On International Coinage and the Variations of the Foreign Exchanges During Recent Years Author(s): Ernest Seyd Source: Journal of the Statistical Society of London, Vol. 33, No. 1 (Mar., 1870), pp. 42-73 Published by: Wiley for the Royal Statistical Society Stable URL: http://www.jstor.org/stable/2338866 Accessed: 27-06-2016 08:00 UTC Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at http://about.jstor.org/terms JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. Wiley, Royal Statistical Society are collaborating with JSTOR to digitize, preserve and extend access to Journal of the Statistical Society of London This content downloaded from 129.219.247.33 on Mon, 27 Jun 2016 08:00:45 UTC All use subject to http://about.jstor.org/terms 42 [Mar. On INTERNATIONAL COINAGE and the VARIATIONS of the FOREIGN EXCHANGES during RECENT YEARS. By ERNEST SEYD, ESQ. [Read before the Statistical Society, 15th February, 1870.] STATISTICAL Science, in its multifarious investigations, is greatly assisted by that ever-ready statistical agent-Money. Hence any subject which affects the nature and office of so obedient an agent must be of interest to the statist, even if the manner in which the subject is brought forth by the essayist is not quite in accordance with the tabular and purely statistical treatment to which such an audience as is now before me is accustomed. The subject on behalf of which I now address you, is that of Universal Coinage; with special reference to the position which Great Britain now occupies in this question, and with a view to British interests, I am anxious to show- Firstly. The desirability of her joining in a general scheme of international valuation. Secondly. The manner in which this can be done with the least possible disturbance. The Royal Commission of 1867 reported to Her Majesty against the proposal, but left the question generally subject to further discussion; the proposal made by Mr. Lowe last year seems to have been withdrawn. Now, if it be found impossible to render effective the scheme put forth by the Chancellor of the Exchequer, which was, among other things, intended to bring about international agreement by means of seignorage, are we then to conclude that it is altogether impossible or impracticable for England to join in the carrying out of universal coinage by other methods? For the sake of England I hope that this will not be the case. It is agreed on all sides that the introduction of a universal system of coinage would be a great step in the progress of civilisa- tion; and, in spite of many sceptical objections and occasional sneers as to the chimerical character of proposals in that direction, the great principle must be recognised as valid. The present diversified systems of money may be compared to a number of disjointed railways or means of conveyance, all working on different gauges, and under different arrangements, necessitating unloading and reloading of commodities at the respective ends, involving charges and loss of time; whereas one general system of currency may be likened to an -uninterrupted network of rails of equal gauge, This content downloaded from 129.219.247.33 on Mon, 27 Jun 2016 08:00:45 UTC All use subject to http://about.jstor.org/terms 1870.] SEYD-On International Coinage. 43 extending all over the world, and the advantages which the rapid and economical exchange of commodities would enjoy under such a system of conveyance. are a fair illustration of the advantages which international trade would derive from a uniform system of valuation. That such a system of valuation would be the indirect or direct means of facilitating mutual intelligence, mutual agreement, socially as well as politically,-would, in fact, stimulate civilisation, we may leave out of consideration if we like, but that the interest of every trading and manufacturing nation is enhanced by this more convenient method of effecting exchanges is patent to all. In England the opinions in reference to this matter differ widely. Some authorities warmly support universal coinage, ready and willing to make sacrifices for the cause; others support it, but consider the difficulties great; others oppose it, because the diffi- culties appear to them too great, or not compensated by correspond- ing advantages; whilst a fourth party, boldly and sweepingly con- demns every step in this direction, and, armed with the sovereign, defies the world. This last party removes the question from the sphere of those cosmopolitan considerations by which only it should be governed, and virtually evades the discussion by a more or less veiled appeal to national vanity. The question must be treated, at least in these rooms, from a more elevated point of view. Here we are concerned with general economical interests, to which eveii our own national ones should, if necessary, give place; but I hope in the course of my remarks, to show you that there is no foundation for the fears which take refuge in an appeal to feeling, where reason only should be called upon to decide. The evidence given before the Royal Commission of 1867, fairly represents the above three first opinions, but I think that in regard to the third, on the head of " the corresponding advantages," it is by no means complete, and that the importance of certain vital points connected with the question has not been sufficiently brought out. Permit me to illustrate this in my own way. I will assume, for argument's sake, that the pound sterling should become the unit of universal coinage, that the British valua- tion, and its divisions, should prevail all over the world. Does any one pretend to say that this would not be a great boon to the British manufacturer and the British banker, in the carrying on of their business ? Would it not give a great impulse to the develop- ment of the trade of this country ? We require, at this moment, some such impulse! In former times, when England's supremacy in manufactures of all kinds was absolute, the producer of goods could afford to say to the foreigner, " Here are my goods; such is This content downloaded from 129.219.247.33 on Mon, 27 Jun 2016 08:00:45 UTC All use subject to http://about.jstor.org/terms 44 SEYD-Omt International Coinage. [Mar. " their price, pay me for them on *the spot, or go elsewhere." Hence foreigners flocked to these markets, foreign commission houses settled in this country, and undertook the equalisation of accounts. The English manufacturer was thoroughly independent, and was not called upon to extend his intelligence by any com- petition in a mnarket exclusively his own. This system of doing business is still prevalent, but it is steadily undergoing modifications, the manufacturer desires direct inter- course-nay, he is driven to cultivate it. Foreign nations have made gigantic progress in manufactures; and 'many productions, formerly English monopolies, are now articles of active competition abroad as well as here. The foreign buyer, instead of sending money to England, glad to obtain goods for it, now says: " I can " buy these goods at a certain price elsewhere, and upon certain " conditions as to credit; if you will deal with me on these terms " you may, or-I shall go elsewhere! " The English manufacturer is thus brought face to face with a foreign account, and he may be called upon to draw a bill of exchange; and here his difficulty commences. He knows little of foreign exchanges, and, with his single mindedness of purpose, he soon finds himself entangled in vexatious disputes, either with the drawee or the negotiator; and if, guided by experience, he finally guards himself against these small losses by adding something to the price of his goods, he is by so much hampered in his com- petition with a foreign producer. It is not too much to say that many manufacturers, after a few trials of this kind, give up foreign trade, because the "money part" is not clear to them. The only method in which the English manufacturer can in some way meet the case is that of drawing his bill in English cur- rency at an exchange to be endorsed by the purchaser of the bill. This is frequently done in an irregular manner, and otherwise the cost of realisation becomes a bar to effective competition. But whilst this method seemingly answers the purpose (and before the royal commission it was stated as so answering every purpose, which I deny), it is in itself the most conclusive proof of the ignorance of, and the consequeut disadvantage to, the drawer of such bills. Foreign manufacturers, when drawing upon England, know well how to adjust their claims to English currency; and bills drawn in francs, for instance, upon England, endorsed " as per " exchange," are rarely seen. The habit of our manufacturers to draw bills of this kind, payable abroad in British currency instead of in the foreign currency, is bad in principle; and the saying that it answers the purpose is a weak excuse, which cannot cover the disadvantages to which the system subjects the foreign trade of the country. It also supports the business of a middleman, whose This content downloaded from 129.219.247.33 on Mon, 27 Jun 2016 08:00:45 UTC All use subject to http://about.jstor.org/terms 1870.] SEYD-On International Coinage.