This is a story of a 20 Kreuzer called KERVEGUEN that circulated in Reunion island
http://www.clicanoo.re/La-Reunion/L-histoire-de-la-Reunion/Temoins/la-saga-des-kerveguen-3-la-fumeuse.htmlThe saga of the Kerveguen family - part 3: the female smokerGabriel de Kerveguen, an enterprising business man had his own answer to the monetary crisis of the middle of the XIXe century resulting from the abolition of slavery: to solve the lack of coins, he imported and put in circulation 227 000 pieces of 20 kreutzers (or “zwangziger”) demonetized by the Habsburgs. Some 814 000 were retrieved...The abolition of slavery in 1848 raises problems for the Kerveguen family to pay the Indian hired to replace the thousand slaves on their fields. They refuse to be paid in banknotes or negotiable notes, in which they do not have confidence. They want to be paid in ringing currency, as they were used to in India. “These Indians, accustomed to the rupees of money of their country, showed themselves rather intransigent on the quality of the currency which one paid them”, wrote André Bernot, manager of the telegraph office, in his article “The case of the Kerveguen, or a very unforeseen incident during the monetary reform of 1879”.
However, there is not much money in the island. Because of the increase in sugar cane production, the Reunionnais produced less and less food and became increasingly dependent on imports. The hired hands want rice, rather than corn, and since there isn't any, it is necessary to import rice. But how? The heterogeneous mass of coins in circulation, will be exhausted or re-exported quickly, since the merchants of India accept neither letter of credit nor commercial drafts on the island of Reunion. As trade of Reunion with India, Madagascar and other countries of the region was one way, it causes a monetary imbalance in the colony. Monetary scarcity is cruelly felt in the “shops” and other commercial transactions.
At the beginning of 1859, Gabriel Coat De Kerveguen goes to Europe with an idea in his head, leaving quite precise instructions for his financial agent in the Reunion Privy Council, the stockbroker Armand Gamin, even before proposing a solution to the Privy Council of the colony. He has learned that the Austrians have withdrawn the kreutzer coins from circulation; they look much like the two French francs, but are thinner and have a lesser weight and silver content. He buys by weight 227 000 coins of 20 kreutzers (called “zwanziger”, from “zwanzig” = twenty) struck with the effigies of the kings and emperors of the Habsburg dynasty reigning between 1755 and 1848, in particular those of empress Maria-Theresa, of Josef II, Franz II and Ferdinand II. On their reverse is the bicephalous eagle surmounted by a crown, symbol of the Holy Roman Empire, the number 20 in a cartouche and the year. According to the
Bureau des longitudes, these coins weighed 6,682 grams and contained 57,2 % of silver, 42% copper and 0,8% gold. This small presence of gold is explained by an old and pious habit of believers which is to add a gold ring, cross, chain or medal in the molten metal of church bells. Actually, the weight of these kreutzers varied with the year: 6,315 grams in 1804 and 6,630 grams in 1845.
Accepting a done dealThe cases with these coins precede Gabriel and arrive at the Meeting in June 1859. The customs authorities let them pass without any problem, since they are goods of Mr. Gabriel. At the meeting of the Privy Council of the colony of July 11, 1859, Gamin presents the idea of his employer to make them circulate in the island. Faced with a done deal (the coins already there and are even presented to the Council), the majority of the worthy members do not appreciate this feat of ingenuity and express their violent disapproval, the more so since Mr. Gabriel is not present. Some underline, rightly, that such an authorization concerns the French State and not them. After a tumultuous meeting, Governor Darricau takes the responsibility, as there are guarantees “more than sufficient in the immense fortune of Mr. de Kerveguen”. Indeed, at the time, this fortune is estimated at more than thirty million goldfrancs. A considerable sum, when compared to that of Mrs. Desbassyns (who died in 1846) which at the same time was 1 600 000 francs but, and that, in metropolitan France, except perhaps for Mr. de Rothschild, nobody else had as much money!
