MONETARY SYSTEMS OF FOREIGN COUNTRIES
ENGLAND[89]
[90]The monetary unit is the _pound_, or _sovereign_, equal to $4.8665,
divided into 20 _shillings_ of 12 _pence_ each, each penny equal to 4
_farthings_. Originally the pound was a Troy pound of silver, .925 fine.
Under the law of 1816 gold was made the standard and silver subsidiary.
The coinage of gold is free, and to avoid delay the Bank of England is
required to buy all gold and pay for the same at once at the [minimum]
rate of L3 17_s._ 9_d._ per ounce, a [maximum] charge of 1-1/2_d._ being
imposed for the accommodation. Silver is only coined on government
account and the coinage ratio is 14.29 to one.
They have the gold _sovereign_ (containing 113.001 grains pure gold),
the unit of their currency, also _half-sovereigns_, _crowns_ (5_s._),
_double florins_, (4_s._), _half-crowns_, _florins_, _shillings_, _six_
and _three pence_ pieces, _four pence_ (groat), _two pence_ and _penny_,
all in silver, also _penny_, _half-penny_, and _farthing_ in bronze. A
few English banks, operating under old charters, issue notes to a
limited extent, which circulate as money. Otherwise the paper currency
of England and Wales consists wholly of notes of the Bank of England....
Extraordinary measures were resorted to by the British government in the
early stages of the European war of 1914; with the close of the war
currency conditions will doubtless go back to normal, as described
above.
The Government, also, under date of August 6, authorized an issue of
currency notes, in denominations of L1 and 10 shillings....
These notes, which were first issued to the public August 7, were
deposited with the Bank of England for account of the British
government, as the practical way of getting them into use; they were
used for various purposes, including advances to banks at 5 per cent.
per annum, up to 20 per cent. of their deposits; the volume outstanding
December 30, 1914, was L38,478,164; the amount outstanding on June 23,
1915, was L46,199,705. These notes were protected in part by securities
and by an increasingly large gold reserve, exceeding 75 per cent. in
March, 1915.
Postal orders were made legal tender and so remained until February 4,
1915....
CANADA
In 1857 the legislature of Upper and Lower Canada formally adopted
dollars and cents as the money in which public accounts should be kept.
The Confederation in 1867 adopted the same for the Dominion, retaining,
however, the sovereign.
In 1871 the Currency Act prescribed the same for all accounts, providing
also that the gold coins of the United States of America should be legal
tender along with British sovereigns, the latter at a rating of $4.86
2/3.
The silver and bronze tokens (including pieces of 50, 25, 20, 10, 5, and
1 cents) had been supplied from the London Mint, or from Birmingham on
its behalf, from 1856 to 1907. After the Confederation no more coins
were issued for the separate Provinces. The twenty-cent piece (though
still retained by Newfoundland) has not been struck for Canada since
1864.
From January 2, 1908, the whole supply of British and Canadian coins was
undertaken by the Ottawa Mint. By the Ottawa Mint Act the Dominion
Parliament undertook the support of a branch of the Royal Mint in
Ottawa, the administration to be in the hands of the British Treasury.
This system (the same as that of the Australian Branch Mints, Sydney,
Melbourne, Perth) was preferred to the plan of an independent Dominion
Mint because that was the only way of procuring the privilege of coining
British sovereigns.
A royal proclamation published on November 2, 1907, duly established a
branch of the Royal Mint at Ottawa, and authorized the coinage of
British sterling gold coins from dies prepared in England, such coins to
rank with those struck in London. The depositor of gold bullion has the
right to demand British sovereigns in exchange....
The British sovereign (or pound) is legal tender in Canada at $4.8666.
The American gold coins are also legal tender. Canadian silver coins are
925 parts fine, and have a slightly less amount of fine silver than
United States of America silver coins of similar circulating values. The
dollar, though sanctioned, has not yet been struck.
Paper currency consists of legal-tender Dominion notes and bank-notes
issued against the credit of the banks; there were at the end of 1914,
22 banks, with 3,130 branches in the Dominion, 20 in Newfoundland and 72
in the United States and other foreign countries....
On July 31, 1914, just before the war, Dominion notes were issuable
without limit, providing the amount over $30,000,000 was covered by
gold. The volume at that time was $112,821,618.53 and the gold held
amounted to $90,292,833.28. As a consequence of the war the limit beyond
which Dominion notes may not ordinarily be issued without being entirely
covered by gold was by an Act passed in August increased from
$30,000,000 to $50,000,000....
