Napoleon III
Don Stott
I know, let me put the words in your mouth: "Stott, you've really gone off the deep end now." Oh yeah? Well, my friend, the problems of France, and Emperor Napoleon III…and the silver market, are so obviously pertinent, and probably unknown by most, that I think you'd better keep on reading!
Several things had a serious effect on France, beginning about 1850. First of all, the gold discovery in California in 1849, plus discoveries in Australia and Siberia, made gold far more plentiful than silver in a lot of places, and especially in France. World gold production between the years 1850 and 1875 exceeded production of the previous 350 years. By a law passed in 1803, France had an official gold-silver ratio of 15.5 to 1, so silver was necessary. French coinage was silver.
In 1832, Belgium acquired independence from Holland. In 1854, Belgium ceased producing silver coins, and depended on the French mint for silver. It was cheaper than minting its own coins. In 1854, the French minted fewer silver coins than at any time since the Revolution in 1795. Silver was hoarded and speculated upon by the masses. It was indeed scarce. Belgium's silver imports from France jumped from 6 million francs in 1850, to 78 million in 1859. Switzerland was having the same problems in obtaining silver for its coinage.
Gold was literally everywhere, it seemed, and those nations who had a silver based monetary system, as did France and others, suffered from a severe shortage of silver. Realizing that, the citizens hoarded silver, so little was available for coinage. It seemed as though everyone was dealing with, and paying with gold. There was so much gold, that its price went down, and so little silver, that its price went up. Simple economics. France desperately needed silver.
Then, along comes the War of Northern Aggression, improperly called the "Civil War." France's most important industry was textiles, and the North's blockade in 1861, stopped cotton shipments from America, which France depended upon. It was a disaster, to put it mildly. By 1863, France had 223,336 unemployed, affecting the lives of approximately 670,000 persons. Napoleon was enraged over the French dependence on the US for its cotton, and went to India for cotton. Indian cotton had a shorter staple, many impurities, and resulted in a yarn that caused threads to break more easily. Reluctantly, France went to India, but India demanded payment in…guess what… silver! America had accepted gold. India absolutely refused to export its cotton unless it was paid for in silver. Mean time, many small mills had gone bankrupt, and the larger ones were in deep financial difficulty.
Get the picture? France, as well as others, were in a desperate need of silver, and huge amounts of gold were on the market because of recent discoveries. No one had any silver…except Mexico…and everyone wanted it. Most of it was in Sonora, on the northwest corner of Mexico. Sonora was, and still is, a sort of desolate, parched, uninhabited place, with its main city being Hermosillo. Actually, Mexico's borders receded drastically when the US acquired about half of Mexico by the Treaty of Guadalupe Hidalgo, signed on Feb 2, 1848. Less than two weeks earlier, gold had been discovered in California, and the adventurers quickly descended on Sonora, thinking it would be rich in gold also. California was then part of the US, whereas Sonora was still a Mexican possession. Officials in Sonora were worried about the sudden influx. Sonora was enormously rich in silver. So much so, that it was supplying three fourths of the world's supply. Solid ingots weighing thousands of pounds were found in Sonora. Mexico's wealth of silver, and France's and other's dearth, could easily restore the world's balance between gold and silver.
In the 1850's, Sonora had several difficulties. The Apaches raided regularly, and the defeat in the recent war with the US, left them broke and battered. Many Sonorans, ironically, ignored the huge silver wealth in their own land, and were lured by California gold. Their two greatest threats, the Indians and Americans, were ignored by Mexico City, and little help was sent. Charles de Pindray and 88 Frenchmen left California for Sonora on November 21, 1851, aboard the Cumberland, and soon landed at Guaymas, Mexico. They attempted to make a deal with the Mexicans to obtain much needed silver, but were rebuffed by the officials. The Indians were also harassing them, and hope was lost. Pindray was mysteriously shot on June 5th, 1852, possibly self-inflicted by his failure to obtain the silver.
