Latin Monetary Union

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Latin Monetary Union.

In 1865, France, Belgium, Italy, and Switzerland (joined in 1868 by Greece) agreed to regulate their national currencies on a uniform basis, thus making it freely interchangeable. Several other countries joined informally. The fluctuations of gold and silver created difficulties, and the union, further disrupted by World War I, was disbanded in 1927.
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The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or ideologically biased.

Latin Monetary Union


a union concluded in 1865 by France, Belgium, Italy, Switzerland, and (from 1868) Greece to standardize the coinage of gold and silver coins and to maintain a stable money circulation on the basis of bimetallism. The members of the Latin Monetary Union could freely coin gold and silver at the value ratio of 15.5 to 1. Acceptance of the silver coins of each member by the state treasuries of the others on the same basis as gold coins was obligatory in all payment transactions between the members. In the 1870’s, as a result of the progressive devaluation of silver and the shift by the majority of European countries to gold monometallism, a considerable number of freely coined silver 5-franc coins streamed into the countries of the Latin Monetary Union, thus creating the danger of gold outflow from these countries. The Latin Monetary Union was compelled to limit the coinage of silver coins and subsequently to discontinue it altogether.

After World War I, when the capitalist countries turned to paper money, the Latin Monetary Union lost its importance and virtually ceased to exist (it was formally disbanded on Dec. 31, 1926).

The Great Soviet Encyclopedia, 3rd Edition (1970-1979). © 2010 The Gale Group, Inc. All rights reserved.
References in periodicals archive ?
Even at the heyday of commodity standards when both theory and institutions were most consonant with equilibrium models, the main experiments in monetary union like the Latin Monetary Union soon came under severe strains, usually after public finance imbalances, and stopped functioning according to the rules.
This reckless behavior was in keeping with Greece's checkered modern history, which includes being the first country to be booted out of the euro's main predecessor, the Latin Monetary Union, back in 1908 and suffering through at least four significant devaluations since World War II.
That was how the Latin Monetary Union collapsed, essentially with countries cheating.
For instance, five European countries joined ranks to set up the Latin monetary union between 1875 and 1927, three other countries formed the Scandinavian monetary union (1873-1914).
Long before the Latin Monetary Union or the Euro, Europe and much of the world had a common currency in the thaler first minted in 1741 in the Imperial Mints of the Holy Roman Empire, in this case those in Austria.
France might seek to salvage a Latin Monetary Union (France, Italy and Spain) extended to include Austria and the new EU countries in Central Europe.
We found that there was a key difference between the success rates of national monetary unions like the United States, Canada, Germany, and Italy compared with international monetary unions like the Scandinavian Monetary Union and the Latin Monetary Union. The key reasons for this outcome were the force of political will and greater economic integration.
ONE European group, the Latin Monetary Union, introduced common coins in France, Italy, Switzerland and Belgium in 1865.
It opted initially for a silver standard in 1850, but was forced to legalise the massive circulation of French gold coinage in its territory in 1860 and then decided to join the Latin Monetary Union in 1865, pressing its monetary allies for the adoption of the gold standard (Willis, 1901).
Bismarck refused to link the mark to the franc-based unit of the international union projected in 1867 (see the section on the Latin Monetary Union below) despite requests from southern German chambers of commerce and some economists.
It covers three surviving monetary unions (the Zollverein, the Swiss experience, and the Belgium-Luxembourg union) and two that failed (the Latin Monetary Union and the Scandinavian Monetary Union).
The Latin Monetary Union can be traced to 1830 when Belgium decided to base its own franc on the French franc standard (Flandreau, 1995).