BRITISH COLONIES
The British West Indies, as also Guiana, make British gold legal tender.
United States gold also circulates freely. There are a few banks with
limited note-issuing power, and minor coins are similar to those of
England. There is a growing use of United States currency.
British Honduras has a dollar unit, identical with that of the United
States.
British India has ... adopted the gold [-exchange] standard and India
has for some years been largely absorbing gold; the _pound_ is the
unit--the metallic currency, mainly silver, is maintained at parity with
gold by an arbitrary valuation or rate of exchange. The principal coin
is the _rupee_, equal to $0.3244; by a fixed government rating 15 rupees
equal L1. There is a gold [-exchange] standard reserve for India,
amounting, March 13, 1915, to L25,627,393, about one-half held in India
and one-half in London; it consists of gold and investments.... Paper
money is issued only by the Government and is covered by gold, silver
largely, and securities to some extent.
The Straits Settlements have a _dollar_ currency, divided into 100
_cents_; the value of the dollar was fixed by the Government at 2_s._
4_d._, on January 29, 1909, and has since been maintained at
approximately that rate, a gold [-exchange] standard reserve being
accumulated for that purpose. The system is copied after that of India.
Hong Kong, silver standard, is the exchange point between gold and
silver countries, and hence important. The British _dollar_ of 416
grains is the principal coin. It fluctuates in value with the value of
silver bullion.
Australia and New Zealand have the British system of banking. There are
many banks, some with British charters, and many branches; they issue
notes covered by gold. Gold in large quantities has been produced in
these states since 1851.
British Africa and other minor Eastern possessions have the British
system, modified in various respects.
Egypt having recently been formally annexed by Great Britain, her
monetary system will naturally be closely identified with that of
England in the future. The English sovereign has been for many years the
gold coin of common use.
LATIN UNION
The Latin Union consists of France, Italy, Belgium, Switzerland and
Greece; they are bimetallic, both gold and silver being full legal
tender, and the coinage ratio being 15-1/2 to 1; they have identical
systems, and formed a union to maintain the parity of silver and gold,
at the above ratio, by accepting each other's silver coins; while their
systems are bimetallic in law, silver is now coined only in small
denominations and on government account. The general adoption of the
gold standard by other countries has embarrassed the efforts of the
Union to preserve the parity and also the interchangeability of silver
coins between these nations.
FRANCE
France has the _franc_, equal to $0.193, as the monetary unit; the
principal gold coin is the _louis_, equal to 20 francs. The paper
currency of France is issued wholly by the Bank of France, a private
corporation, privately owned, but whose chief officers are appointed by
the Government, which thereby obtains a general control of policy and
administration; the maximum amount of note-issue is fixed by law,
arbitrarily, and by occasional increase is kept well ahead of the
country's necessities; no fixed legal reserve is required, but the total
note-issue must be covered by gold, silver, securities, and commercial
paper; as a matter of fact it carries very large metallic reserves, and
since it may lawfully pay its obligations in either gold or silver, it
can always conserve its gold holdings by requiring a premium for the
same, or withhold gold payment altogether.
It has over 400 branches and the same rate of discount obtains in all
branches on the same day; it thus regulates and controls the interest
rate throughout France, in the interest of uniformity and fairness; it
may do business with banks or individuals and has many very small loans;
its notes are a legal tender; the power to issue currency is one of its
chief elements of banking power....
BELGIUM
Belgium is bimetallic and its coins are the same as those of France and
have unlimited lawful currency; bank-notes are issued only by one bank,
privately owned; the Government receives a share of the dividends in
excess of 6 per cent., and imposes a tax upon the note-issues; demand
liabilities, including notes, must be protected by a coin reserve of
33-1/3 per cent. and the notes must be covered by cash, commercial paper
and securities.
ITALY
Italy has the _lira_, equal to $0.193, and divided into 100 _centesimi_;
her coins correspond to those of France; the Bank of Italy largely, and
two other banks to a lesser extent, issue notes against their credit,
limited, however, to three times their capital, unless covered by gold;
the issue may be increased, but comes in for a tax of 1 per cent. per
annum and must be protected by a 33-1/3 per cent. reserve in coin and
foreign exchange....
SWITZERLAND
Switzerland's coinage system duplicates that of France, and her Federal
Bank is very similar to the Bank of France....
