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Title: The History of Currency, 1252 to 1896

Author: William Arthur Shaw

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THE HISTORY OF CURRENCY

1252 TO 1896

BY W.A. SHAW

[1896]

Reprints of Economic Classics Augustus M. Kelley Publishers NEW YORK 1967

First Edition 1895 (London: Wilsons & Milne, 29 Paternoster Row, 1895)

Reprinted 1967 by AUGUSTUS M. KELLEY PUBLISHERS From Second Edition of 1896

Library of Congress Catalogue Card Number 67-20086

Printed in the United States of America by Sentry Press, New York, N.Y. 10019

THE HISTORY OF CURRENCY

1252 TO 1894

Being an Account of the Gold and Silver Moneys and Monetary Standards of Europe and America, together with an Examination of the effects of Currency and Exchange Phenomena on Commercial and National Progress and Well-being

BY W.A. SHAW, M.A.

LATE BERKELEY FELLOW OF THE OWENS COLLEGE FELLOW OF THE ROYAL HISTORICAL AND ROYAL STATISTICAL SOCIETIES

Second Edition

New York: G.P. PUTNAM'S SONS London: WILSONS & MILNE 1896

TO

RICHARD COPLEY CHRISTIE

THIS BOOK IS RESPECTFULLY DEDICATED IN MEMORY OF A FRIENDSHIP OF PECULIAR GRACE AND INSPIRATION

[Pg vii]

PREFACE

The purpose of this book is twofold—first and foremost, to illustrate a question of principle by the aid of historic test and application; secondly, to furnish for the use of historical students an elementary handbook of the currencies of the more important European states from the thirteenth century downwards.

Little need be said as to this latter purpose. The total omission of the historic, reasoned, and consecutive study of currency history—the most important domain of practical economics—from the curriculum of every university in the land is matter for surprise and regret, and can only be attributed to the lack of an initiative and of a handbook.

As to the former purpose, there is no field of history so strewn with scientific (i.e. comparative and prophetic) possibilities as economic history; and in economic history there is no department in which the study of the experience of other times and nations is more necessary and resultful, lesson-full, wisdom-full, than the domain of currency. The verdict of history[Pg viii] on the great problem of the nineteenth century—bimetallism—is clear and crushing and final, and against the evidence of history no gainsaying of theory ought for a moment to stand.

Throughout mediæval Europe and up to the close of the eighteenth century the currency of Europe was practically bimetallic—practically, because actually so without the prescription of a law of tender, and without the allowance of any theoretic grasp or conception of the practice as distinctively what nowadays we understand as bimetallic.

The conception of a law of tender is quite modern. And the evolution of the idea of such a law has gone hand in hand with the evolution of a conception of monetary theory on the part of the legislator—that is, with the bitter experience which for want of such a conception Europe endured for centuries. In all systems of jurisprudence money and minting appertains to the kingly office, and the development of the law of tender is to be traced in royal proclamations of the King in Council for long before it became the subject of parliamentary legislation. For centuries, such proclamations were issued, referring to a prohibition of export of the precious metals, banishing foreign coins from the land, or, again, permitting their circulation, and, in that case, prescribing the rough tariff or rate according to which (foreign) coin for (native) coin they should be current. In such proclamations there is no idea of separating the two metals, gold and[Pg ix] silver; there is no idea of a law of tender; there is no intention to declare a ratio; there is no conception of bullion apart from coin. The two metals had grown to be the circulating and exchange medium; they were actually there, and all that had to be done was to keep them there. The advantage which was to be derived from a trade in bullion, and from an understanding of the effects of differently-prevailing ratios in different countries, was known only to the Jew and the Italian. They plied their trade in secret, and the legislator was only apprised of the result by suddenly finding a slipping away and dearth of coinage. Then the legislator altered the tariff, and gradually rose to the conception of the ratio as underlying this process of seduction. Then, as a further defence of a particular class of coins, he imposed a limitation on the tender of such, so as to prevent bullion operations on it. This limitation was the first development of a law of tender. Throughout, from the thirteenth to the eighteenth century, both gold and silver had been actually employed in European commerce without any idea either of declaring or of restricting the tender, whether of the one or the other.

The final outcome of the application of the law of tender was the development of the modern monometallic system—a system in which alone lay the safeguard against the operation of the bullionist. It was only at the close of the eighteenth century that England evolved this system and flung away the[Pg x] last remains of that mediæval ignorance which had brought with it such a dower of mishap. France has taken almost a century of further experience before arriving at the same point of development.

Another point. At the time that England was shaking off the mediæval system France, too, was accomplishing a reform of her money system. It stopped half-way. The old kingly prerogative of altering the coinage was taken away, the unit of the currency was declared definite and unchangeable, and the seigniorage on minting was abolished. So much was accomplished by her law of 1803. But no further application was made of the law of tender than to throw the sanction of legal enactment over that mediæval system which had been the bane of France since first two metals found circulation in her bounds. As far as tender is concerned, there is no difference between the practice of the French monetary system in 1726 and that of 1803. The system was bimetallic in both cases—in the first case, legally by recognition and as resting on the royal jurisdiction; in the second case, legally by direct legislative or parliamentary enactment. The idea that the law of 1803 created a new system and a new heaven for France is doubly absurd. It was a continuation of a very old and a very danger-fraught system, with its roots deep in mediæval ignorance and practice.

In addition to this—and quite as demonstrably—there was no conception of a theory of bimetallism in[Pg xi] 1803, nor any conception of a bimetallic function to be performed for the good of the human race by bimetallic France. This is a conception of the schools, and bred of later needs and hopes and fears. The modern theory of bimetallism is almost the only instance in history of a theory growing not out of practice, but of the failure of practice; resting not on data verified, but on data falsified and censure-marked. No words can be too strong of condemnation for the theorising of the bimetallist who, by sheer imaginings, tries to justify theoretically what has failed in five centuries of history, and to expound theoretically what has proved itself incapable of solution save by cutting and casting away.

Such a verdict as this of history, negative as it is, must strike many a serious mind with dismay. The following of bimetallism would not be what it is were it not for the despair of any other remedy for the situation at the moment. We are thereby left apparently hopeless and remediless. But the first step to the discovery of a true and possible remedy, if any exists, can only be the casting away of the false and impossible.

The difference between the monetary problem of the seventeenth century and that of to-day lies in this, that while there has been continuity of history and development there has been a change of needs and circumstance. The danger of arbitrage transactions to the mediæval legislator lay in the fact that they stripped the country, which suffered from them,[Pg xii] not, or not merely, of a bullion reserve, but of her actual currency, and rendered even internal trade impossible. He accordingly tried to arrest the drain by threatening imprisonment and death.

To-day the safety and supply of the internal currency of the various states is provided for by a monometallic system or by note issue, while, conversely, trade in the precious metals has become free, and bullion flows automatically from land to land in accordance with the dictates of a now rightly-conceived theory of international trade. Just so far the monetary problem has changed—becoming a question of the evolution of a stable international exchange system. The theoretic pretensions of bimetallism have correspondingly widened, but on any ground, wide or narrow, the only material for the study, comprehension, and judgment of such pretensions lies in the actual experience of Europe during the past five centuries.

A few words of more particular explanation are necessary.

1. To the student of money and monetary standards the perpetually recurring phenomena of reductions of the unit and standard weights and contents of coins will present no difficulty. Three causes underlay the process—(1) the practice of alloying, (2) the competitive and dishonest action of governments, (3) the ideal nature of the unit itself, which permitted, literally, anything in the way of arbitrary manipulation (compare, e.g., the very[Pg xiii] different depreciations of the English shilling and the French sou, being both descendants of the solidus; or again, of the French livre and the Italian lire, being both descendants of the libra).

2. A second and much greater difficulty is presented by the confusion of nomenclature. It is often difficult to determine what particular piece is meant by a given name, or, if the identity of the piece can be fixed, its period may still be uncertain. In French numismatic history, for instance, the term florin d'or or denier d'or is used in documents quite generically for the more specific florins d'or à l'agnel, à l'écu, aux fleurs de lis, à la masse, moutons d'or, etc. This quite indeterminate use of the word "florin" (= denier = "piece," or generally, "coin") may possibly explain the crux to be found on pages 3, 9, 301, and 399 of the text (infra), where florins d'or are mentioned in French history more than seventy years before the first authentic minting of the gold florin at Florence.

3. With regard to the figures of the ratios there is great difference and divergence among the various authorities. The declared ratio may be of a double nature—(1) mercantile, as calculated on the purchase price of gold and silver in the open market; (2) legal, as settled by law in the terms prescribed for Mint purchase and issue. The former is comparatively simple, but it is not until a quite recent date, the opening of the eighteenth century, that it is statistically determinable. The table of the commercial[Pg xiv] ratio (pp. 157-9 infra) is taken from Soetbeer, and was by him calculated on the Hamburg exchange and London market rates. The competing figures of the commercial ratio drawn up by Ingham in his Report to the Senate of the United States (4th May 1830), and by John White, of the same date (see United States Report of the International Monetary Conference of 1878, pp. 583, 647), I regard as comparatively untrustworthy.

