Latin Monetary Union

The Latin Monetary Union (LMU) was a 19th century attempt to unify several European currencies into a single currency that could be used in all the member states, at a time when most national currencies were still made out of gold and silver. It was established in 1865 and disbanded in 1927.

History

By a convention dated 23 December 1865, [ [http://gallica.bnf.fr/ark:/12148/bpt6k96073g/f471.table [Traité (Recueil). 1864-1867] Recueil des traités de la France . Tome neuvième, pp. 453-458] ] France, Belgium, Italy, and Switzerland formed the Latin Monetary Union and agreed to change their national currencies to a standard of 4.5 grams of silver or 0.290322 gram of gold (a ratio of 15.5 to 1) and make them freely interchangeable. The agreement came into force on 1 August 1866.Pollard, 2005, p. 39.] The four nations were joined by Spain and Greece in 1868, and Romania, Austria-Hungary, Bulgaria, Venezuela, Serbia, Montenegro, San Marino and the Papal States in 1889. In 1904, the Danish West Indies were also placed on this standard but did not join the Union itself.

With the tacit agreement of Napoleon III of France, Giacomo Cardinal Antonelli, the administrator of the Papal Treasury, embarked on an ambitious increase in silver coinage without the prescribed amount of metal. [Einaudi, 2001, p. 104.] The papal coins quickly became debased and excessively circulated in other union states, to the profit of the Holy See, but eventually Swiss and French banks rejected papal coins and the Papal States were ejected from the Union.

By 1873, the decreasing value of silver made it profitable to mint silver in exchange for gold at the Union's standard rate of 15.5 ounces to 1. Indeed, in all of 1871 and 1872 the French mint had received just 5,000,000 francs of silver for conversion to coin, but in 1873 alone received 154,000,000 francs. Fearing an influx of silver coinage, the member nations of the Union agreed in Paris on January 30, 1874, to limit the free conversion of silver temporarily. By 1878, with no recovery in the silver price in sight, minting of silver coinage was suspended absolutely. [cite book
url=http://www.econlib.org/library/YPDBooks/Laughlin/lghHBM11.html
title=The History of Bimetallism in the United States
author=James Laurence Laughlin
date=1898
publisher=D. Appleton and Co.
chapter=Chapter XI] From 1873 onwards, the Union was on a "de facto" gold standard.

Hindered by fluctuations in the values of gold and silver and by the political turbulence of the early twentieth century, the Latin Monetary Union faded away in the 1920s and in 1927 came to a formal end.

The last coins made according to the standards of the Union were the Swiss fifty-centime, one-franc, and two-franc pieces of 1967.

Non-members

United Kingdom

An interesting parallel can be seen between the discussions in the United Kingdom concerning the possibility of Britain joining the Latin Monetary Union, [Einaudi, 2001] and the current discussions concerning British membership of the euro.Clarifyme|date=March 2008

The proposal involved reducing the amount of gold in one pound sterling by less than 1% to make one pound equivalent to 25 Francs and also decimalising the currency.

United States

The United States made several steps that could have prepared the country for joining the Latin Monetary Union, but never did so. Its gold coinage was already within four percent of the LMU standard at the rate of 5 LMU francs per U.S. dollar. The "Mint Act of 1873" increased the mass of the dime, quarter dollar, and half dollar slightly to 25 grams of .900 fine silver per dollar, putting them on the LMU standard, a standard that was maintained until the minting of U.S. silver coins was halted in 1965. 1875 saw the introduction of the 20¢ piece which contained 5 grams of .900 fine silver, the same standards as one franc. In addition, the United States Mint produced pattern coins called Stellas in 1879 and 1880 that would be worth 4 U.S. dollars or 20 French francs. However, as close as it came, the United States never joined, decided not to resize its gold coins, repealed the legislation authorizing the 20¢ piece after only three years, and kept its large silver dollar which was minted using a 16 to 1 ratio for silver to gold.

Coins

Belows are examples of coins of 5 units.

ee also

* Peseta
* Venezuelan bolívar
* First World War
* Latin Union
* European Economic and Monetary Union
* Euro
* Bimetallism
*currency union

References

*
*Pollard, John F. 2005. "Money and the Rise of the Modern Papacy: Financing the Vatican, 1850–1950". Cambridge University Press.

External links

* [http://digilander.libero.it/maggioref/latin%20monetary%20union.html Grand-dad of today's Euro: The Latin Monetary Union (1865-1927)]
* [http://www.unionlatine.com Coins of the Latin Monetary Union: 1865 - 1926]