On the 5th of November, 1871, the Finance Minister of the new German
Empire, Herr Delbrück, presented to the Imperial Diet a brief report
of the “motives” which had led the Government to propose a measure for
the unification of the German coinage. This measure provided for the
coinage of gold pieces of ten and twenty marks, and it discontinued
the coinage of large silver coins, but did not demonetize those that
were in circulation. The report says, first of all, that it may be
considered as beyond doubt that the existing silver standard cannot
be maintained. The only gold coins authorized by existing law were
German crowns and half-crowns, but these had no fixed relation to the
standard silver coins of the nation nor to those of any other country.
Consequently they were not accepted in the domestic circulation. They
had never been an integral part of it, nor had they acquired any
standing in international commerce, being melted down as soon as they
reached the frontier. Consequently the internal commerce of Germany
was confined to the use of bulky and inconvenient silver coins. “The
inconvenience of silver coins,” says the report, “led of necessity to
a very considerable circulation of paper, which, in ordinary times,
is taken as a welcome facility, but in critical times contains the
germs of serious dangers. The artificial demand for paper created by
the exclusive circulation of silver made it almost impossible to adopt
any radical and rational regulation of the banking system through laws
common to all Germany.” For these reasons--namely, that silver was
bulky and inconvenient, and that it brought about a forced circulation
of paper and prevented any wise regulation of bank issues--the single
gold standard was recommended, with a silver subsidiary coinage. The
measure was supported by very strong speeches by Minister Delbrück and
by Dr. Bamberger, and it passed on the 23d of November. This measure
was provisional only, a second and more detailed one being enacted two
years later.
It is said by some that Germany, by demonetizing silver in 1871 and by
selling it in 1873 and later, drove France and the Latin Union into a
suspension of silver coinage, and caused the great decline in the price
of that metal. If this were true it might possess an academic, but
hardly a practical interest. Germany is not answerable to us for her
tastes. We cannot call her people to account for liking to have gold in
their pockets or sauerkraut on their tables. We cannot go back to 1871
or blot out the intervening years. Nor have we been able to persuade
Germany that she has made any mistake in her new monetary system. She
declined to take part in the Monetary Conference of 1878. She came with
reluctance to that of 1881, and announced at the outset that she could
not join in any movement for the free coinage of silver. She repeated
this declaration at an early stage of the recent Brussels Conference.
So I feel warranted in saying that the question whether Germany has
been guilty above others in oppressing or depressing silver is of no
practical consequence.
But such a charge cannot be sustained. Germany had completed her new
monetary system and stopped selling silver in 1879, and the Latin
Union countries had closed their mints to silver three years earlier,
whereas silver continued to decline all the same. The London price for
1879 (average) was 51¼d. per ounce. It is now 38d. The decline has been
greater since Germany stopped selling than it was before. From 1871 to
1879 the aggregate decline was 9d.; from 1879 to 1893 it has been 13d.
The simple truth is that Germany was driven to the gold standard, just
as Great Britain and the United States had been previously, by the
_inconveniencies_ of silver money. These inconveniencies manifested
themselves with some variations of detail in different countries, but
all grew out of the ponderousness of silver, an evil which increased
with the growth of commerce. Some persons habitually speak of silver as
a twin sister to whom some grievous injustice has been done. All such
must admit that she is a very corpulent one.