The Latin Monetary Union: The Gold Francs that United Europe

On December 23, 1865, representatives from France, Belgium, Italy, and Switzerland met in Paris to sign a historic treaty that would change European commerce: the Latin Monetary Union Convention.

The Problem It Sought to Solve:

In the mid-19th century, European trade faced monetary chaos. Each nation minted its own coins with different weights, purity, and denominations. Merchants needed money changers at every border, commissions were high, and fraud was common.

France, under Emperor Napoleon III, proposed a revolutionary solution: standardize the technical specifications of gold and silver coins among several countries, allowing them to circulate freely across borders without the need for exchange.

The Fundamental Principles:

• Bimetallic standard: Gold and silver coins should circulate with a fixed value ratio (1:15.5)

• Technical standardization: Same weight, diameter, and purity for equivalent denominations

• Free circulation: Coins from any member country should be accepted in all others

• Legal tender: Obligation to accept coins in commercial transactions and debt payment

The genius of the Latin Monetary Union lay in its technical precision. Member countries agreed on exact specifications that made their coins interchangeable.

Gold Coins - 20 Francs/Lire/Drachmas Denomination:

• Total weight: 6.45161 grams

• Fine gold: 5.80645 grams (900/1000 purity)

• Diameter: 21 mm

• Alloy: 90% gold, 10% copper

This coin was the workhorse of international trade. A Belgian merchant could use his 20 Belgian francs in Italy, where they were accepted as 20 lire. A Swiss could pay in France with Swiss francs without any complication.

Gold Coins - 10 Francs/Lire/Drachmas Denomination:

• Total weight: 3.2258 grams

• Fine gold: 2.90322 grams (900/1000 purity)

• Diameter: 19 mm

• Alloy: 90% gold, 10% copper

Silver Coins - Denominations of 5, 2, 1, and 0.5 Francs:

Although silver coins were also standardized, they faced problems when the gold-silver ratio fluctuated in world markets, which eventually weakened the system.

France - The System Leader:

As architect of the union, France minted the largest volume of coins. The famous French "20 francs" bore effigies of Napoleon III, Ceres (goddess of agriculture), the Gallic Rooster, and the Angel of the Republic, depending on the political period.

• 1803-1815: Napoleon Bonaparte in various versions

• 1816-1848: Louis XVIII, Charles X, and Louis Philippe

• 1849-1851: Ceres (Second Republic)

• 1852-1870: Napoleon III

• 1871-1914: The Angel ("Génie") of the Third Republic

Belgium - The Trading Partner:

Belgium, with its King Leopold I and later Leopold II, minted Belgian francs identical in specifications. Belgian coins showed the royal profile and the Belgian lion. They circulated widely in France and the Netherlands.

Switzerland - Monetary Neutrality:

Switzerland issued Swiss francs with the image of Helvetia (personification of Switzerland). Swiss coins were especially appreciated for their minting quality and the country's reputation for monetary integrity. The 20-franc Helvetia (1883-1896) and later Vreneli (1897-1949) became icons.

Italy - The Lira in the System:

The Kingdom of Italy minted 20 lire coins with effigies of Victor Emmanuel II, Umberto I, and Victor Emmanuel III. Although denominated "lire," they were completely interchangeable with francs from other countries.

Greece - The Gold Drachma:

Greece joined the system in 1868. Its 20 drachma coins showed King George I. Although less common than issues from other countries, they also circulated throughout the union.

Unofficial but Adhering Countries:

Several countries adopted the same specifications without being formal members:

• Spain: 25 gold pesetas (same weight as 20 francs)

• Papal States/Vatican: 20 papal lire

• San Marino: 20 San Marino lire

• Monaco: 20 Monaco francs

• Serbia, Bulgaria, Romania: Various periods with compatible coins

How It Worked in Real Life:

Imagine a textile merchant from Lyon in 1890. He travels to Milan to buy silk, then to Bern to sell fabrics, and finally to Brussels to close deals. In each city, he simply takes out his 20-franc gold napoleons and pays directly.

The Italian seller doesn't need to exchange the French coin - he accepts it at face value of 20 lire. In Switzerland, it circulates as 20 Swiss francs. In Belgium, as 20 Belgian francs. No exchange commissions, no delays, no exchange rate risk.

Advantages for Commerce:

• Cost reduction: Elimination of exchange commissions (typically 2-5%)

• Accounting simplification: Commercial books could be kept in a single unit

• Greater confidence: Guaranteed weight and purity reduced fraud

• Improved liquidity: Greater supply of acceptable cash

Main Beneficiaries:

• Merchants operating in multiple countries

• Banks and exchange houses (although they lost commission income)

• Migrant workers who could send money without losses

• Upper-class tourists traveling through Europe

Despite its initial success, the Latin Monetary Union faced structural challenges that eventually weakened it.

The Gold-Silver Ratio Problem:

The system established a fixed ratio of 1:15.5 between gold and silver. When silver discoveries in America (especially in Nevada) flooded the market in the 1870s, the market price of silver collapsed.

This created a perverse incentive: melt gold coins to buy cheap silver, mint it into coins at the inflated official value, and make profits. This process, known as "Gresham's Law" (bad money drives out good), threatened to empty gold reserves.

