell the story of the operation of the compensatory law. It is not necessary that coins issued from the mint should enter into the general circulation. They may be hoarded or exported or even sold upon the bullion market. As indicated in the preceding chapter, it is even possible that gold, undervalued at the mint, may, by special agreement, continue some of its monetary functions, but at its market instead of its legal value. The importation of the overvalued metal, however, is certain, unless conditions are precisely the same in other countries, because in the form of the coins of the country in which there is overvaluation it is worth more than in any other form. It is, therefore, sent to the mints of such a country from all quarters, in accordance with the law by which commodities are impelled to seek the best markets. However, the above tables show that gold was exported in considerable quantities during the years 1834 to 1838 and 1841 to 1847, and that the net exports of silver were very large every year from 1853 to 1864 inclusive. The relative amounts of these metals brought to the mints for coinage also indicate the operation of the bimetallic system, though there was at no time a complete discontinuance of the coinage of either metal.*

Regarding the effects of the divergence between the legal and the market ratios upon the monetary use of these two metals during this period the following statement quoted by Mr. William Shaw + from an official explanation of the reasons for introducing a subsidiary currency into France in 1876 is significant: "The variations of the commercial from the legal 15 1/2 ratio remained normal during the years 1824-67. All the same they sufficed to modify greatly the composition of the French circulation. After the predominance of silver, which became marked in 1847, the ratio from 1847-67 introduced gold in a large proportion, and measures had to be taken to retain in France the smaller silver coinage."

* See Appendix, p. 367. + History of Currency, p. 187.

The causes of the fluctuations in the relative values of the precious metals must be sought in an analysis of their demand and supply. For the period now under consideration this is a difficult process, owing to the absence of detailed information regarding all the facts involved, and it would be impossible here in any case on account of a lack of space. Three events, however, throw considerable light upon the situation, and will suffice for our purposes. The first is the great increase in the amount of silver produced in the closing years of the eighteenth and the early years of the nineteenth century; the second is the resumption of specie payments by England in 1822; and the third is the enormous increase in the annual production of gold after 1850. During the first eighty years of the eighteenth century the average annual production of silver had been in weight from 21.6 to 31.5 times that of gold, while in the forty years intervening between 1780 and 1820 it was never less than 47.2 times that of gold, and for the ten years 1800 to 1810 averaged 50.2 times as much.* It was natural, therefore, that the value of silver should fall below that established by law in France in 1803, which was not far from the market value at that date. The natural effect of the resumption of specie payments in England was to increase the demand for gold, that being the standard money of the country after the passage of the act of 1816. This fact considered in connection with the continued large annual production of silver as compared with gold goes far towards explaining why silver did not recover its value during the next thirty years.