On July 20, 1859, the director for Internal Affairs makes issues an announcement which authorizes the introduction of the coins into the island, without determining their value, giving them legal tender status or obliging the agents of the Treasury to accept them. The government of the island does not want to be implied deeper. Three days later, as if all had been foreseen, another announcement, this time of the company of Mr. Gabriel, appears in the newspapers. It informs the public that the coins have the value of their purchase price, i.e. a French franc. We will never know the real price paid in Austria. What we know from an assay is that their real value at the time of putting them in circulation did not exceed 86 centimes. Taking just this into account, the operation will have generated a benefit of 38 590 francs to the Kerveguen enterprise!
Overvalued piecesThe Austrian pieces were therefore overvalued by almost 20% in the island. On some coins, a letter “K” was struck in the reverse with a hammer, the only distinctive sign of the new currency. One should also note that by paying his Malabars, Bengalis and Telingas with his own currency, Kerveguen incited them to spend them in its own stores, where his money is most easily accepted. The Kerveguen coins were a very great success, at first in the South where the main part of the activities of the powerful family was concentrated, later in the rest of the island.
In July, Gabriel returned to Reunion to see how “his” currency was going and to propose other ambitious projects to mitigate the lack of money and to arrange the needs of foreign trade. He is quite controversial for the majority of the members of the Council, who still reproach him his done deal, so he returns almost immediately to France, to defend his ideas directly with the minister, and even the president.
Smart people with money (or the Kerveguens themselves?), realized that they could also make a profit of 20% by importing kreutzers and do it without the authorization of it of the Council. Twenty years after, in 1879, as many as 814 000 coins would circulate in the island! However, for the last six years, France applies a new monetary system in all its territory, except in Reunion, where a rather delicate special situation persists. After much hesitations, a decree is signed on April 2, 1879, which incorporates Reunion in the national system. To his amazement, the paymaster general of the Department of Bouches du Rhone, a Mr Imhaus, representing the Minister of Colonies got wind of the Kerveguen currency while on an official trip to the island to explain this reform. A decree taking effect on May 10 stipulates: the Kerveguen currency will have to be withdrawn from circulation within twenty day. The coins are immediately refused everywhere and depreciated quickly, causing scenes of panic and virulent demonstrations. The police begged the tradesmen to leave their shops open and to accept the kerveguens. The house of the agent of Gabriel is attacked by an angry crowd, which claims refunding. Certain speculators will exchange the coins for… 10 centimes. domestic trade is as good as stopped.
Paralysed EconomyThis has without any doubt a terrible blow to the savings of households, and, by extension, to that of the island. This period of uncertainty and distress was prolonged for almost two months by the protests of Kerveguen because of the large difference between the number of pieces he issued (227 000) and of those retrieved (814 000). Thus, during four months (from April at July 1879), the economy of Reunion was almost paralysed. Almost, because Spanish piastres, Indian rupees and other pagodas also circulated in the island.
Of course and logically, the Kerveguen family is responsible only for the number of pieces they issued, but the problem is complex: many colonists built small saving in kreutzers for a long time and at the price of great sacrifices. Not exchanging all of the coins in circulation would rob them of years of work and saving. In view of the impossibility to determine which smart people issued the surplus, the court of Saint-Pierre judges the Kerveguen family responsible for the existence of these coins in the island and requires them, in July 1879, to refund all in circulation. Of course, that causes the greatest protests on behalf of the family, which is obviously taken advantage of. In the end, it makes amends and scrupulously pays for all the coins brought back to the treasure of the Colony, but ill feelings remained with them forever. The affair has not undermined the financial stability of the Kerveguen family: they profited for twenty years of the circulation of their blessed kreutzers. In fact, it was morally justified that the affair should have given a serious blow to the heirs to Gabriel. Much more than this misfortune was necessary to knuckle them under. Kerveguen did wrong and came out the better in an industry where everything appeared well disposed to them. The economic bankruptcy of the island in the first years of the XXth century would separate the descendants of the great Gabriel from their fields after the First World War and make them return to France, where their business interests were more important than those they had in Reunion, even if their sixteen factories and properties in the island were worth… thirteen million goldfranc.