GREECE
Greece ... has for its monetary unit the _drachma_, equal to $0.193. Her
coinage follows the Latin Union agreement. Paper currency is issued both
by the Government and by banks, and both are depreciated. Greece had to
resort to emergency measures during the Balkan War, which may have an
influence upon her currency for some time.
SPAIN
Spain ... has the _peseta_, equal to $0.193 United States, as her unit.
The Bank of Spain has the sole right to issue notes, which may equal
five times its capital and must be protected by a 25 per cent. coin
reserve. Gold commands a premium. Silver is coined only on Government
account....
GERMANY
Germany, gold standard, has for her currency unit the _mark_, of 100
_pfennig_, equal to $0.238; the 5-mark piece contains the same amount of
pure silver as the 5-franc piece and two United States half-dollars....
Silver is legal tender to the amount of 20 marks. The coins for her
colonies are varied to suit local needs.
AUSTRIA-HUNGARY
Austria-Hungary, gold standard, has as its unit the _krone_, equal to
$0.2026; 20-krone and 10-krone pieces are coined in gold, also gold
ducats, worth $2.288; silver coins are of various fineness....
PORTUGAL
The Portuguese Government, by decree of May 22, 1911, adopted a new
monetary system and the coins will be placed in circulation as soon as
possible. The unit of the system, excepting for her possessions in
India, is the gold _escudo_,... equal to $1.08 American gold. The escudo
is divided into 100 equal parts called _centavos_.... Multiples are 2,
5, and 10 escudos. Divisions of the escudo are of silver, with values of
50, 20, and 10 centavos; subsidiary coins consist of bronze and nickel
pieces. Her currency is not maintained at a parity with gold.
NETHERLANDS
... The unit is the _florin_ or _guilder_ of 100 cents, equal to $0.402.
The 10-florin piece is the principal gold coin; the _ryksdaalder_ (2-1/2
florins), the florin and half-florin in silver are legal tender, as well
as all gold coins; silver is maintained at parity with gold by law;
coinage of silver is only on Government account; paper money is issued
by a central bank and 40 per cent. metallic (gold and silver) reserve is
required against deposits as well as notes; the balance of the notes are
covered by negotiable instruments. The central bank was organized in
1814. Banking in the Netherlands is excellently managed.
SWEDEN--NORWAY--DENMARK (SCANDINAVIAN UNION)
These have the gold standard and have for their unit the _krone_, equal
to $0.268 United States currency; their subsidiary silver has various
fineness; paper currency of Sweden is issued by the Royal Bank, owned by
the Government; notes are legal tender and may be issued to a fixed
amount in excess of gold on hand or in foreign banks, but must at all
times have gold to the extent of at least 10,000,000 _kroner_.
Norway has a single bank of issue, controlled by the State, which owns a
majority of the stock; notes are legal tender and may be issued to twice
the amount of gold on hand and in foreign banks.
Denmark's paper money is issued by a privately owned bank, but under
strict control by the Government; the notes are legal tender and may be
issued to a sum 30,000,000 kroner in excess of the gold on hand.
RUSSIA
Russia is on a gold basis and has for its unit the _ruble_, of 100
_kopecks_, equal to $0.51456 in United States currency; the silver coins
in common use are the ruble, one-half and one-fourth ruble; paper money
is issued by the Imperial Bank, which is owned by the Government and
managed as part of its finance department; the law requires the coin
reserve to equal two-thirds of the note issue....
JAPAN
Japan maintains the gold standard and its unit is the _yen_, equal to
$0.498; the yen is divided into 100 _sen_, the sen into 10 _rin_. The
yen equals 11.574 grains of pure gold.
The Bank of Japan may issue notes to the extent of $120,000,000 upon
securities, any amount upon specie, and also may issue further sums in
excess of specie, subject to a tax of 5 per cent. The stock of the bank
is all privately owned. Japan first copied the national banking system
of the United States and after trial abandoned the same for a central
bank. She has managed her finances and her banking with wonderful
ability and great success. Besides the Bank of Japan, there are many
strong private banks, notably the Yokohama Specie Bank.
CHINA
China, silver basis, had for its unit the _tael_, divided into 1000
_cash_; there are said to be sixteen different kinds of tael in the
different states of China; the most valuable is the "Haikwan," or
"_customs tael_," the one in which customs dues are reckoned, and this
equalled $0.664 United States currency, October 1, 1914. The cash is of
base metal, with a square hole punched in the centre and is worth less
than a mill in our currency.