The Response: De Facto Abandonment of Bimetallism:

In 1873-1874, member countries severely limited silver coin minting, effectively adopting a gold standard. Already-minted silver coins continued to circulate, but only gold coins maintained unlimited legal tender.

Tensions Between Members:

Italy and Greece, with weaker public finances, occasionally minted excessive amounts of coins, diluting system confidence. France and Belgium pressed for fiscal discipline, creating diplomatic tensions.

The Impact of Conflict:

World War I (1914-1918) shattered the European monetary system. Governments suspended gold convertibility, printed unbacked paper money, and requisitioned private gold to finance the war effort.

Gold coins disappeared from circulation. Citizens hoarded them, fearing inflation and devaluation. Cross-border trade collapsed, making coin interchangeability irrelevant.

Restoration Attempts (1918-1927):

After the war, there were weak attempts to revive the union. France briefly restored convertibility in 1928, but with a massive franc devaluation. International cooperation had evaporated.

Official Dissolution (1927):

The Latin Monetary Union was formally dissolved in 1927, although it had been dead in practice since 1914. Countries retained their monetary standards, but the dream of a shared European currency had ended.

The Legacy for Modern Investors:

Today, 20-franc coins from the Latin Monetary Union are highly valued by investors and collectors:

• Content Value: Containing 5.80 g of pure gold, their value follows the spot price of gold

• Universal Recognition: They are accepted by dealers worldwide

• Low Premiums: Being so common (millions minted), they have premiums over spot of only 4-8%

• Excellent Liquidity: Easy to buy and sell in any market

The Latin Monetary Union offers valuable lessons that resonated when designing the euro in the 1990s.

Successes that Inspired the Euro:

• Technical standardization: Precise specifications worked brilliantly

• Reduced transaction costs: Trade was significantly facilitated

• European identity: Created a sense of shared economic integration

Failures that Warned about Risks:

• Lack of fiscal discipline: Without central authority, weak countries abused the system

• Rigidity to shocks: The system couldn't adapt to changes in metal prices

• Absence of political union: Without deep political integration, monetary union was vulnerable

The Euro Learned:

The Maastricht Treaty (1992) and the Stability and Growth Pact established:

• Convergence criteria (deficit, debt, inflation)

• European Central Bank with independent mandate

• Supervision and sanction mechanisms (though imperfect)

However, the European debt crisis (2010-2015) showed that some problems of the Latin Monetary Union persist: the difficulty of maintaining fiscal discipline in a monetary union without complete fiscal union.

Why They Are Popular Among Investors:

20-franc coins (napoleons, helvetias, vrenelis, etc.) represent one of the best options for physical gold investment for several reasons:

1. Competitive Premiums:

Due to the enormous quantities minted (an estimated 500+ million pieces), premiums over gold value are extremely low. Typically 4-8% over spot price, compared to 10-15% for rarer coins.

2. Universal Recognition:

Any serious precious metals dealer in the world recognizes and buys these coins. You don't need to explain what they are - their reputation precedes them.

3. Divisibility:

With 5.80 g of fine gold, a 20-franc coin is worth approximately $480-550 USD (at Nov 2025 prices). They are manageable units for small and medium investors.

4. Legal Protection in Some Countries:

In several European countries, old gold coins enjoy favorable tax treatment (VAT exemption, reduced capital gains) as they are considered antiques or historical pieces.

5. Beauty and Historical Connection:

Beyond financial value, owning an 1870 napoleon or an 1898 helvetia connects you with 150 years of European history.

Main Coins for Investment:

• 20 Francs France "Napoleon": The most common and liquid

• 20 Francs Switzerland "Helvetia/Vreneli": Excellent quality, very popular

• 20 Francs Belgium "Leopold": Good option, slightly lower premium

• 10 Francs (any country): For investors with less capital

Where to Buy Them:

Investment coin dealers, established numismatic houses, and online platforms specializing in precious metals. Always verify authenticity (weight, diameter, magnet) and buy from reputable sources.

The Latin Monetary Union was much more than a technical agreement about coins. It was the first serious attempt at European monetary integration, an ambitious experiment that demonstrated both the possibilities and dangers of sharing a currency without sharing a government.

For more than 40 years, a citizen could travel from Lisbon to Athens carrying the same gold coins, trading freely without money changers or commissions. It was a preview of the European single market that would come a century later.

Although the union ended in failure, its lessons were invaluable. The architects of the euro meticulously studied what worked and what failed in the Latin Monetary Union. The Maastricht criteria, the European Central Bank, and the Stability Pact are direct responses to the problems that sank the 19th-century system.

For today's investors and collectors, the coins of this union represent a unique opportunity: own physical gold with low premiums, universal recognition, and rich history. Each 20-franc napoleon is not just 5.80 grams of gold - it's a tangible fragment of the dream of a united Europe.

In a world where cryptocurrencies promise to be the future of money and central banks digitize their currencies, the gold coins of the Latin Monetary Union remind us that dreams of universal monetary systems and the search for trustworthy money are as old as civilization itself.