With regard to the legal or Mint ratio (see infra, tables, pp. 40, 69-70, 157) there is the greatest discrepancy, and I print the figures with much trepidation and every mental reserve. The differences in the results arrived at by the various authorities are due to the difference in method of calculation, according as the issue price or the purchase price at the Mint is taken (i.e. with or without allowance of seigniorage and remedy), or according as the pure or gross content of the piece is calculated from (i.e. with or without allowance for alloy). As a matter of fact, hardly any two authorities or sets of calculations agree. See, for instance, duplicate sets of figures for Holland in Appendix 1. to Schimmel's Geschiedkundig overzicht; or again, compare Soetbeer's figures with those deduced by Köhler in his Grundliche Nachricht; or by Dr. Arnold Luschin, in the Proceedings of the Congrés International de Numismatique, 1880, p. 443; or with those deducible from Le Blanc's tables (infra, Appendix VI.). It is to this difference that must be attributed the discrepancy[Pg xv] in the statement of the ratio by the French Mint authorities in 1640 (see text, infra, p. 92 and note, ibid.). The difficulty of calculating the European Mint ratio at any moment can be judged from the experience and statements of persons so widely apart as Sir Isaac Newton in England, Mirabeau and Calonne in France, and Morris and Hamilton in the United States (see infra, pp. 172-3, 229-30, and 251).

With regard to the scope of the present work, it is confined entirely to the history of metallic currency and standard. There is no reference to the paper-money experience of any country, not even America or Austria. Such a subject must form matter for a separate treatment. The account of Austrian money is, therefore, to be found in Appendix v., under Germany, and on the effects of the latest Austrian reform (as also of the latest development in India and the United States) no opinion whatever is expressed. I content myself with the simple statement of fact and event.

In appending a list of the authorities used, it is difficult to overcome the feeling of humiliation which has come to me from the contrast of the ephemeral, slight, and unworthy treatment of monetary history to-day, with the grand, solid, scholarly works which the eighteenth century produced. With the exception of Soetbeer's magnificent labours, without which the present work would have been simply impossible as far as the statements of production and relativity of[Pg xvi] the precious metals are concerned, and of the similar historic work of M. Ottomar Haupt, the literature of this subject to-day is light and polemic and transitory to a nauseating degree.

GENERAL

Authorities.

GERMANY

Authorities.

[Pg xxi]

FRANCE

Authorities.

ITALY

Authorities.

NETHERLANDS

Authorities.

[Pg xxvi]

SPAIN

Authorities.

ENGLAND AND AMERICA

Of the almost endless series of Government Reports, a full bibliography will be found in Soetbeer's Litteraturnachweis.

The American Mint Reports, and the Austrian Statistische Tabellen zur Wahrungs-Frage der Osterreichisch-ungarischen Monarchie (Vienna, 1892), deserve separate and special mention for their unequalled usefulness.

I am deeply indebted to H.C. Maxwell Lyte, C.B., Deputy Keeper of the Records, for references to the Patent and Close Rolls, the Exchequer Records, and other sources, which I have attempted to work into the tables of the French coins (Appendix VI.).

The Index of Coins at the end of the present volume is intended mainly for the purposes of historical research. It has been compiled, along with the General Index, entirely by my sister, Miss Edna Shaw, to whom my warmest thanks are due.[Pg xxix]

CONTENTS

CHAPTER I

From the Commencement of Gold Coinages to the Discovery of America, 1252-1492

Recommencement of gold coinages in Europe, 1; in Italy, 3; Germany, 6; France, 9; Flanders, 10; Holland, Spain, and England, 11; characteristics of the first period, 13; general depreciation of the standard, 15; monetary experience of Italy, 17; the Florentine troubles, 18; monetary experience of Spain, 23; the Cortes of Valladolid, 24; monetary experience of Germany, 25; the Mint conventions, 26; tables of the groschen and gulden, 30, 31; monetary experience of France, 31; arbitrary debasements, 32; course of the monies under Philippe de Valois, 35; the States-General of France, 1420, 37; Charles VII., 38; Louis XI. and Charles VIII., 39; general statement of the ratio, 40; monetary experience of England, 41; Edward III.'s issues of gold, 42; the measures of, 1353, 45; complaints of 1381, and the monetary investigation, 50; recoinage of 1414, 55; recoinage of Henry VI., 58.

CHAPTER II

From the Discovery of America to the End of the First Cycle of the Influence of the Metals of the New World on European Currencies, 1493-1660

General characteristics: First movement of metals from the New World, 61; mercantile importance of the Netherlands, 63; statistics of the production of the precious metals, 65; statement of the Mint ratio, 69; operation of the Netherlands plakkaats, 71; list of ditto, 76; tables of ditto, 79; monetary experience of France, 83; course of the monies under Henry II. and Charles IX., 84; the States-General of 1575, 87; Henry III.'s reform of 1577, 88; checked by Henry IV., 1602, 89; the monetary experience of 1614, and reform of 1615, 90; recoinage of 1640, 91; Florence, 93; Germany, 95; table of the groschen and gulden, 97; Imperial Mint Ordinances of 1524, 1551, and 1559, 98, 99; Mint disorders, 100; Kipper und Wipper Zeit, 102; Imperial basis of [Pg xxx] 1623, 106; Spain, 107; her function as a distributor, 108; England 113; tables of gold and silver coins, 113; recoinage of 1527, 118; export of 1537, 119; measures of 1544, 121; the Tudor debasement, 123; Elizabeth's recoinage, 1559, 129; the mistake of 1600, remedied by James I., 132; export of 1607 and 1611, Sir Walter Raleigh's opinions, 134; crisis of 1620-22, 139; the State prosecutions of 1638, 148; the troubles of 1649 and 1652, 151.

CHAPTER III

From the End of the First Cycle of American Influences to the Present Day, 1660-1894

Statistics of the production of the precious metals, 154; statement of the ratio, 157; development of theory of international trade, 160; free trade in the precious metals, 163; place of discount and interest rates in the modern system, 165; monetary experience of France, 167; recoinages of 1689, 1726, and 1785, 168; Calonne's ratio, 172; monetary action of Republican France, 173; the law of 1803, 176; bimetallic experiences, 1803-76, 179; movements and mintings of the metals, 183; measures of 1835, 187; French monetary commissions, 188; formation of the Latin Union, 190; its history, 193; Germany, 197; Zinnaische standard, 199; Leipzig standard, 1690, 200; Austrian or Convention standard, 201; South German standard, 202; Prussian standard, 203; Conference of Munich, 1837, 204; Mint conventions of Dresden, 1838, and of Vienna, 1857, 205-212; agitation of 1857-70, 213; new Imperial system, 215; England, 219; recoinage of 1696, 222; Newton's report, 1717, 229; recoinage of 1774, 233; silver legislation, 237; Bank Restriction and the Act of 1816, 240; movements and mintings of the metals, 244; United States, 246; beginnings of a national system, 247; reports of Morris and Hamilton, 249-251; Act of 1792, 253; gold export and the law of 1834, 255; silver export and the law of 1853 and 1873, 259; Acts of 1878, 1890, and 1893, 262; movements and mintings of the metals, 265; Netherlands, 268; Portugal, 272; the international conferences, 274; Paris conferences of 1867, 1878, and 1881, 275-280; Brussels Conference of 1892, 285; India, 293; her historic function, 293; movements and mintings of the metals, 299.

APPENDICES

THE HISTORY OF CURRENCY

[Pg 1]

CHAPTER I

From the Commencement of Gold Coinages to the Discovery of America, 1252-1492

The monetary history of Europe begins in the thirteenth century, and in the Italian peninsula. Its starting-point is the era of the reintroduction of gold into the coinages of the Western nations, and is definitely marked for us by the minting of the gold florin of Florence in 1252. For all practical purposes gold had gone out of use since the seventh century, and after the submersion of the Roman Empire; and the currencies of the nations of mediæval Europe rested on a silver basis entirely. There are limitations to the truth of this statement, but they are of such a nature as not materially to affect it. In Spain, for instance, the Moors kept up a tradition of gold coinage similar to that of Rome, from the eighth to the middle of the thirteenth century. But its influence on the monetary system of Christian Spain is[Pg 2] not even a matter of question. At the other extremity of the Mediterranean, at Byzantium, seat of the Eastern Empire, the best traditions of the coinage system of Rome were preserved for centuries after the imperial city had fallen before the invasions of the northern barbarians. Indeed, the monetary system of the Eastern empire, by becoming, as it did, the model which Charlemagne copied in his currency enactments, became the basis of all the modern European systems. Further than this, the presence of gold Byzants can be traced here and there, at isolated points and dates, all over the darkness of those early centuries of the Middle Ages, when all coining art seemed forgotten among the races of Central Europe.

