LATIN UNION. By the monetary convention of December 23. 1805, Fran•e, 13elgiuni, Switzer land, and Italy entered into a treaty for the uni form regulation of coinage in these States. This association of States in a common monetary policy was known as the Latin Union. Tim Frenell monetary law of 1tiO3 had established both gold and silver as full legal-tender coinage. Under its provisions the and five franc pieces were exact multiples in weight of the one-franc coin. During the early bimetallic experienee the pressure for the exportation of coin fell chiefly upon gold. and did not therefore greatly disturb the money circulation of every (lay. But with the discovery of gold in California and Australia. gold fell relatively to silver, and large quantities of silver were export ed, as gold was substituted for it in the monetary circulation. The coins first selected for export were naturally the larger five-franc pieces, hut as time progressed the smaller coins were drawn upon and the people suffered great inconvenience from the diminution in the volume of small coins. In IS61 a French commission appointed to inquire into the state of the coinage reported in favor of making the small coins tokens, as had been done in a similar situation in the United States in 1853. This proposal was carried out by a law of 1S64, which, without re ducing the weight of the smaller silver coins, changed the alloy from .900 fine to .S35 fine. This action would have solved the domestic diffi culties of French coinage had not perplexities arisen over the acceptance of foreign coin. Bel gium, Italy, and Switzerland each had a monetary system based on that of France, and their coins, being equal in weight and fineness, had always been freely accepted in France, as the French coins circulated freely in those countries. Urged by the same fear of loss through the minor coin age, Switzerland had reduced the fineness of the coins to .800 and Italy to .835 before France acted, while Belgium had taken no steps in the matter. The diversity of value, and the fact that these coins were no longer of full weight and readily convertible into standard coins of the countries having the same system, interfered with their international circulation.
It was primarily for the removal of these diffi culties that the monetary convention of 1805 was convoked by France, at the suggestion of Bel gium. In the convention Belgium and Switzer land proposed the adoption by the contracting parties of the gold standard, with coinage of all silver pieces as tokens, under rules to be agreed upon. France was not ready for this step, and insisted upon the retention of the silver five franc piece at its old valuation and as full legal tender. The result was a treaty prescribing a uniform weight and fineness for the gold coins and the five-franc silver coin, and providing that such coins should have unlimited legal tender in the countries issuing them, and that coins issued by one of the contracting States should be receivable in any quantity which might be offered in payment of public dues in any of the States which were parties to the treaty. So far as the weight and fineness of the coins were concerned, this provision made no change in existing con ditions, though the clause providing for the ac ceptance by any of the States enhanced the value of the coin.
Far more important were the provisions relat ing to the minor silver coins (2 and 1 franc, 50 and 20 centimes). It was provided that these coins should have a uniform fineness of .835. and that they should not be is-sued by the several countries in excess of six francs per head of the population. and that in the States in which they
were issued they should be legal tender to the extent of 50 francs in one payment. The issuing States were required to receive these coins in any amounts in which they might be presented. while each State agreed to accept at the public treas uries sueh coins issued by the other contracting States in payments not exceeding 100 francs. This defines the scope of the Latin Union and summarizes the conditions which insure the inter national circulation of the coins. For while it is true that no obligation is imposed upon citizens of France to accept the minor coins of Italy. for instance, yet in effect the practice of the govern ments controls that of individuals. The weak point in the treaty was the retention of the five franc silver piece on a par with the gold coinage. If at the time the inconsistency of this privileged position for the five-franc piece attracted little attention, it was perhaps because with the pre vailing price of silver there was little probability of its being brought to the mint for coinage, and the question may have appeared an academie rather than a practical one. It is curious to observe that one year after the treaty went into effect the price of silver had fallen suffieiently to make its coinage profitable; so that had no change been made in the law the dearth of small coin would have been remedied without any legal enactments or treaties. But as the coinage of the minor coins was reserved to the Govern ment, it followed that when conditions favored the coinage of silver on private account the mints of the contracting States began to turn out five-frane coins at a rate which in a few years threatened the circulation of gold. During the struggle between Prussia and France the French mints were inactive, but those of Belgium and Italy developed a remarkable activity. France found herself flooded with Belgian and Italian coins after the return of peace. Accord ingly measures were taken to check the coinage of silver. By agreement of 1S74 the quantities to be coined in the several States were limited, and this agreement was renewed in 1875 and 1S76. In the meantime the several States had passed laws authorizing the suspension of coin age of the five-frane piece, and by 1877 it had practically ceased. By this action the countries of the Latin Union definitely adopted gold as the standard of value, though their circulation is charged with a considerable quantity of full legal-tender silver which must be kept at a par with gold. The fact that Belgium in the early seventies issued silver far beyond her needs, and far beyond her ability to redeem at the present value of silver, has had much to do with the successive prolongations of the Latin Union beyond the term of years for which it was origi nally created. While France has directed the policy of the Union with great success, she has had to hear in a measure the burden of her weaker partners.
At the time the Union was founded it was deemed possible that other nations would asso ciate themselves with the States composing it. thus preparing the way for an international coinage, hut this has proved to be illusory.
Consult: Bamberger, Die Sehicksale des la teinisehen Miinzbundes (Berlin, 1885) ; the ar ticle "Latin Union," in Palgrave. Dictionary of Political Economy (New York, 1900) ; Willis, History of the Latin Monetary Union (Washing ton. 1001) ; Arnaun6, La Nonnaie, le credit et le change (2d ed., Paris, 1902).