In the last years of the Empire a new system of coinage was established
and since continued by the Republic. The unit is the _yuan_ of silver,
worth $0.477, but varies with the price of silver; one-half, one-fifth,
and one-tenth yuan are also coined in silver and smaller coins in copper
and brass....
PHILIPPINES
The unit of value is the _peso_, equal to $0.50 in United States
currency. The fiscal affairs are administered by the United States and
the currency is safe and maintained on [essentially] a gold basis.
ARGENTINA
At a time when the cultivation and development of trade relations with
South America seem most alluring, we find a principal embarrassment in
the currency and credit conditions which obtain in most South American
States, but Argentina, one of the most favored of South American States,
has a stable and sound currency system. Her unit is the _peso_, of 100
_centavos_. The gold peso is equal to $0.9647 in United States money. In
1889 the Government took measures to acquire gold and fixed the relation
of paper to gold at 227.27 per cent., and it has since been maintained
at that level without fluctuation. This made the paper peso equal to
about $0.44 gold. They have a very large gold reserve in their _caja de
conversion_, 262,000,000 pesos gold, which protects the paper money and
gives it stability. Gold payments were suspended temporarily at the
commencement of the European war (1914), but paper money seems to have
remained at par....
BRAZIL
Brazil was formerly a colony of Portugal, and naturally copies the
parent country in her currency system. Her unit is the _milreis_, of
1000 _reis_. Nominally the gold standard prevails, but depreciated paper
is the currency of her commerce. The milreis contains 12.686 grains of
pure gold and is worth in United States currency $0.546.
In 1898 the Government assumed the sole power to issue paper money, and
strove to bring the same to a parity with gold; the arbitrary valuation
put upon the milreis by the Government was 15_d._ or $0.30.
On December 20, 1910, the value of a milreis was raised to 16_d._ The
Government accumulated a conversion fund, understood to be $60,000,000
to $70,000,000, but owing to crises at home and abroad it has not yet
been able to make gold and paper notes interconvertible.
Brazil possesses an enormous area, and is wonderfully rich in
undeveloped resources. Her coffee and rubber are especially valuable and
should take care of her international trade balances. In the near future
her currency should become stable and free from fluctuation. Brazilians
receive important service from foreign banks and bankers.
CHILI
Chili has the gold standard, but her paper currency is not maintained at
a parity with gold; her unit is the _peso_, of 100 _centavos_, of the
value of 18_d._...
FOOTNOTES:
[89] The following table, from _The Monetary Systems of the Principal
Countries of the World_, compiled in the office of the Director of the
Mint, Washington, 1912, gives the weight, fineness, etc., of the coins
of Great Britain:
GOLD
-----------------+-------+------------+-------+--------+--------+--------
| | | | | Pure |Value in
Denominations. |Weight.| Fineness. | Fine | Weight.|gold or | United
| | |weight.| |silver. |States
|Grams. |Thousandths.|Grams. |Grains. |Grains. | money.
-----------------+-------+------------+-------+--------+--------+--------
5 pounds |39.9410| 916-2/3 |36.6125|616.3720|565.0080|$24.3325
2 pounds |15.9764| 916-2/3 |14.6450|246.5488|226.0032| 9.7330
Sovereign | 7.9881| 916-2/3 | 7.3225|123.2744|113.0016| 4.8665
Half sovereign | 3.9941| 916-2/3 | 3.6612| 61.6372| 56.5008| 2.4332
-----------------+-------+------------+-------+--------+--------+--------
SILVER
-----------------+-------+------------+-------+--------+--------+--------
Half crown |14.1379| 925 |13.0775|218.1760|201.8119| $0.6083
Florin |11.3103| 925 |10.4620|174.5405|161.4495| .4866
Shilling | 5.6551| 925 | 5.2309| 87.2695| 80.7232| .2433
Sixpence | 2.8275| 925 | 2.6154| 43.6339| 40.3008| .1216
Fourpence (groat)| 1.8850| 925 | 1.7436| 29.0893| 26.9071| .0811
Threepence | 1.4137| 925 | 1.3076| 21.8162| 20.1788| .0608
Twopence | .9425| 925 | .8718| 14.5446| 13.4536| .0405
Penny | .4712| 925 | .4358| 7.2715| 6.7252| .0202
-----------------+-------+------------+-------+--------+--------+--------
[90] A. Barton Hepburn, _A History of Currency in the United States_,
pp. 450-473. The Macmillan Company. New York. 1915.