Notwithstanding such limitations, however, it still remains true that the monetary history of the modern world dates from the thirteenth and not the seventh century, and from the little commercial states of Italy rather than from Byzantium. Previous to the minting of the gold florin of Florence there is no trace of any independent minting of gold coins on a commercial scale by any state of mediæval central Europe. The currency system of England, for instance, from the time of the Saxons to the days of Henry III. was based entirely on silver. In endless variety and under a diversity of names the silver penny was the unit coin current of the realm. Its equivalent in the Frankish Empire was the silver denarius, which Charlemagne had made the unit of his system, and which so con[Pg 3]tinued for both the kingdom of France and the Holy Roman Empire till the fourteenth century. Finally, among the numerous states of Italy, with each their little independent Mint, there is no trace of the coinage of gold until the days of the commercial greatness of Florence and Venice. For eight centuries or more those races of Europe, which were to turn the course of the modern world and build its civilisation anew, were ignorant of the commercial use of what has been through all history the most potent factor in civilisation—gold.

The explanation of the reintroduction and recoinage of gold is to be found in the history of the Crusades and of the commercial growth of the petty independent states which sprang from the political confusion of Italy. No sooner had they achieved each their little autonomous existence than they threw themselves with feverish energy into the development of the trade with the East. Florence and Venice, Pisa and Genoa, led the way and reaped the fruits; and it was in her most flourishing time, when she had conquered her rivals, Pisa and Siena, and was enjoying a prosperous peace and active trade, that Florence, at the instance of the chief of her merchants, resolved on the coining of the gold florin (1252).[1]

The mere idea of such a gold coinage could only[Pg 4] be derived from the East—from Byzantium. But it is a curious fact that the importation of it should be due in the first place to the Crusades. Frederick II. of Sicily was elected Emperor of the Holy Roman Empire in 1212. Sixteen years later he headed the Fifth Crusade, and the gold coin (Augustale) which he issued some time between his return from that crusade and his death, probably commemorates his wish to rival the appearance of opulence of the Eastern court. This Sicilian coin is the direct ancestor of the florin of Florence, and to it would fitly belong the honour of leading in a new era, were it not that the superior beauty of the Florentine coin gave it universal currency and reputation, and extinguished the memory of its predecessor.

The gold coin of Genoa (Genoviva) is supposed to have issued in the same year as the florin (1252). Five years later (1257) Henry III. of England imitated the florin in his gold pennies, and more than thirty years (31st October 1284) later Venice followed the lead of Florence and instituted a coinage of gold zecchinos, under the dogeship of Giovanni Dandolo.

Two conditions were essential to the bringing about so momentous a revolution as this, however little the mind of contemporaries may have known it as such. In the first place, the foreign trade of the Italian republics must have become so extensive as to demand a currency medium of higher denomination than silver; and, secondly, that trade must have developed in such directions as to tap gold-using or[Pg 5] gold-bearing regions in order to supply the Italian mints. It is a curious fact that both these conditions were realised through the instrumentality of the Crusades. The quickening effect of these vast movements on the trade of the Mediterranean is well known, but their influence in the second direction has not hitherto been pointed out. In the Fourth Crusade Venice lent the force which captured Byzantium (1203), and when, by her arms, Baldwin, Count of Flanders, had been seated on the Eastern throne, Venice reaped her reward in three-eighths of the territories of the Eastern Empire. She received Peloponnesus and a chain of islands in the Ægean, and by the hold she had on Constantinople secured the virtual control of the Black Sea. In its turn the control of the Black Sea brought with it the monopoly of the overland trade with India.

At one and the same moment, therefore, Venice acquired possession of a huge treasure of gold wrested from the conquered city, and of the then only gold-yielding districts—the Crimea—and of an intercolonial trade, demanding a more enhanced currency medium. The result of such a combination of circumstances was irresistible. During the continuance of the "Latin Empire" at Byzantium, Venice and her sister state were practically the only merchants of Europe.

The institution of a gold coinage among the Italian republics, therefore, marks for us an era of commercial expansion which is only fitly to be[Pg 6] compared with that of Holland in the seventeenth century, or of our own country in modern times.

We are not concerned with tracing the effects of this extraordinary movement further than as they bore in their train the dower of a currency of gold.

In the European system, Venice was the intermediary between the spice-laden east and the wool-bearing north. England, the wool-growing country of fourteenth-century Europe; Flanders, the home of the weaving industry; the Hanse Towns of Germany and the gradually forming kingdom of France were successively brought face to face with the new medium of currency; and if the story of the gradual adoption of that new medium could be written, it would form one of the most instructive of all chapters of currency and commercial history.

As it is, we have only uncertain and scattered data.

In the case of Germany—of chief importance in the process by reason of her geographical position midway between the Mediterranean and the north—the first minting of gold in imitation of the Italian states fell in the second quarter of the fourteenth century. Of the two types of gold monies issued by the Emperor Louis IV., surnamed "Bavarian," the first, struck some short time before 1328, was in direct imitation of the florin of Florence. The second, struck some little time later, was a copy of the écu d'or of Philip VI. of France.

In 1337 our own King Edward was made vicar-general and lieutenant to the Emperor, with powers[Pg 7] to coin monies of gold and silver. He accordingly kept his winter at the Castle of Louvain, and caused great sums of money both of gold and silver to be coined at Antwerp. Two years later, this same Emperor Louis, the Bavarian, granted to the Duke Rainhold of Gueldres the right to mint gold coins, "after the valuation of the gold monies of the Archbishop of Cologne, the Duke of Brabant, and the Counts of Hainault and Holland." In the following year he granted to the free state of Lübeck a similar right—the patent expressly stipulating that their gold coins should not exceed in weight or value the gold florin of Florence.

Sixteen years later (1356) the general liberty of coining gold was conceded to the seven Electoral Princes by the Golden Bull of the Emperor Charles IV., and subsequently state after state and free town after free town purchased or were granted the right. Even as late as 1372, in the patent granting to Frederick of Nürnberg this so eagerly solicited liberty, the stipulation is made that the gold gulden to be coined should be of as good gold and weight as "the gulden or florin of Florence."

In the case of Lübeck direct documentary evidence of transactions relating to the introduction of a gold coinage has survived among the archives of that state. The privilege of a Mint and of coining (of silver) was first granted to Lübeck by Frederick II. in 1226. But it was not until a century and more later that Louis the Bavarian, by his bull of 28th November[Pg 8] 1340, conceded the right of coining gold "in pieces which were to be neither heavier nor of higher worth than the florin of Florence." On the 8th September in the following year the Lübeck Mint made its first purchase of gold from a certain Jacob Grell of Zütphen in Holland. The purchase consisted of 4 marks 1 loth 8 pfen. weight of gold (Lübeck weight), and the price paid was 24 solidi the carat. In other parcels, up to Michaelmas of 1341, the authorities remitted to the Mint a total weight of metal of 50 marks 2 oz. 3 1⁄2 ang., varying in fineness from 15 to 23 carats. The consignment yielded in the pot 46 marks 1 oz. 7 ang. of pure metal, and was coined into 3199 pieces of a total weight of 47 marks 5 oz. 10 ang., being 67.08 gold pieces to the Lübeck mark. The coins were issued on the 18th February 1342, and bore on the one side the lily of Florence and on the other the figure of John the Baptist—all in direct imitation of the florin. The total issues made in the immediately succeeding years from the Lübeck Mint were:—

With more or less irregularity the earliest German guldens imitated the florin, and maintained something like a steady and uniform denomination quite up to the beginning of the last quarter of the fourteenth century.[Pg 9]

In France, as in Germany, the first coining of gold can only be dated approximately, but for all practical purposes quite safely. The generally accepted view is that the French series of gold coins was initiated in 1254 by Louis IX., "St. Louis," and that the issue was connected with the Sixth Crusade which he had headed five years before. There is documentary evidence extant to disprove this. Florins d'or appelez Florences are mentioned as early as 1180, not vaguely but quite definitely with an exact statement of weight standard and equivalence. Unless the record of the first minting of the gold florin at Florence is untrustworthy the coin here referred to can only be an imitation in gold of the silver florin of Florence. The same document which contains this reference (De Saulcy, i. 115) also specifies petits royaux d'or as minted not only in 1180 by Philip Augustus, but also in the days of his father, Louis VII. Similar mention of at least two gold coins of Louis IX. occurs as early as 1226, one evidently of the florin type, the other a pavillon d'or. It is quite safe to assert, however, that these coins were for show merely, due to an emulation of Byzantine and Italian opulence, and indicate no wide or commercial employment of gold. Of the gold florins of 1226, for instance, thirteen pieces were struck, twelve for twelve peers of France as a gift, the thirteenth for the King himself, "and know you that this is the most beautiful money that can be found, and the finest and best engraved." The interest of such issues is entirely numismatic and not[Pg 10] commercial or monetary.[2] It is not until late in the reign of St. Louis—until 1265 or thereabouts—that there is mention in France of any such gold coinage as could have this commercial rather than merely numismatic importance. For the purposes of metallic or currency history proper the real starting-point for France is marked rather by the gros royaux d'or, coined in 1295 by Philip le Bel, than by the more meagre coinage of St. Louis and his predecessors. The gros royaux of Philip were double the value of the petits royaux of St. Louis, of which latter Philip le Bel speaks thus in his proclamation. "We have commanded to be made in our name money of gold after the petits royaux d'or, which shall be 70 to the Paris mark and cut as the petits royaux have been used to be, being issued at an equivalence of 11 sols Parisi." From this date (1295) onward the gold coinage of the French Mint became one of the most important factors in the monetary history of Europe.

