Holland had already begun the process in 1847, but had managed it so awkwardly that her condition is not easily understood or described as it was in 1857.  The estimated amount to be thrown out of use was only half the real amount, and in the attempt to avoid a small evil they produced a very great one.

Austria was at that time involved in trouble with her paper money system, and thought the cheapening of gold offered a fair opportunity to come to a metallic basis.  The reasoning of her statesmen was singularly like that of General Grant in 1874, when he pointed to the great silver discoveries in Nevada as a providential aid to the restoration of specie payments, being at the time in sublime ignorance that he had long before signed an act demonetizing silver, and thereby depriving this country of the benefit of such providential aid.  But the strength of the creditor classes was entirely too much for Austria and Prussia, and the German States allied with them almost unanimously declared for throwing gold out of circulation.  A convention had been held at Dresden in 1838, with the view to unifying the coinage, but little had been accomplished, and now a convention was called at Vienna, which was attended by authorized representatives of Prussia, Austria, and the South German States.  It was there stated that, besides various minor coins, there were three great competing systems in Germany, namely, those of Austria, Prussia, and Bavaria.  It is needless to go into details of this once famous convention, but suffice it to say that the following points were agreed upon:  (1) The Prussian thaler was to be the standard for Prussia and the South German States, and was to be a silver standard exclusively. (2) The Austrian silver standard was to prevail throughout that empire. (3) The contracting powers could coin trade coins in gold, but none others, except Austria, which retained the right of coining ducats, and these gold coins were to have their value fixed entirely by the relation of the supply to the demand.  “They were not therefore to be considered as mediums of payments in the same nature as the legal silver currency, and nobody was legally bound to receive them as such;” in short, none of the gold coins permitted by the convention were to be legal tender, but all were to be mere trade coins precisely for the same purpose as the trade dollar once so famous in the United States.  The result, of course, was to make silver the standard and gold the fluctuating money or token money.  The effects of this convention remained with but little change till 1871.

Of course, gold at once became “dishonest money.”  It was worth less than silver, and a regular gold panic set in.  Holland had already demonetized most of her gold coinage, that is, had deprived it of the legal tender quality, and Portugal now practically prohibited any gold from having current value, except English sovereigns.  Belgium demonetized all its gold at one sweep, and Russia prohibited the export of silver.  Thus, in an alarmingly short space of time five nations had practically demonetized gold, and others were threatening to do so, and the world was rapidly being taught that gold was the discredited metal, while silver was the stable and sound money.