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The doubts of a collector: Michel Chung-Poo-Lun: “Much exaggerated” Collector Michel Chung-Poo-Lun does not believe that the number of “zwanziger” issued in the island amounts to 814 000. And he wonders what became all these pieces, since they are now impossible to find.In the Cartesian spirit, Michel Chung-Poo-Lun never believes hearsays. He believes only what can be proven. He reasons like no one else and is extremely wary of theories that lack evidence. Thus, the business of the kreutzers remains a puzzle for him: “The story says that more than 800 000 parts were put in circulation. Kerveguen disputed to have introduced such an enormous number of it. Despite that, he was condemned to exchange all those which circulated, although he agreed to do so (and that is logical!) for only the number which he had issued. And since he was obliged to exchange these, these pieces should have been returned to the State, right? What did the State do with them? 800000 pieces, that represents a total weight of almost 5 tons. That is not nothing! The story does not say what became of them, while they were supposedly held by tradesmen and private individuals.”
The collector also thinks that the number of 814 000 “does not correspond at all to reality. If so, you would still have found some. Because before the abolition of slavery, there were some 62 000 slaves (who were not paid) in the whole colony. (…) I own one of these kerveguens. My piece is counterstamped K which attests that it was put in circulation by Kerveguen. But there was not just one of them, there were many more! I repeat the question: what became of all the other ones?
In the more than fifty years that I am collector, no one has offered one of them, whereas I regularly receive offers for all kinds of other pieces, even those which are regarded as extremely sought after. And even in the few treasures discovered here and there, nobody to my knowledge found a kerveguen. All that tends to show that there was not as many as the story says. (…) Some people say they were molten. OK, but, by whom, for what? To my knowledge, Réunion did not strike new pieces with the metal of these kerveguens.
Not all pieces were offered to the Treasury: why does one finds all kinds of other coins and not those?” Michel Chung-Poo-Lun still asks other questions, to which it also does not find an answer: “How could Kerveguen, a private person, have dealt with a sovereign country like Austria? He cannot have dealt with private individuals for such a large number of pieces. Which private individuals would have kept so many demonetized pieces…? And then, didn't Austria need to melt them to issue other coins? (…) One does not know either how Kerveguen could leave Austria with something so heavy and also bulky. Austria is far from the sea. And it is not obvious either that the country had struck as many pieces, because, it had issued not only the 20 either kreutzer at face value. Another question: with what has Kerveguen paid the pieces he bought? That remains a puzzle, since you will not find the least bit of an answer to this question anywhere…”
The Kerveguen coins The catalogue of the first and only numismatic exposition in Réunion, now twenty years ago, evokes the Kerveguen coins. Jacky Rickebusch wrote: “To face the ongoing requirements for cash a convention of 1859 authorized lord Coat de K/Veguen to buy and put in circulation the demonetized Austrian coins of 20 kreutzers called zwanziger. The authorization was for 227 000 coins, but probably more were issued, as so many were retrieved... The initial operation was profitable because the pure silver weight, which varied from one year to another (of 1755 to 1848), represented at best 0,83 F. Nevertheless everyone accepted these coins for 1 F. But in 1879, a decree of April 2nd withdrew all the foreign coins which then circulated freely in France and in the colonies. Although this decree was intended to end monetary anarchy, it sowed public disorder. The kreutzers become useless and refused by the tradesmen who lost confidence and closed their shops. The people of modest means felt injured and took to the street. The representative of Mr. K/Veguen agreed to repurchase 227.000 of them. “To calm the situation, the governor changed his position and decided that the kreutzers will be accepted in receipt of tax. After stormy debates, the Conseil General agreed with the repurchase of the coins but they in turn held Coat de K/Veguen responsible; he was eventually condemned to refund the 800 000 coins paid for taxes. To replace the demonetized coins, French coins are introduced: 2 million gold louis, 1,5 million in silver coins of 5 F, 4/5 million small coins. The colonial Treasury, moreover, issued various notes of 50 centimes, 1 F and 2 F…”