In Flanders the first gold coins were struck in 1357, under the rule of Count Louis II.[3] Both the coins issued by him are copied directly from French types——his real au lion from the French écu of Philip IV., and his mouton d'or from the French coin of the same name. And it was the same[Pg 11] French original which furnished the types to William V., Count of Holland (1356-77), when he followed the fashion and coined gold. Of the six types minted by Count William during his reign, two are an imitation of the French mouton, and the last is derived from the universally prevailing type, the florin.

In Spain the first coining of gold by the Christian powers fell in the same epoch and derived from the same source. Alfonso XI. (1312-50), surnamed the "Noble," was the first King of Castille who coined the oro gran modulo (doblas de oro), while in Aragon Pedro IV. (1336-87), "the Ceremonious," in his oro florines directly imitated the Florentine type, though his later pieces are more original in design.

Finally, with regard to England,—to whose monetary history a central importance attaches,—the course of events was most evidently controlled by the revolution in the continental currencies. It is, at the same time, comparatively easy to ascertain. The first of our kings to issue gold coins was Henry III., who in 1257 coined a penny of fine gold, of the weight of two silver pennies of the time, and ordered it to be current for twenty pence.

There can be no doubt that the idea of such a coinage was derived from that of St. Louis of France; and, just as in France, the issue seems to have been premature. Probably neither in the one country nor the other did there exist a sufficient store of the precious metal itself, nor sufficient activity of trade to attract such a store, or[Pg 12] indeed to make a gold coinage at all a matter of mercantile advantage. It is only a developed and active or considerable trade that demands so enhanced a medium of exchange. Accordingly, just as in France, there is a noticeable gap between the first actual minting of gold by the predecessors of St. Louis, and the minting of it in such quantities as to make a factor in commercial and monetary history, in the days of Philip le Bel (1295); so, in England, the first issue of Henry III. was followed by an interval of nearly ninety years, during which no coinage of gold by our kings took place. The real introducer of this metal into English currency and commerce was Edward III., and the first practical issue of it is to be dated in 1344, rather than 1257. It will be seen at a glance what this statement implies. The issue of Henry III. in 1257 had been premature—an act of kingly rivalry and show, rather than of commercial necessity. But the succeeding century saw a rapid development in the commerce of Northern Europe, and a gold coinage had gradually become both a possibility and a necessity. One after the other—in the order of time just detailed—the various commercial states with which England had intercourse had adopted it and profited by it. That England should follow in the movement scarcely more than sixteen years later than Germany, and a year or two before Flanders, is some evidence of the organisation of her trade, as well as of the intimacy of inter-commercial relationships. So[Pg 13] purely a matter of trade and natural growth was this vast movement of the adoption of a gold coinage—a revolution indeed as it proved, though yet unwritten, more momentous in its influence on European civilisation than either the Renaissance or the Reformation.

Approximately, therefore, the fourteenth century may be taken as the starting-point for a history of European bimetallism. The first period of that history embraces all the movements of the previous metals, from such starting-point up to the discovery of America in 1492—a matter of two centuries, roughly speaking.

The characteristics of this period are perfectly well defined, and repeat themselves with almost faithful and exact similarity of recurrence in the several states comprising the Europe of that date. In brief, such characteristics were those of—(1) a period of commercial expanse, necessitating an increasing currency and advancing prices; (2) a period of stationary production of the precious metals, necessitating a struggle among the various states for the possession of those metals; (3) a period of endless change in the ratio between gold and silver, necessitating continual revision of the rate of exchange. Broadly speaking, those characteristics fall into two classes, accordingly as they relate to—(1) the natural movement of prices i.e. having regard merely to the supply of the precious metals; (2) to the unnatural struggle for the metals themselves—for the material[Pg 14] for currency—due to international rivalry and bad or crafty legislation.

With regard to the former of these, the period was distinctly one of insufficient and relatively diminishing production of the metals. During these two centuries, 1300-1500, the main sources of the derivation of gold were the Eastern trade and the finds on the eastern shores and northern interior of Africa. The chief supply of silver came from the mines in Germany. These latter—in Hungary, Transylvania, Saxony, and Bohemia—were of such importance and activity, in the fifteenth century and towards the time of the discovery of America, as partially to keep pace with the general trade expanse of the time, thereby helping to arrest a fall of prices that would have been absolutely disastrous to the civilisation of Europe. The combined production during this period cannot even be conjectured. At the close of it—during the reign of Henry VII.—the total coinage of England, both silver and gold, did not probably exceed £3,000,000, while the total stock of both metals in Europe in 1492 has been estimated at no more than £33,400,000. These figures stand alone, for we have no idea of the extent of the commerce which was worked on so small a monetary basis, and very little idea of the amount of aid which was extended to metallic money by such expedients as bills of exchange. To estimate, therefore, whether the period was one of depreciating, stationary, or appreciating currency, we are[Pg 15] reduced to the testimony of prices and the Mint records.

In France, at the beginning of the period (in 1308), the mark of gold was coined into 44 livres, and the mark of silver into 2 livres 19 sols. At the close of the period, or towards it, in 1475, the mark of gold was coined into 118 livres 10 sols, and that of silver into 10 livres.

In Germany the mark of gold was coined into 66 gulden of 23 carats in 1386, and into 71-1⁄3 gulden of 18 1⁄2 carats in 1495—a depreciation of 34.36 per cent. In Spain the mark of silver was coined into 130 maravedis in the year 1312, and into 2210 maravedis in 1474. This latter case is, however, so inextricably complicated with considerations of mere, i.e. arbitrary, debasement, as to render it useless for any estimation of the natural appreciation of the metals. In England our earliest gold coin weighed 128 4⁄7 grains, and was tariffed at 6s. 8d. In 1489, 80 grains of gold were equivalent to the same, 6s. 8d.—a reduction of 37.94 per cent. Within the same period the weight of the silver penny sank from 22 to 12 troy grains, a reduction of 45.45 per cent. Eliminating cases of arbitrary debasement, a rough average for the period might fairly give 40 per cent. of depreciation through the two centuries.

The case need hardly be laboured statistically, for the legislative history of all the countries forming the circle of commercial Europe in the fourteenth and fifteenth centuries witnesses this general downward[Pg 16] movement—this appreciation and restriction of currency—in grim and unmistakable manner; and it is the expression of this general movement in their legislations that gives the test and measure of the earliest bimetallic troubles of Europe. In many ways the problem before the various Governments was a more difficult one than that which besets the modern world. There was, for instance, nothing like an equal and generally recognised ratio of value between gold and silver prevailing at any one single point of time. At one and the same date a ratio of 7 or 8 to 1 prevailed in the Moorish parts of Spain, and 12 to 1 in the Christian parts (the kingdom of Castile). Similarly, at a later period, in 1474, the ratio in England was 11.15, in Germany 11.12, and in France 11.00, in Italy 10.58, and in Spain 9.82.

The natural result of such a state of chaos, if it had been permitted to work itself out unhindered, would have been arbitrage transactions of such a nature—a flux and reflux of the European currencies so perpetual—as would have induced a yearly and universal bankruptcy. In spite of frantic efforts on the part of ruler after ruler, such results did partially come about, and they sufficiently account both for the distraction of Governments and the hatred universally visited upon the Jew in the Middle Ages. The measures which were adopted by the various States to counteract this invisible, insidious, and wasting process, partake of the roughness and unscientific character of the age. The export of gold[Pg 17] and silver was forbidden on pain of death; and it was no mere paper threat, for prominent London merchants were drawn and quartered for the offence. The rates of exchange of foreign coins were fixed by proclamation, and the office of exchanger limited to a particular place. When all this proved ineffectual, the coins were cried down, and violent and sudden changes in the ratio enacted. What made the jerk and friction of such a process worse was that such measures were not merely defensive, but intentionally offensive. The wish of the fourteenth and fifteenth century ruler was not merely to defend his own stock of precious metals from depletion, but—having gained the conviction of the insufficiency of the production of those metals for the needs of Europe—to attract to himself the stock of his neighbours by whatever craft. There was a general struggle for the coverlid of gold, and the methods of that struggle were almost barbaric in their rudeness, violence, craft, and dishonourableness.

Italy.

On account of their knowledge and practice of the science of exchanges and finance, the metallic history of the Italian states is of chief importance for this earliest period. At a time when the northern nations show signs of an infancy of commerce merely, Italy was advanced in the art and practice of a most highly developed commercial and financial state. It is to her that we owe our system of book-keeping and[Pg 18] the use of bills of exchange, not to speak of the pawnbroking and funding systems; and it is permissible to conjecture that Italy, keeping her finger as she did on the monetary pulsations of Europe, reaped her harvest, and far the largest harvest, from the bimetallic fluctuations of the fourteenth and fifteenth centuries. In their turn those fluctuations acted on herself, and occasionally disastrously. On account of their pre-eminence as the commercial states of the peninsula, Florence and Venice are chosen to illustrate in brief the monetary history of Italy. The account of the general course of depreciation in both these states, and of the fluctuations of Mint rates is given in the Appendix (Nos. I. and II.). As regards the bimetallic influence of these changes of rates, there is one telling record in the history of Florence.

