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Latin Monetary Union
From Wikipedia, the free encyclopedia
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, established in 1865 and disbanded in 1927.
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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, 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.[1]
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.
An interesting parallel can be seen between the discussions in the United Kingdom concerning the possibility of Britain joining the Latin Monetary Union [1], and the current discussions concerning British membership of the euro.
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.
| George I of Greece 5 Drachmae 1876 | Léopold II of Belgium 5 Francs 1868 | ||
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| Napoléon III of France 5 Francs 1868 | Victor Emmanuel II of Italy 5 lire 1874 | ||
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- Einaudi, L. 2001. Money and Politics: European Monetary Unification and the International Gold Standard (1865-1873). Oxford.
- Pollard, John F. 2005. Money and the Rise of the Modern Papacy: Financing the Vatican, 1850–1950. Cambridge University Press.