## Marc Flandreau

Print publication date: 2004

Print ISBN-13: 9780199257867

Published to Oxford Scholarship Online: August 2004

DOI: 10.1093/0199257868.001.0001

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# (p.217) Appendix A. Bullion Quotations on the Paris Bourse and London Stock Exchange

Source:
The Glitter of Gold
Publisher:
Oxford University Press

# 1. Paris

On the Paris Bourse, gold and silver were quoted 6 days a week. The operators on the market were the exchange-brokers, and the prices recorded are those at which they concluded their transactions. Bullion quotations were recorded as premium (prime) or discount (perte) with respect to a reference price, the Tarif. When a metal's price rose above the reference price, it was said that ‘a premium or advantage must be given’ on top of the Tarif. In principle, the Tarif corresponded to the price at which the Mint took in the equivalent of 1 kg of pure ore brought for exchange (matières portées au change, that is, bullion brought for coining). In 1803, for example, with a minting price of 9 francs per kilogram of gold and 3 francs per kilogram of silver—both for metal $9 10$ ths pure—the reference prices were (since 3,100 and 200 francs, respectively were minted with these quantities):

$Display mathematics$

The minting price for both gold and silver changed over time, however (see Fig. A.1 below). The initial Tarif was referred to as the ‘trade tariff’ (Tarif du commerce), whereas the Tarif of the day was called the ‘mint tariff’ (Tarif de la Monnaie). As Ernest Seyd noted (1868: 299), ‘In dealing in Gold it is always first agreed whether the price shall be fixed by the Tarif de la Monnaie, meaning the present rates of the Mint, or by the Tarif du Commerce, as the old Tariff is now termed. For Silver the latter is generally taken.’ In the source we used (Cours Authentiques des Matières d’Or et d’Argent, Ms Folio 310, Archives de la Monnaie de Paris), the reference chosen for quotations was jotted down in the margin of transaction statements, removing all confusion. True to Seyd's remark, the ‘trade tariff’ was used for silver, while gold was quoted on the basis of the ‘Mint tariff’. The resulting reference price was 3,434.44 until February 1835, 3,437.77 until March 1854, and 3,437 thereafter. The gold–silver exchange ratio may thence easily be calculated by combining the series of premia on bullion and the relevant reference prices.

Figure A.1. Coinage fees

Source: Matigny (1859).

# 2. LONDON

Gold and silver were quoted in London twice a week, on Tuesdays and Fridays. Trading took place on the Stock Exchange, along with transactions in bills and securities. Various forms of bullion (ingots or foreign currency such as Mexican dollars) were traded. The main quotation for gold and silver was the price per standard ounce of each metal. For silver, the standard was 37-fortieths (or 92.5 per cent) of fineness, and the price was quoted in pence. For gold, the standard was 11-twelfths (or 91.66 per cent) of fineness, and the price was (p.218) quoted in pounds, shillings, and pence. Owing to the narrow ‘bid ask’ margin set by the Bank of England on the gold price, the price of gold was basically the Bank buying price, except when financial crises led the authorities to suspend the Act of 1844 (as in 1857). But for most practical purposes these minute differences do not matter, for the period under study, and the price of gold can be arbitrarily (but safely) set at either the Mint price of 3£ 17s 10½d or at the bank purchasing price of 3£ 17s 9d.

The major data-collecting difficulty lies with silver. Existing silver quotation series are not continuous. Until the late eighteenth century, the chief source of stock exchange prices, The Course of the Exchange, published by the brokerage firm Castaing since the late seventeenth century, had contained a silver price report (see Neal 1990: 24). Its successors in the first half of the nineteenth century (such as Luytens and Ripley) left it out. Only in 1859 did the Wetenhall house of brokers (which for a few years at the end of the eighteenth century had assumed publication of The Course of the Exchange) step into the breach and regularly include silver quotations in its weekly review. For the period before 1859, we must rely on indirect sources, such as The Economist. Indirect sources seem to have lacked regular information on these matters. Reported prices probably relied on transactions performed by one correspondent broker and so did not reflect the entire range of possible deals. If that broker had not done any dealings on the day in question, there was no quotation. Since in London silver served mainly to pay for imports from Asia, it often happened that only a small number of bullion dealers made purchases. In that case, the quotation for ‘Bar Silver per Oz. Standard’ in The Economist is not given, and instead ‘000’ is reported. The 1840s and early 1850s contain many such gaps, despite indirect evidence of substantial activity.

(p.219) After 1859, thanks to the coexistence of the series in The Economist and the one in Wetenhall, a nearly perfect ‘end of the month’ series may be constructed. Comparing Wetenhall and The Economist's figures shows that the two sources are close substitutes. We decided to rely on Wetenhall (since Wetenhall is the primary source), occasionally using The Economist to check for outliers, etc. The resulting continuous series may be found in the Statistical Annex.

In order to work out a pre-1859 series we faced a choice between two courses. Either we could rely on The Economist (at the cost of a perhaps too large a number of missing observations), or we could rely on an alternative source. We decided to use the Wolowski series published in the 1870 Enquête Monétaire. The ‘Wolowski series’ was reportedly constructed on the strength of information provided directly to Wolowski by the London bullion brokers. It begins in the 1840s and matches very well the Wetenhall series when it overlaps with it (after 1859). It is probably therefore the best possible source for the pre-1859 period.

Lastly, a simple rule was suggested by Laughlin (1885: 285) for converting the London price of silver into a gold–silver price ratio. On the basis of a gold price of 3£ 17s 10½d, calling p s the silver quotation (in pence), and p g the gold–silver exchange rate, in London, one gets: p g = 943/p s.