The second quarter of the fourteenth century witnessed a decided rise in the value of silver as against gold. It told immediately upon Florence, on account of her Mint rates. By the regulation of 1324 the ratio in Florence was 13.62, whereas in France the ratio was approximately 12.6, and twenty years later, 1344, hardly more than 11 in both France and England. The result on Florence was immediate, and silver disappeared from circulation. In 1345, says her historian, Villani, there was great scarcity. There was no silver money with the exception of the quattrini. It was all melted down and transported. Silver of the alloy of 11 1⁄2 oz. fine was worth in other parts out of Florence more than 12 lire a fiorino,[Pg 19] whence arose great discontent to the woollen merchants, who feared that the gold florin, in which they received their foreign payments, should fall too much. Being a powerful factor in the little state, they agitated, and the recoinage of 1345 was the result. The precedent evil and the remedy applied by this recoinage may be thus illustrated:—

By law—

The silver species current in Florence in 1345 were quattrini and Guelfi del fiore. These coins were of the same standard as above (11 1⁄2 oz.), were coined at a tale of 167 to the libbra, and issued at an equivalence of 30 piccioli. The libbra of this silver, therefore, by Florentine Mint rate was valued at 20 lire 17 soldi 6 denari di piccioli. Abroad, therefore, the price of silver was a matter of slightly more than 5 lire higher than in Florence.

The same result could be got by taking the billon money of Florence and calculating from its silver contents.[Pg 20]

The natural result was a disappearance of silver. The only remedy was a recoinage, and this was applied by the law of 19th August 1345. By this law the standard of 11 1⁄2 oz. was retained, the tale of the Grossi was increased to 134 pieces to the libbra (132 being rendered to the merchant, and 2 retained for Mint expenses), and each piece issued at an equivalence of 4 soldi.

4 x 132 = 528 soldi.
(= 26 lire 8 soldi di piccioli.)

It will be seen at a glance that this equalised the internal and external price of silver.

Rather strangely this enactment of the 19th of August was followed by another no more than four days later (23rd August 1345), by which a slight reactionary change was made in favour of silver. The tale was decreased from 134 to 132 pieces, to be struck from the libbra of the same standard, and issuable at the same equivalence.

Slight as the backward change was, it was sufficient to leave the monetary system exposed to the same influence of differential exchanging, and within two months it had to be repealed by the law of October 1345. Under the name of Nuovi Guelfi a fresh coin was thereby instituted of the same standard and equivalence as above, but at a tale of 142 per libbra (140 being rendered back to the merchant, and 2 retained for expenses of coinage).

140 x 4 = 560 piccioli.
(= 28 lire di piccioli.)
[Pg 21]

This established a considerable advantage, and turned the flow of silver back again to Florence.

The process might in many respects be compared to our raising of the bank rate, were it not that the two operations represent quite different and separated financial epochs. It is noteworthy, too, because the process will be found immediately imitated in both France and England, that these laws of 1345 represent preponderatingly the sense of the class of exchangers of Florence,—i.e. the financiers professed,—men who would profit individually in their exchange operations as much as the state would in its restored currency of silver. "The above lords," says the preamble to the first-cited Act, "considering the numerous petitions made to them by many artificers, merchants, and honourable citizens, of the incredible lack of silver money in the state of Florence, on account of which the citizens of the said state suffer many inconveniences and wants, have determined to have and have had counsel of the twenty-one guilds of the city, who have [by a roundabout method] chosen eight men, skilled and prudent in the aforesaid, who have had counsel with the officers of our Mint and with certain others of the trade of exchangers," etc., with such result as above.

Yet even so, the effort was only temporarily successful. Before two years was out the price of silver abroad, outside of Florence, had advanced to 12 lire 15 soldi a fiorino = 27 lire 14 soldi di piccioli, whereas the price fixed by a fresh Mint law of 1345 had[Pg 22] been again reduced to under 26 lire 10 soldi di piccioli. The result was a second melting down and disappearance of the silver coins of the state, a second agitation on the part of the Florentine woollen merchants, and renewed legislation.

By the Mint regulation of 1347, a new-named money was introduced called Guelfi Grossi, coined at a tale of 117 to the libbra (111 3⁄5 being rendered cash to the merchants, and 5 2⁄5 retained by the Mint for the state), at the same standard as before (11 1⁄2 oz.), but at an equivalence of 5 instead of, as previously, 4 piccioli per piece.

117 x 5 = 585 piccioli.
(= 29 lire 5 soldi di piccioli);

a figure which is considerably above the 27 lire 14 soldi piccioli, which Villani gives as the price of foreign silver at the time. Even taking the lower tale of 111 3⁄5 pieces, which the importer of silver to the Mint got for his bullion, there is a distinct margin of profit.

111 3⁄5 = 558 piccioli.
(= 27 lire 18 soldi di piccioli.)

Indeed, in its entirety, this operation of 1347 has a sinister look. At home the woollen merchants of Florence were obliged to pay wages in silver, abroad to receive payment in gold. It was to their interest to cry down the equivalence of silver; they paid less and received more. The means by which they brought the state to put upon silver a price so far removed from the market price could only be the bribe[Pg 23] contained in the relinquishing of 5 2⁄3 pieces in each libbra. But such a process is in reality the beginning of debasement.

If this is not the true import of the Act of 1347, it testifies all the more to the only other possible motive—the monetary straits of Florence, her want of silver for currency, and the violent effort she was prepared to make to get it.

Whether by way of effect or cause it is hard to say, but certainly silver in the middle of the succeeding century had so far disappeared in the Italian peninsula, or gold so far increased during the fifteenth century, that the commercial ratio remained persistently low—1: 9.25, both in Milan and Florence; and the Mint regulations of 1460 adopted by the latter state (see under table of Florentine silver coins, Appendix), can only be looked upon as a simple repetition of the measures of 1345 and 1347.

Spain.

The currency history of Spain up to the conquest of America is one long list of alterations in the coinage, and of petitions from merchants and various Cortes for or against changes in the rating of the coins. The oro gran modulo was rated at 100 pesetas, under Alfonso XI. of Castile, 1312-50, and at 1000 under his successor, Peter the Cruel, 1350-69. The oro dobla Castellana was rated at 60 pesetas under Henry II., 1369-74; at 40 under Henry the Crafty, 1390-1406; and at 100 under John II.,[Pg 24] 1406-54. In the case of this country the troubles in the fourteenth century arose from the proximity of France, the circulation of lower-rated French coins, and the consequent depletion of the treasure of the kingdom. In Aragon, for instance, the charter of Peter IV. in 1346 had ordered the coining of gold after the same weight and fineness as of the florin of Florence. It was found too high, and three years later he was obliged to cancel it by another proclamation, ordering his own gold coins to be made of the same weight and fineness as the écus of the French kings. The close of his reign and the early part of that of his successor witnessed acute crisis and distress, which led to Henry II.'s celebrated reduction of the coinage at the Cortes of Medina del Campo in 1371.

In 1391-93 another general proclamation was issued, ordering a reduction of the value of the monies and fixing new rules of exchange, and this was followed by one in 1398, prohibiting the circulation of foreign coins in Spain, except at bullion value. This latter was a common device, as will be seen in the case of our own country. It proved ineffectual to prevent the outflow of the metals, and when re-enacted in 1413 was found to be of as little avail. The Cortes of 1442 (Valladolid) complained bitterly, in a petition, of the money drawn away from the realm by foreign merchants, and in the same year a fresh ordinance was issued to readjust the values of the native monies to the foreign coins. In this schedule, doblas de la Banda[Pg 25] were rated at 100 maravedis, and the florin d'oro d'Aragon at 65 maravedis. In 1473, only thirty or so years later, by the charter of Henry IV., issued at Segovia, these coins were rated at 300 and 200 maravedis respectively. It was only with the advent of the Catholic sovereigns that the internal disorder and want of unity of the Spanish system was effectually remedied, in the very hour of that discovery of a new world which was to put upon Spain the vital function of distributing the new stores of precious metals (see account of Spanish monies, Appendix III.).

Germany.

The movements of the precious metals in Germany—which, as far as the ratio of the two metals is concerned, may be held to include the Netherlands up to 1552, when Flanders withdrew from the monetary system of the Holy Roman Empire—is a record of exactly the same process of natural and gradual appreciation of the metal (i.e. depreciation of the weight and fineness of the coin) as in Spain, France, and England. In the accompanying tables the movement of silver is illustrated by means of the groschen, and that of gold by the Rhenish gulden. These coins, it need hardly be said, were not unit coins, nor sole prevailing. They are chosen from the bewildering variety with which the numerous independent Mints of Germany have succeeded in perplexing posterity, as being of relatively greater repute and wider acceptance, and[Pg 26] because it is a simply impossible task to combine all the denominations of these coins, in order to deduce an average.

