Latin Monetary Union

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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.


Overview of contractual states (red) and associated states (other colours) between 1866 and 1914.

By a convention dated 23 December 1865,[1] 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.[2] The four nations were joined by Spain and Greece in 1868, and Romania, Bulgaria, Venezuela, Serbia and San Marino in 1889. In 1904, the Danish West Indies were also placed on this standard but did not join the Union itself. When Albania emerged from the Ottoman Empire as an independent nation in 1912, coins of the Latin Monetary Union from France, Italy, Greece, and Austria-Hungary began to circulate in place of the Ottoman Lira. Albania did not however mint its own coins, or issue its own paper money until it adopted an independent monetary system in 1925.[3]

The LMU served the function of facilitating trade between different countries by setting the standards by which gold and silver currency could be minted and exchanged. In this manner a French trader could accept Italian lire for his goods with confidence that it could be converted back to a comparable amount of francs.

With the tacit agreement of Napoleon III of France, Giacomo Antonelli, the administrator of the Papal Treasury, embarked[when?] on an ambitious increase in silver coinage without the prescribed amount of metal.[4] The papal coins quickly became debased and excessively circulated in other union states,[5] to the profit of the Holy See, but eventually[when?] Swiss and French banks rejected papal coins and the Papal States were ejected from the Union[when?].[2]

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.[6] From 1873 onwards, the Union was on a de facto gold standard.


The LMU eventually failed for a number of reasons. Some members, notably the Papal State's treasurer, Giacomo Cardinal Antonelli, began to debase their currency. This meant he minted coins with an inadequate amount of silver and then exchanged them for coins from other countries that had been minted correctly. More importantly, because new discoveries and better refining techniques increased the supply of silver, the fixed LMU exchange rate eventually overvalued silver relative to gold. German traders, in particular, were known to bring silver to LMU countries, have it minted into coinage then exchanged those for gold coins at the discounted exchange rate. These destabilizing tactics eventually forced the LMU to convert to a pure gold standard for its currency (in 1878).[7][8]

According to Financial Times, another major problem of the LMU was that it failed to outlaw the printing of paper money based on the bimetallic currency. A weakness which was exploited by France and Italy that printed banknotes to fund their own endeavours, effectively "forcing other members of the union to bear some of the cost of its fiscal extravagance by issuing notes backed by their currency".[9] Greece also caused problems. According to the BBC, "its chronically weak economy meant successive Greek governments responded by decreasing the amount of gold in their coins,[10] thereby debasing their currency in relation to those of other nations in the union and in violation of the original agreement". Greece was formally expelled from the Latin Monetary Union in 1908. It was readmitted in 1910, however.[11]

Even though the minting of new silver coinage ceased, the existing silver coins continued in circulation, and the fluctuations in the values of gold and silver were somewhat of a nuisance.[clarification needed][citation needed] The political turbulence of the early twentieth century which culminated in the First World War, brought the Latin Monetary Union to its final end in practice, even though it continued 'de jure' until 1927, when it came to a formal end.

The last coins made according to the standards (i.e. diameter, weight and silver fineness) of the Union were the Swiss half, one-franc, and two-franc pieces of 1967.[12]


The Latin Monetary Union inspired the Scandinavian Monetary Union, established in 1873.[11]


Below are examples of coins of 5 units.

5 Greek drachmae 1876
George I of Greece Coat of arms of Greece
5 Belgian francs 1868
Leopold II of Belgium Coat of arms of Belgium
5 French francs 1868
Napoleon III of France Coat of arms of the Second Empire
5 Italian lire 1874
Victor Emmanuel II of Italy Coat of arms of the House of Savoy
5 Spanish pesetas 1885
Alfonso XII of Spain Coat of arms of Spain
5 Venezuelan bolívares 1912
Simón Bolívar Coat of arms of Venezuela

See also[edit]


  1. ^ [Traité (Recueil). 1864-1867]Recueil des traités de la France . Tome neuvième, pp. 453-458
  2. ^ a b Pollard, John F. (2005). Money and the Rise of the Modern Papacy: Financing the Vatican, 1850–1950. New York: Cambridge University Press. p. 39. ISBN 0-521-81204-6. 
  3. ^ Daggar Jon's 'Coin and Currency'
  4. ^ Einaudi, Luca (2001). European Monetary Unification and the International Gold Standard (1865–1873). Oxford University Press. p. 104. ISBN 0-19-924366-2. 
  5. ^ Not borne out by references in coin catalogues, e.g. Krause & Mishler, Standard Catalog of World Coins, 19th century, which shows LMU standard finenesses for Papal States silver and gold coinage with no debasement
  6. ^ James Laurence Laughlin (1898). "Chapter XI". The History of Bimetallism in the United States. D. Appleton and Co. 
  7. ^ The Latin Monetary Union
  8. ^ European Monetary Unification and the International Gold Standard (1865-1873), Oxford University Press 2001
  9. ^ Financial Times article "Eurozone: A nightmare scenario - Latin Lessons" note:free registration to FT is required to view the article
  10. ^ This also is not backed up by the coinage record. Greece issued no silver or gold coins for circulation after 1884 (silver resumed in 1910), and all extant coins from the period in question (prior to 1884 and in 1910/11) are of LMU standard. See Krause & Mishler, Standard Catalog of World Coins, 19th-century & 20th-century volumes (annual publications).
  11. ^ a b "A Point of View: Making friends the shared currency way". BBC. Retrieved February 26, 2012. 
  12. ^ E.g. Krause & Mishler, Standard Catalog of World Coins, 20th century. The cupro-nickel ½, 1 and 2-franc coins made since 1968 are also still of LMU-standard weight and diameter, though no longer silver.

Further reading[edit]

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