A second expedition was launched in 1852 by Pierre Charles de Saint-Amant. He, and 80 men left San Francisco, but that also failed. A third group in 1852 was led by Raousset-Boulbon, but he did it diplomatically, rather than attempting force. He went to Mexico City, not Sonora, and obtained political, financial, and diplomatic backing, plus a concession from the President Mariano Aristra for the silver mines of Arizona, located on the northern border of Sonora. It got really complex from then on, with Switzerland getting in on the action, but basically nothing resulted, and Aristra resigned the presidency in January of 1853. Santa Anna took over.
Antonio Lopez de Santa Anna took office in March 1853. In December 1853, the Gadsden Treaty allotted even more Mexican Territory to the United States. Now about Santa Anna. He was illegitimate, a womanizer, mean, and in general not a very nice guy…a euphemism. Mexico had allowed Americans to settle into the Texas territory to populate it. They figured it was just a dry plain with no mineral wealth, and no hope of ever going anywhere. So, thousands of Americans from Arkansas, Tennessee, and other places decided to move to the Mexican Territory of Texas, where they obtained land for two cents an acre. Among them was Sam Houston, a former Congressman, Governor, and depressed man. His wife had left him, and he had sunk into alcoholism and depression. Santa Anna decided that he wanted the immigrants to pay taxes to Mexico, and be subservient to Mexico. He was afraid that he was losing Texas, since it had been largely populated with US immigrants. He was! The Texians, (what they called themselves), said "Hell no," and the Alamo was fought over it. The Texians lost that one, but at the battle of San Jacinto, they won, even though they were outnumbered four to one. Santa Anna had his men ready for the fight, and the Texians didn't show up. He told his men to take a nap and relax. Santa Anna went into his tent with a gal, who was a secret friend of the Texians, who later became known as "The Yellow Rose of Texas." She seduced Santa Anna, and when the Texians came, he had his pants down, and there was no one to lead his forces. They lost, and the Republic of Texas was born. Santa Anna cancelled the silver deal with France.
Napoleon III did everything in his power to obtain Mexican Silver, and he succeeded, but not in the way he wanted. He never got to own the mines or colonize Sonora, despite numerous efforts, sending representatives, threatening force, being diplomatic, or a dozen other attempts. While he was trying though, silver was indeed flowing from Mexico to France. The catastrophic shortage of silver in Europe, and especially France had been abated somewhat. In 1863, wising up, Mexico prohibited the export of all silver.
This succinctly points out how important gold and silver are, because they are real, honest MONEY. A hundred and fifty years ago, Just about all currencies were backed by gold and silver, and silver was the accepted coinage around the world. Daily purchases and transactions were done with silver coins, and gold was in various treasuries to back the currencies. Everyone had real gold and silver coins, which were, and still are, MONEY in the truest sense of the word. It was an accepted fact of life, and no one questioned the sense of it. Inflationary times weren't part of anyone's vocabulary, other than in war times, when un-backed paper currencies were attempted, and always failed. France was desperate for silver, just to carry on normal transactions between citizens. The Indians were smart enough to demand silver for their cotton, and any nation without gold and silver, was in a terrible fix. How times have changed! Today, true money is shunned by the majority, and worthless pieces of paper with engravings on them, are accepted as valuable and as money. They are neither, and as time progresses and the presses continue rolling out trillions of notes, more and more will realize the fallacy of it all, and wish they had taken their surplus and placed it in gold and silver.
Today, as was true under Napoleon III, there is a shortage of silver. We are using twice what is being produced. The world is also consuming twice the gold that is being produced. How long before it becomes a general realization that the true monies are the way to save, making them cost ever more in paper currencies? I say not long, and when prices of gold and silver skyrocket in FRN's, that will be an indication. Protect yourself.
October 22, 2004
Don Stott has been a precious metals broker since 1977, has written five books, hundreds of columns, and his web site is http://www.coloradogold.com
Germony