Up to 1375 the German gold coin was minted in close imitation of the Florentine florin. The weight was 53 grs., as was that of the Florentine piece; and the lily and St. John, the guardian saint of Florence, were both employed in the two coins, the German piece being indeed issued at first under the denomination, Florin d'or.

From the above-named date, however, and onwards, each succeeding and various power altered type, weight, or alloy, with more or less arbitrariness, but always to the increasing of the confusion of the system as a whole. And it was to remedy this confusion, or to reduce it somewhat, that the monetary union of the four electoral princes of the Rhine was established (8th June 1386), under the lead of the three towns, Frankfort, Speyer, and Worms; under which the four princes, Frederick, Archbishop of Cologne, Carl, Archbishop of Treves, Adolf, Archbishop of Mainz, and Rupert, Count Palatine of the Rhine, agreed upon a common minting of gold gulden. According to the treaty, 66 such gulden were to be minted from the Cologne mark of gold, each of the alloy of 22 carats 6 grs. gold, and 1 carat 6 grs. silver. In 1402 this coinage was confirmed at Mainz by the Mint edict of Rupert II.[4]

[Pg 27]

Seven years later, 1409, the three spiritual electors, Frederick, Archbishop of Cologne, John, Archbishop of Mainz, and Werner, Archbishop of Treves, made a new and slightly different treaty, for the purpose of again reducing the alloy of the gulden from 22 1⁄2 to 22 carats.

At this rate the system was, in the same year, at Speyer, formally accepted for themselves by the Netherlands, and at Cologne also, in 1409, by the Empire generally.

The detailed and various changes which the independent princes and powers of Germany subsequently made, it is out of the question to follow. To instance only in brief. In 1419 Frederick of Brandenburg ordered the coining of gulden for his own states, at the rate of 64 1⁄2 to the Cologne mark, and of the fineness of 19 carats—a very considerable reduction in the metal value of the coin. In 1422, only three years later, Sigismund was coining gulden 66 1⁄2 to the mark and 22 carats 6 grs. fine—a value somewhat higher than that accepted for the empire in 1409. In 1428-29, accordingly, the Emperor Sigismund issued an imperial order, which was formally adopted by the Reichstag meeting at Eger (1437) and Nürnberg (1438), by which the Cologne mark was to be coined into 68 gulden and the fineness reduced to 19 carats. Four years later, 1442, the Emperor Frederick IV. projected a further reform and reduction, proposing to coin 72 pieces of 19 carats fine, but this was not carried into effect, probably as exaggerat[Pg 28]ing the average depreciation of the content of the coin (or appreciation of the metal). The rate, therefore, established by Sigismund practically remained in force for a matter of sixty years.

In the diet of 1495-97 (at Worms), however, a further slight reduction in weight and fineness took place, 69 1⁄3 pieces being struck out of the Cologne mark, and the fineness lowered to 18 carats 10 grs.

On the whole, therefore, the movement of gold during these two centuries is remarkably sluggish in Germany, putting aside, i.e., the internal variations between state and state; and remarkably corresponding to, and confirmatory of, that in England. And in all probability the mean of the quantities in the two countries would aptly measure the perfectly natural or normal appreciation of gold (depreciation of the content of fine metal in the current gold coin) throughout the period.

The movement of silver during the same two hundred years, 1300-1500, is much more excited, but shows an average or mean appreciation that tallies remarkably with that of gold just described, as also with that of silver in England. The various denominations of silver coins which arose in Germany, in those years, make it a work of extreme difficulty even to attempt averages. In the accompanying tables, therefore, the groschen is taken as most fairly averaging and widely current in the empire. In its first form, the Gros Tournois, struck at Tours, in France, this coin contained 55 1⁄10 parts of a[Pg 29] Cologne mark, and was of the fineness of 15 loth 6 grs. In 1296, when it was first adopted in Germany (in Bohemia, and Meissen), 63 1⁄2 pieces were struck from the mark, and the fineness had been reduced to 15 loth. Its subsequent variations, up to the time of the discovery of America, are detailed in the accompanying table and in Appendix No. V., the principal points in which are marked by the years 1341, 1378 (a notable attempt at reformation by Charles IV. and Wenceslaus), 1390, 1412, and 1444 (marking also an attempt at reformation by treaty between the Duke of Saxony and the Margrave of Meissen).[Pg 30]

TABLE OF THE MOVEMENT OF GOLD & SILVER IN GERMANY 1300-1500.

[Pg 31]

FRANCE.

In France during this same period the ratio of gold to silver was changed in a single century more than a hundred and fifty times, and with a roughness that is quite inconceivable to the modern mind. To take a period of ten years for example:—

[Pg 32]

France presents the utmost difficulty to the student of metallic money during this earliest period, by reason of these violent and arbitrary alterations of the coinage. The extreme diversity of the coins, and the perpetual changing of the composition or alloy, make it almost impossible to estimate the fluctuations in the value of money in relation to goods, or gold in relation to silver. Apart from the international struggle for the precious metals, France was torn and ruined by the English invasions, and debasement after debasement of the coinage was resorted to as a means of raising money to continue the struggle. Such debasements mark the reign of Philip le Bel, 1285-1314, and of each succeeding king, from his days to the final ejection of the English invaders, and after. A single instance will serve to show their nature. In 1342 the mark of gold, which in a normal time just preceding was valued at 41 livres 13 sols, was proclaimed equal to 117 livres, and in 1360 the mark of silver, valued normally at 5 livres, rose to 102 livres.[5] It stands to reason that such abnormal movements must be neglected in any attempt to determine the course of such fluctuations in value of the metals, and the ratio of gold and silver, as arose naturally from the metallic and currency history of the time. Eliminating, therefore, this element of forced and accidental debasements, due to political circumstance, the natural history, if it may[Pg 33] be so styled, of the French coinage displays the same tendency to an appreciation of money metal which marks the history of the other European countries.

TABLE OF THE MOVEMENT OF GOLD & SILVER IN FRANCE, 1300-1500.

In this table each of the points or dates taken marks a period of return to good money after a period of debasement, and in the mind of the legislator such return to good money (monnaie forte) can only be construed as based on an estimated general or normal rate of monetary values, for each particular succeeding point of time. At[Pg 34] every return to good money a proclamation was issued, expressing the determination of the administration to adhere to good money, as in the halcyon days of St. Louis, etc. etc., and fixing the rate at which the monies should be coined and current. By taking these points or dates of return to good money, therefore, we eliminate the arbitrary action of the Government in periods of debasement, and arrive at a net result showing the natural movement of the metals.

The general trend of the table—or of the metals whose movements it portrays—is perceptible at a glance, and will, moreover, be found exactly similar to that of the cases of England and Germany below. On account of the arbitrary debasements by the Kings and of the numerous feudal coinages struck independently by the bishops and subsidiary lords, the question of the friction with which this process of metallic appreciation worked itself out cannot be so well illustrated in the case of France as in that of England. But so much as this may be briefly indicated. In 1294 the scarcity of silver coinage was so great that a proclamation was put forth ordering silver to be brought to the Mint, and forbidding the export of the metals. In consequence of the futility of this ordinance, a further proclamation was issued in 1309, forbidding the circulation in France of English silver sterlings and gold florins of Florence, and crying down the exchange denomination of all other foreign coins. Similar proclama[Pg 35]tions were issued again and again—notably in 1328. But the complaints as to the depletion of the coin of the realm became much more serious in France after Edward III. had instituted his gold coin in 1344. There was henceforth a process of double friction—(1) as arising from the difference of the declared value of the French King's coin, as compared with foreign tariffs of coins; (2) as arising from the difference between the ratio of gold to silver in France and that prevailing in other countries.

In 1336 Philippe de Valois had fixed the ratio at 1:12, "the cause which moved us to this being that so our people who were in great privations and straits for money may more abundantly and quickly be filled again with money new and current." This was re-enacted in 1339, but proved quite inoperative to rule the market rate, and in 1346 Philippe found himself obliged to tolerate the advance which had been put upon the good monies in the market, by allowing provisionally the chaise d'or to be current for 30 sols Tournois. Four years later the silver rate was altered by a proclamation conceived in these terms: "As the changers and merchants who are accustomed to bring bullion to our Mint have ceased, and do daily cease to do so, so that the working of our Mint is greatly impeded, to the great prejudice of our people if no remedy is applied, we therefore order that for each mark of silver brought to the Mint there shall be delivered out by the Mint another 8 sols Tournois in addition to the 112 sols Tournois fixed by law."[Pg 36] The immediate consequence was a hoarding and disappearance of the gold coins, and in the following year, 1351, the tale of the denier d'or aux fleurs de lis was altered from 50 to 54 to the mark.

