Monetary Law of 1803 (France)

Monetary Law of 1803 (France)

The French Monetary Law of 1803 ratified the franc as the French money of account and established France on a bimetallic system.

From the Carolingian monetary reform in the eighth century until the French Revolution, the livre was the money of account in France. Under the Carolingian system each livre consisted of 20 sols, and each sol consisted of 12 deniers. These basic provisions of the Law of 1803 were first passed in Calonne’s law of 1785, named after a comptroller general of French finances. The chaos of revolution disrupted the implementation of Calonne’s law, but on 7 October 1793 France acted on the precedent set by the United States and Russia, and established a decimal monetary system. In 1795 the French revolutionary government changed the name of the money of account from livre, to franc. In 1799 the terms franc, dixieme, and centime replaced livres, sols, and deniers as the official units required in accounting.

The Law of 1803 fixed in law the provisions of Calonne’s law, based upon a decimal monetary system with the franc as the French monetary unit. The franc had two legal equivalents, one in silver and the other in gold. The law declared that “Five grams of silver, nine-tenths fine, constitute the monetary unit, which retains the name of franc.” The law also provided that the mint strike silver coins in denominations of a quarter franc, half franc, three-quarter franc, 1 franc, 2 francs, and 5 francs.

After declaring the specifications and denominations of the silver franc, the law stated that “There shall be coined gold pieces of twenty francs and of 40 francs.” The 20-franc Napoleon coin weighed 6.45 grams, making a gold franc equal to 0.3225 grams of gold. The defined metal contents of the silver franc and the gold franc established a bimetallic system in which a gram of gold was 15.5 times as valuable as a gram of silver.

Both gold and silver coins were legal tender, and unlike the old livres each coin bore a stamp of its value. Anyone, including a foreigner, was free to bring gold and silver to French mints for coinage. The law specified that:

The expense of coinage alone can be required of those who shall bring material of gold and silver to the Mint. These charges are fixed at nine francs per kilogramme of gold, and at three francs per kilogramme of silver. When the material shall be below the monetary standard, it shall bear the charges of refining or of separation.

(Laughlin, 1968)

Just as England became the headquarters for the gold standard during the nineteenth century, France became the staunch defender of bimetallism. A bimetallic ratio of between 15 and 16 to 1 continued until the 1870s when the value of silver began to fall significantly, forcing France and other bimetallic countries in Europe off the bimetallic standard in favor of the gold standard. The United States abandoned bimetallism in favor of the gold standard during the same period.