Gold, Silver, the Morgan Dollar and the Rarest Silver Crown of the Latin MonetaryUnion

On 16 November 2021, Numismatica Genevensis will be auctioning a very important rarity: 5francs, 1886 - the rarest silver crown of the Latin Monetary Union. Produced around thesame time as the Morgan dollar, its rareness also shares the same economic and historicalbackground: the overproduction of silver in the American town of Virginia City, Nevada.

By Ursula Kampmann
Sponsored by Numismatica Genevensis

On 16 November 2021, Numismatica Genevensis will be auctioning a very importantnumismatic rarity. It is the rarest silver crown of the Latin Monetary Union. Only fivespecimens of this 5-franc coin from 1886 are known: three of them are located inSwitzerland's most important museums. Only two of them are in private hands. And now, forthe first time since 2008, one of those two specimens is coming onto the market.

Swiss Confederation. 5 francs 1886 B, Bern. One of two specimens in private hands.One of five known specimens. From Auction SKA Bern 1 (1983), Lot 659. NGSA 5 (2008),Lot 1292. NGC MS64. FDC. Estimate: CHF 200,000. From Auction NumismaticaGenevensis 14 (15 and 16 November 2021), Lot 395.

The estimated price for this piece, graded as MS64 by NGC, is CHF 200,000. The obversedepicts Helvetia against the backdrop of the Alps, a die created by Geneva-born medallistAntoine Bovy for the new coinage of the recently established confederation. The incrediblyrare year can be found on the reverse, surrounded by a wreath of oak leaves and Alpine roses.The coin was minted in Bern, hence the little B under the wreath.

This coin not only holds significance in the world of Swiss numismatics. It is a key testamentto the economic history of the 19 th century, bearing witness to the close link between the silverdeposits discovered in the American state of Nevada and European monetary policy, as wellas the almost global transition to the gold standard.

Bavaria. Ludwig II, 1864-1886. 1 crown 1866, Munich. NGC PF63+CAM. FDCestimate: CHF 20,000. From Auction Numismatica Genevensis 14 (15 and 16 November2021), Lot 202.

A Groundbreaking Change in the Monetary System
For centuries, Europe used gold and silver to mint its coins. They were all appraised regularly,since their value fluctuated depending on how high the price of gold or silver was at the time.In order to keep these currency fluctuations off their balance sheets, merchants reverted tousing a money of account, a system created in the Carolingian period. Any incoming oroutgoing amount paid in cash had to be converted into this money of account for bookkeepingpurposes.

And then came the 19th century. The people gained more power and demanded a currencysystem that even the simplest farmer would be able to understand. The money of account andthe coins actually minted increasingly became one and the same. To make it easier foreveryone to use these coins, the value was stamped on them right away, as illustrated by theBavarian coin shown here: the inscription tells us that, in accordance with a coinage treaty,fifty such crowns were to be minted from one Cologne pound of gold.The monetary system changed rapidly in the late 18th and 19th century. Each nation chose onesingle currency, whose value was fixed exactly. For example, the American Coinage Act of1792 states that each dollar must be equivalent to 371 4/16 grains of pure silver. In its 1850Federal Coinage Act, Switzerland postulated that its new single currency, the franc, shouldcontain 4.5 g of fine silver, following the French franc.

The problem here was that it wasn't just silver coins circulating in all these countries, but alsogold coins, and the price ratio between gold and silver was constantly changing due to themany new gold and silver mines being discovered in the 19 th century. The prices of preciousmetals were rising and falling more quickly than many governments were able to respond tothem.

The Comstock Lode and its rich silver deposits changed the world's monetarylandscape forever.

Gold From California, Silver From Virginia City
Just think of the California Gold Rush of 1848, when the discovery of gigantic amounts ofgold caused the price of the metal to plummet. Here are a few figures to illustrate just howdrastically the amount of gold in circulation changed after 1848: in the decade between 1851and 1860 alone, 189.7 t of gold were mined. By way of comparison, this figure reached just136.3 t in the half-century from 1801 to 1850, although it was already clear from 1849/50 thatthe price of gold was in free fall due to the increased mining output. That's why Switzerland,for example, delayed its gold coinage until 1883.

At that time, the price of silver was in free fall because the enormous yields from theComstock Lode, located in Virginia City, Nevada, caused the world's silver production toskyrocket to 2,544 t between 1861 and 1870. By way of comparison, this figure had been 772t between 1841 and 1850, before rising to 1,760 t between 1851 and 1860. Between 1901 and1910, 5,681 t of silver were mined around the world. And of course, this had an impact on theprice of silver. Whereas in 1870, the London Fix price for one ounce of silver was 60 pence, itfell to 47 pence in 1890 and then to 28 pence in 1900.