There is here no question of an arbitrary debasement. It was simply an attempt to preserve the currency from the action of a changing market ratio, which led to the withdrawal now of the one, now of the other coins, and to the circulation meanwhile of foreign coins at a rate apparently disproportioned to the metallic content.[7] In 1361 evidence was given before the Mint authorities that "in payments the people do by abuse give foreign monies at a higher rate than they are worth, viz. the moutons of Flanders and Brabant at a higher rate than the franc d'or, of which said moutons the best specimens are worth 18 denars less than the said franc d'or; a silver piece called chartain for 16 and even 18 denars, which is worth no more than 10," and so on. Two years later it was declared that the Mint at Tournay was on the point of stopping work, "the people having been accustomed for a long time to give a higher price for the mark of gold than in the case of other monies of this kingdom, and this by reason of the foreign merchants." Towards the close of his reign Charles V., finding his kingdom filled with depreciated imported specie, while all the good native pieces had been drawn out of the land, sought and obtained from the Pope, 1372, a Bull of Excommunication[Pg 37] against neighbour powers who should counterfeit his monies. It was not until 1391 that the proper defensive measure of a change of ratio was resorted to, and by that time the conditions of the Mint rates in surrounding nations had so altered as to render the change partially inoperative. In 1393, accordingly, there was a great lack of the smaller silver coin, which led to a proclamation by Charles VI. on the 2nd April of that year for encouraging the minting of petiz deniers Tournois. The same complaint was, however, re-echoed in 1395 and 1396, but, as it appears, quite futilely, for nine years after another proclamation had to be issued against the currency of foreign coins of Scotland, Navarre, the Rhenish and Netherland provinces, etc., "which have course in our kingdom for a greater value than they are worth, by which means our monies are arrested in their course and greatly withdrawn; the gold and silver deniers a l'écu which we have minted having been melted down."

When the States-General met at Paris in 1420 the depreciated state of the coinage was laid before the assembly as of prime concernment, and it was by its advice that the proclamation of the following year was issued fixing the écu d'or at a tale of 66 to the mark and of the gros d'argent at 86 1⁄4, "it being come to our knowledge that for some time past the money in our kingdom is so diminished and enfeebled that by this means the gold and silver which abounded is in very great measure drawn away and transported,[Pg 38] and the traffic of strangers here almost ceased, and all necessaries of life put at a great height," etc. The result of this reformation of 1421 was that during some portion of the succeeding years of Charles VII.'s reign silver came from all parts in great abundance, although in 1436 complaints were again heard that money was not being coined and did not suffice for the public needs. At this point, however, the complaints apparently ceased, and it was not till twenty years later that the step was again taken of decrying and forbidding the circulation of foreign specie.

The ceasing of the disorders in the French money is attributed to the expulsion of the English invaders, but there can be little doubt that much more simple and natural laws were at work. From the reign of Louis XI. onwards these natural laws had freer play as against the disturbing influence of mere arbitrary debasements, and it is easier to analyse their influence.

From his accession in 1461 onwards the monetary history of France displays many analogies with that of the Netherlands (see Chapter II.). Thus in 1470, finding the market rate of foreign coins driven above the home Mint rate by the licence of the people (i.e. by normal market action), Louis issued a tariff to regulate the exchange rate in which the prevailing prices of the foreign specie were tolerated as an interim for a period of three months. At the end of that time it was manifestly impossible to secure a permanent reduction, and in order to prevent the[Pg 39] transport of specie it was found necessary, 4th January 1473, to raise the value of the home coin both gold and silver (see account of French monies in Appendix No. VI.). Still the export continued, and in 1475 the process of enhancement had to be repeated as a measure of defence for the gold specie. Thirteen years later similar precautions were taken for the silver specie by Charles VIII.'s proclamation of 24th April 1488.

This is the last defensive measure of the first period of the monetary history of France, and no further act is on record previous to the great change in the relative values of the precious metals which ensued upon the discovery of the New World.[Pg 40]

[Pg 41]

England.

Even before the adoption of a gold coinage by Edward III., England had felt the effect of loss by exchange, owing to the introduction of gold florins by means of the Flemish trade. In the Parliament of 1339, at Westminster, complaint was made of the want of coinage. It was proposed as a remedy—(1) that every merchant should bring in 40s. or more for every sack of wool that he should import, and (2) that it should be considered by the King and his council whether it might not be advantageous to permit florins de écu (of France), and florins of Florence (i.e. gold), and other good florins to be current with the esterlings (i.e. the silver penny), "but only esterlings to be compulsory for under 40s. value." In less than four years good money was being carried out of the realm, and false money brought in at such a rate that Parliament was seriously perplexed. In its debate on the matter at Westminster, 1343, the result is thus stated: "All orders of persons in the realm had loss for a long time, on account of the florins which were delivered in payment in Flanders, bearing so high a value there as to occasion a loss of one-third on all merchandise imported thence." Certain goldsmiths of London were therefore ordered to be called in to advise and to refine one or two of each kind of florin, so as to rate the fine gold in them according to the true value. And it was proposed that of this fine gold one kind of money should be made in[Pg 42] England and Flanders, provided the Flemings were willing, to be current in both countries at such an alloy and value as should be determined by the King and Council, and all other gold money to be taken at bullion value, and all silver money to be reckoned thereby ("other sufficient money to be received according to the value of the fine gold").

The result was the first practical issue of English gold. In 1344 an indenture was made between the King on the one part and George Kirkyn and Lotte Nicholyn of Florence, goldmasters and workers, on the other, for the coining of three monies of gold, one to be current at 6s., and to be equal in weight to 2 petits florins of Florence of good weight, 50 of these being coined out of the pound Tower of London.

In this indenture Edward copied the ratio prevailing in the French kingdom, viz. that of 12.61 to 1 between gold and silver. That ratio was considerably too high, and he quickly experienced the same effects which were felt by the French King from it. During his reign (1327-50) Philip of Valois coined more species of new money than all his predecessors put together, but owing to the adoption of this too high a ratio the country was gradually depleted of good money. In order to induce people to bring bullion to the Mint he offered to coin free of cost, but found nothing of avail until he followed the example of England and altered the ratio.

In our own country the same truth had been quickly grasped. It was found that the new gold money was[Pg 43] rated too high, i.e. overvalued in relation to silver, and was therefore refused. By a proclamation of the same year, therefore, 9th July, it was withdrawn and ordered to be taken only as bullion, and a new indenture was made for the coining of gold nobles—39 1⁄2 out of the pound Tower, and at the value of 6s. 8d. The nobles were at once made current and tenderable along with silver, by proclamation; gold being ordered to be received in payment of 20s. and upwards.

By this indenture the ratio was at once dropped from 12.59:1 to 11.04:1. This attempt to determine the rate of exchange is a common feature in the legislation of France and Spain as well as of England. It stands to sense, and is apparent on every page of the monetary history of the period, that it was absolutely imperative. The friction which accompanied the process can now only faintly be imagined, but that is a secondary consideration. The essential point was, that such changes were normal and inevitable, forced by sheer necessity upon Governments, such an one even as our own, which has always been most jealously conservative in matters of coinage.[Pg 44]

In the first issue of Edward III. the Troy grain of gold had been valued at .6666 of a penny. At such rate it was overvalued and refused, and in the second issue of the same year the value was dropped to .5777 of a penny. Gradually, as the ratio on the Continent changed, and came to bear on the English rate, this was in its turn found an under-valuation, and only two years later, 1346, the value was raised to .6222, making a ratio of 11.57 to 1. The change was made in consequence of loud and serious complaints of the scarcity of coin, good money being carried out and false "Lusshebournes" (Luxembourgs), worth only 8s. in the pound, being brought in. The grievance was so great that Parliament petitioned Edward most urgently to interfere, instancing in special the Lombards,[Pg 45] "that they purchased English florins at a lower rate than that which was appointed," and praying "that such persons should not buy or sell the said money, nor make any agreement, in the sale of their merchandise, what money they would receive in rejection of English money." To this it was answered, that it should be commanded throughout England that all persons should receive for their merchandise gold, according to the currency ordained, without any agreement to be made, under pain of imprisonment and heavy ransom, and when any agreement had been made it should be at the will of the purchaser to pay money of gold or silver as he should think fit. At the same time, an ordinance was issued forbidding any person to carry out the King's good money or to bring in counterfeit.

TABLE OF THE MOVEMENT OF GOLD & SILVER IN ENGLAND 1300-1500.

The effect of Edward's change of ratio—from 12.59 (the same as the French rate) in 1344 to 11.04 in 1346—told immediately on the French currency, and at the first return to good money in the first year of King John (1350-64) the ratio in that country was changed at a stroke from 12.61 to 11.11. This in its turn acted upon precious metals in England, and for three years the English King found himself futilely struggling against an outflow of silver, by such measures as the hanging and drawing of merchants, before he discovered that it was due to an overvaluation of gold. In 1353, accordingly, he lowered the weight of the gold nobles from 128 4⁄7 grs. to 120. At the same time, the contents of the silver penny were reduced in a greater proportion (from 20 grs.[Pg 46] to 18). By this means the ratio of 11.04, which had prevailed since 1346, was lowered to 11.15.

That this ratio achieved its purpose, as far as England was concerned, is apparent from the simple fact that it remained unaltered for over sixty years until 1414; that it acted adversely upon and drained France of her gold is apparent from the change of the ratio there at her first immediately succeeding return to good money. Two periods of debasement had marked the short reign of John of France (1350-64), and the effect of these and of the influence of the English ratio was such that in 1360 there was no gold in his kingdom. Towards the end of that year, and in the beginning of 1361, John promulgated a reformation of the coinage—a return to good or "forte" money, and in this reformation he adopted a ratio which would act on the English stock of precious metals.

