France’s early-19th-century monetary laws defined the franc with a fixed gold–silver relationship (a bimetallic system). This stable coin standard later became the model France promoted internationally, because it made cross-border coin acceptance easier when coins were valued mainly for their metal content.
France, Belgium, Italy, and Switzerland signed the Monetary Convention creating the Latin Monetary Union (LMU). They agreed to mint gold and silver coins to shared specifications and a fixed 15.5:1 silver-to-gold ratio, aiming to make member coins widely acceptable across borders.
The LMU agreement entered into force, turning the treaty into an operating coinage regime. In practice, this meant a French trader could accept partner-country coins with more confidence, because weight and fineness were standardized even though each country kept its own national designs.
France hosted the International Monetary Conference in Paris, using the LMU experience to argue for wider international standardization. The conference did not create a universal currency, but it showed France’s broader goal: make trade easier by aligning coin standards across countries.
Greece joined the LMU and aligned the drachma with the franc standard by weight and value. This expansion demonstrated the LMU’s appeal but also increased the challenge of enforcing shared rules across more governments and mints.
As silver fell in value on world markets, minting silver coins at the treaty ratio became profitable in a way that could drain gold from circulation (a classic bimetallism problem). LMU states agreed to limit free silver coinage, marking the start of a shift away from true bimetallism.
France took the major step of shutting the mint to silver, responding to continued pressure from falling silver values. This showed that, even inside the LMU, national authorities acted to protect gold reserves and domestic monetary stability when the treaty ratio no longer matched markets.
LMU members agreed to suspend the coinage of large 5-franc silver pieces, the key coin that kept the bimetallic ratio working in everyday payments. With large silver effectively frozen, the LMU moved toward a de facto gold standard for full-value money while keeping limited subsidiary silver for small change.
At the outbreak of World War I, the Bank of France suspended payments in gold, part of a broader financial emergency across Europe. This effectively ended the LMU’s gold-based coin system in day-to-day operation, because wartime finance depended more on paper money and controls than on coin convertibility.
After years of postwar inflation and instability, France launched major fiscal and monetary reforms under Prime Minister Raymond Poincaré. These measures stabilized the franc’s value in practice, setting the stage for a legal redefinition of the franc’s gold content later in the decade.
Although the LMU had largely stopped functioning as a working monetary system after 1914, it continued on paper for years. The formal dissolution marked the end of the treaty framework that France had helped build to manage gold–silver coin compatibility across borders.
France’s parliament set a new gold value for the franc, commonly linked to Poincaré’s stabilization. The reform did not recreate the old pre-1914 bimetallic world; instead, it marked a postwar return toward a gold-based legal anchor (often described as a gold-bullion or gold-exchange approach) after years of floating paper money.
France and the Latin Monetary Union: Gold–Silver Policies and Departure from Gold (1865–1928)