Impact on the Global Economy
What did this mean for the global economy? Each individual nation had to decide whichmetal they trusted to retain a certain level of stability. While India and China continued to relyon silver, Germany, when it first emerged as a unified empire with a single currency in 1871,opted for gold as the standard for its currency. To be clear: this didn't mean that there were nolonger any silver coins circulating in Germany, on the contrary. But the currency was definedin terms of gold and all denominations could be converted into gold at any time without anyextra charge.

Therefore, a large proportion of the 6,000 t of silver contained in the coins that werewithdrawn following the change in currency was reminted into German Reichsmarks. Ofcourse, some of it also flowed into the global market. And that was an excellent excuse for allthe silver barons in Virginia city, who were furious that their substantial financial investmentswere no longer paying off due to the dramatic drop in the price of silver on the global market.To put it into specific terms: between 1871 and 1885, the ratio between gold and silver fellfrom 1:15.51 to 1:32.6!

And by the way, the rumour that the monetary reform in Germany was solely responsible forthe drop in the price of silver is still perpetuated in many numismatic books to this day.

The Emergence of the Morgan Dollar
This brings us to the measures taken by the U.S. government to help its silver producers.Richard Parks Bland, a lawmaker representing the state of Missouri, initiated a bill that wouldbecome known as the Bland-Allison Act. Nicknamed 'Silver Dick', Bland knew the majorplayers of silver production and had seen their problems first-hand. In fact, the start of hiscareer was directly linked to the Comstock Lode. So, he made their concerns his own andactually pushed through the Bland-Allison Act of 1878 - which went against the President'sveto, by the way. It stipulated that the U.S. Treasury should purchase 2 to 4 million dollars'worth of silver in Virginia City every month. This silver was used to mint dollar coins, whichhave today become a very well-known and popular field of collection: the Morgan dollars.

A Conference in Paris in 1885
But let's return to Europe. Here, the Latin Monetary Union was struggling to counteract thecurrency distortions caused by the overproduction of silver in America. Since it wasestablished, the Latin Monetary Union had relied on bimetallism. In other words: the finenessof the coins minted under the agreement had to be such that the metal value of silver and goldcoins remained at a fixed ratio of 1:15.1. But with the price of silver constantly falling, thiswas impossible to sustain. The price of silver was plummeting faster than the weight andfineness for new silver coins could be determined, the old ones could be withdrawn or thenew ones could be minted. That's why the representatives of the Latin Monetary Unionmembers, which also included Switzerland, met in Paris to discuss how they should proceed.At the end of 1885, the delegates signed a treaty stating that the minting of silver coins shouldbe suspended until further notice. In exchange, France promised to continue exchanging thecurrently circulating silver coins at face value into gold on account of the French Treasury.The Swiss representatives were able to negotiate a special arrangement for themselves: sinceSwitzerland had seen colossal growth, both in terms of population and gross national product,and therefore had a lack of silver coins, it was granted permission to mint a disproportionatelylarger amount of circulating coinage in silver than the other member states. The official figureallowed was 6 francs in silver coins per capita - which would have amounted to 19 millionfrancs -, but this figure was increased by 6 million francs to 25 million. Switzerland was alsogranted permission to remint 10 million francs' worth of old 5-franc pieces into new 5-franccoins. The treaty entered into force on 1 January 1886, bringing us to the important 5-franccoin from 1886, which Numismatica Genevensis will be presenting in its upcoming auction.

A Broken Master Die and an Issue that was Never Realized
Whereas in 1884 and 1885, the Bern mint had only produced small-denomination coins frombase metal, in 1886, it released an extensive issue of gold and silver coins. 250,000 gold coinswere minted, in addition to one million 2- and 1-franc coins. There were also plans to mint 5-franc coins, but this failed due to a technical problem: the master die for the obverse broke,meaning that no new obverse dies could be produced. The newly produced 1886 reverse diehad to be tested with old obverse dies before the official decision was made to mint the large-scale issue with new coin designs.

Although a competition was held in 1886 to select the new coin design, it wasn't until 1888that the design could be used to mint an extensive issue of 5-franc coins.

Thus, the rare Swiss 5-franc coin from 1886 is an historic piece that proves that globalisationis not just something that has emerged in the past few decades. The rareness of this coin wascaused by the same historical events that led to the prevalence of the American Morgandollar, which was minted 6,400 kilometres away.

For more information on the sale, see:
https://www.ngsa.ch/