When the euro currency was officially introduced in January 1999, it apparently harked a new age of European financial success. Yet this was not the first attempt at currency unification. And neither will it be the first and last to fail.
On December 23, 1865, the nations of France, Belgium, Switzerland and Italy formed what was to become the Latin Monetary Union. With this came a complex, and quite frankly boring, specification of weights and measurements which was to bind these nations into a common monetary policy, which was effectively a common currency.
Sound vaguely familiar? Until 1867, this French-led venture was going rather well, with the franc expanding just as much as their geopolitical influence. But with the acceptance of Greece and Bulgaria, things started to change. Quickly, the Union started to suffer when they realised the weak Greek economy was severely hampering the economic progress of the member states as a whole. With the unification of Germany into the Kaiserreich in 1871, Greece looked to German banks to compensate.
With Germany as an economic powerhouse on the European continent, Greece started to borrow a lot of cheap German money. Soon realising they couldn’t pay it all back, the Greek economy collapsed causing food riots and demonstrations on the streets on Athens. Yes, I am still talking about the nineteenth century!
As more global factors pushed much of Europe into the Long Depression of 1873, which lasted until 1879, the Union took on drastic methods to save itself. Mass debasement of currency occurred and the usage of the 5 franc coin was banned which resulted in a ‘limping gold standard’. By 1875, Belgium was expressing a desire to leave the Union, which other member states opposed. Ultimately, this experimental body was the source of domestic strife, internal tension, and most importantly, economic failure.
As many can probably tell, this article really draws in the similarities the Latin Monetary Union has with the European Union of today. Though these comparisons may be quite astounding, and even surreal, we have to remember we live in a very different world to the late nineteenth century, and that the Latin Monetary Union is not the direct and obvious predecessor to the modern EU.
So what does it all mean? It tells us that the European ‘dream’ for one currency is a botched one with very little realism whatsoever. Most importantly, this dream is one which ignores the fact that with however much European integration, these nation states are not ready to compromise for the ‘greater good’ of our continent.
The Latin Monetary Union failed when Europe was the continent of vast Empire and mass wealth where the only competition was across the Atlantic. Now it is a continent in comparatively economic decline. How does the quest for the single currency utopia expect to cling on now? Europe has never been good at listening to the lessons of history.