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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.

Contents

History

Non-members

United Kingdom

United States

Coins

See also

References

External links

History

In 1865; France, Belgium, Italy, and Switzerland joined the union and agreed to change their national currencies to a standard of 4.5 grams of silver or 0.290322 grams of gold (a ratio of 15.5 to 1) and make them freely interchangeable. The agreement came into force in 1866.^[1] They were joined later 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 LMU itself.
Giacomo Cardinal Antonelli, the administrator of the Papal Treasury, with the tacit agreement of Napoleon III of France, embarked on an ambitious increase in silver coinage without the prescribed amount of metal.^[2] 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 5,000,000 francs of silver for conversion to coin, whereas in 1873 alone 154,000,000 francs were received. Fearing an influx of silver coinage, the member nations of the union agreed in Paris on January 30th of 1874 to limit the free conversion of silver on a temporary basis. By 1878, with no recovery in the silver price in sight, minting of silver coinage was suspended absolutely.^[3] From 1873 onwards, the union was on a ''de facto'' gold standard.
Due to the fluctuations of gold and silver and the political turbulences of the early 20th century, the monetary union faded away in the 1920s though was not until 1927 that the union came to a formal end.

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 ^[4], and the current discussions concerning British membership of the euro.

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 one 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. 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, deciding not to resize its gold coins, and keeping 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.

See also

★ Peseta

★ Venezuelan bolívar

★ First World War

★ Latin Union

★ European Economic and Monetary Union

★ Euro

★ Bimetallism

References

1. Pollard, 2005, p. 39.
2. Einaudi, 2001, p. 104.
3. The History of Bimetallism in the United States, James Laurence Laughlin, , , D. Appleton and Co., ,
4. Einaudi, 2001


★ European Monetary Unification and the International Gold Standard (1865-1873), , Luca, Einaudi, Oxford University Press, 2001, ISBN 0-19-924366-2

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

External links

★ Grand-dad of today's Euro: The Latin Monetary Union (1865-1927)

★ Coins of the Latin Monetary Union: 1865 - 1926