In England, Edward's action in 1353 in lowering the contents of both silver and gold coins, and altering the ratio, had given rise to great discontent, to an extent which proved how wiser and truer to the nation's interest was the King than his people. This diminution of the value of these coins, says the Chronicle, made all things dearer, so that the workmen and servants became assuming and demanded greater wages.

There is as little foundation for such an innuendo as there is for the view which regards this depreciation as an issue of base money. It was simply a[Pg 47] measure of precaution, as stopping an invisible and insidious outflow of the currency.

Looked at historically, and not at all controversially, such results as have been just described can only be attributed to the European monetary system of the time. Apart altogether from the arbitrary debasement of the coin, as, e.g., in France—apart even from changes of the ratio enacted with the mere crafty design of inducing a flow of gold, the monetary system of the time was so rough, so unscientific; the tariffing of the coins of different nations against each other was so inexact, so much a matter of rule-of-thumb, of hasty average, that it was simply impossible to issue such general tables of equivalents of coins and such a ratio as would have given stability to the various coinages of Europe. If the currency system of England had been of silver alone, a single enactment lessening the content of the unit coin, or crying up its denomination, would have stopped any outflow caused by under-valuation as compared with foreign money value. The same if it had been only gold. But being combined of the two, being, as it was, both gold and silver, it was necessary, in the case of such outflow, not merely to call down one or both of them below the value of foreign gold or silver, but also and at the same time to establish such a ratio between the two metals for internal circulation as would give no advantage to exchangers acquainted with a different ratio prevailing in some particular part of the Continent. And just the same for the other European[Pg 48] money systems. If, for instance, the English sterling had been called down to a value which would of itself have forbidden export to the Continent, but at the same time such a ratio had been left standing between these sterlings and the gold nobles (say 12:1) as was so far in excess of the ratio prevailing in some parts of Europe (say 11:1) as to overlap the amount by which the sterling had been called down, then the result could, and doubtless would, be an outflow of silver, in face and spite of the apparent higher tariff of the English sterling, as against the continental silver coins. This is the historic, patent, undeniable defect and weakness in the bimetallic system of the Europe of that day. It must be borne well in mind how different the problem then was from that which now besets the monetary world. To-day the flow of the precious metals is natural, the indicator, facilitator, and safety-valve of international trade. Such a conception was an utter impossibility to the fourteenth century. The rulers of that age had only one idea, the maintenance or increase of the treasure of the realm, first for military purposes, and then for trade; and their mental horizon was limited by the boundaries of each their little dominion. They could not grasp the idea of Europe as a monetary whole, each fought for his own head or land, and each found a ready weapon to hand in the monetary confusion of the time. In any system so rough and so non-uniform as that of Europe in the fourteenth century, any variation of one metal served as a vantage-point against[Pg 49] the other, as a lever to press upon and force it out. One metal would have been safe (so long as no partial depreciation was allowed), two metals served simply as fulcra to each other's oscillations, to the undoing of both. The mediæval legislator could not grasp that there was a double train of principle and event transacting itself under his very eyes—the one, changes of denomination of coins; the other, changes of ratio. In less than thirty years after Edward III. had cried down the English coins to below the competing denominations of the Continent, the changes of the European ratio had produced their effect, and Richard II. found the realm denuded of its treasure and currency.

From 1360 the ratio on the Continent gradually sank from 12:1 till towards the end of the first quarter of the fifteenth century, when it stood in France as low as 9:1.

That France experienced the process, which must have been perfectly natural and due simply to relatively diminishing production of silver in those years, 1360-1425, is seen in her alteration of the ratio from 12 to 10.74 in 1380 and to 10.29 in 1422.

In England the same train of events made itself felt at almost the same moment. In 1378 great complaints were made of the export of gold and silver, and of the enfeebled state of the money which remained in the realm, "so that if a remedy be not speedily applied, the King will receive no more than 4s. where he should receive 5s."[Pg 50]

Three years later—one year after the French King had lowered his ratio from 12.1 to 10.74—the Commons presented a petition to the King during the sitting of Parliament, 1381, complaining of the wretched want of the kingdom, which was devoid of treasure, monies of gold and silver being carried out of the realm, and those remaining being clipped to one-third their nominal value. No money at all was being minted in the Tower, and a heavy export of our metals to Scotland and Ireland was taking place. Simultaneously the officers of the Mint presented a petition to the King and his Council in Parliament, complaining that no money was being coined. The causes of this, in their opinion, were—

1. That the monies of gold and silver beyond the seas were more feeble than the monies of England, on which account the merchants could not bring bullion into England for their profit nor for the King's advantage. But if any manner of bullion of gold were brought into the kingdom, by persons travelling, it was sold to those who conveyed it out of England, to their great gain and to the injury of the whole realm.

2. That the silver of England which [i.e. when it] was found to be good and heavy, was taken into Scotland, because the money of that country was so light.

3. That the gold of England being so good and heavy, and that beyond sea so light, the nobles which came from Calais were gone into Flanders, and the English nobles were carried beyond the sea, to the great profit of those who exported them, etc. etc.[Pg 51]

4. That the money of gold and silver of England was commonly clipped, so that they who thought they should have £100 would have no more than £90, unless a remedy were speedily applied.

The officers of the Mint were accordingly ordered to be called before the Lords of the Parliament for examination, and they were succeeded by others, private persons but mostly goldsmiths, who were called upon as experts. In the case of these latter the various statements of opinion are preserved for us in the Rolls of Parliament, and they possess a peculiar interest.

Richard Leye thought that the reason why no gold or silver was brought into England, but, on the contrary, that which had been in the kingdom was exported, was this, that the realm expended too much on merchandise, such as grocery, mercery, furs, etc. He therefore proposed that every merchant who imported goods into England should export an equal quantity of the produce of the realm, and that no one should take out gold or silver, contrary to the statutes.

As to the gold not agreeing with the silver (which was Article IV. of the inquiry), he thought that could not be remedied, unless the money were changed, and to change it in any manner would be productive of universal injury to Lords, Commons, etc.

To Article V. he advised that, whereas new money had been made in Flanders and in Scotland, proclamation be made that all manner of coins of Flanders, Scotland, and of all other places beyond the seas,[Pg 52] should be no longer current in England, and that no one should receive them in payment except as bullion to be carried to the King's Mint.

Lincoln, a goldsmith, gave his opinion similarly against the permission to export gold and silver, and proposed that the gold noble should remain of the same weight as it had been, but at a greater value.

To the First Article Cranten said, that no more in value of foreign merchandise should be consumed within the realm than should be exported of commodities, the growth of England; and then, whether the money were enhanced or debased, it would hereafter remain within the realm. Also, that exchanges or other payments by letters should not be made out of Flanders, or other parts beyond the seas, to pay in England for any merchandise.

John Hoo advised a proclamation against the carrying out of gold or silver, and that the money should be received by weight.

The statement of opinion of the succeeding and last witness is extremely valuable and interesting. Richard Aylesbury opined that, provided the merchandise exported from England was properly regulated,—that is, if no more of foreign commodities were allowed to be imported than the value of the native products which should be taken out,—the money then in England would remain, and great plenty would come from beyond the seas.

He also conceived it to be expedient that the Pope's collector [of Peter's Pence] should be an[Pg 53] Englishman, and that the Pope's money should be sent to him in merchandise and not in coin, and that the journeys of clerks should be entirely forbidden, on pain, etc.

For the feebleness of the gold, which was occasioned by clipping, he conceived there was no other remedy but that it should be universally weighed by those who received it, and that the proclamation should be made accordingly.

The agreement of the gold with the silver he believed could not be effected unless the money were changed, but that he dared not to propose on account of the general damage which would ensue.

On account of the new money which had been made in Flanders and Scotland, he advised that all Scottish monies should be forbidden by proclamation, and also all other monies from beyond the sea, so that they should have no currency in England; and that no one should take them in payment, except at their value as bullion and for the King's coinage; that no one should export gold or silver, according to the statute in that case made, etc.

And, further, he suggested, by way of information, that the pound of gold which was there made into the sum of 45 nobles (but which pound, by reason of clipping and otherwise impairing, was then valued at 41 1⁄2 nobles) should be made into 48 nobles, to be current at the same value as before.

This last proposition would have reduced the ratio to a fraction over 11:1—something higher[Pg 54] than the ratio prevalent in France. Instead of acting on evidence such as this, however, and so changing the ratio, Richard's Government contented itself with the perfectly useless prohibition of export of gold or silver (statute 5 Rich. II. cap. 1). Four years later, accordingly, the matter was again pressed upon the attention of Parliament, and even by the Chancellor of the realm, Michael de la Pole himself, in his opening speech. The English money, he said, was in greater estimation and of higher value in all other places than in England. It was therefore sought out and craftily withdrawn, and the chief or greatest remedy was to increase the value or price of the said money.

In spite of such recommendation as this the measure was not adopted, and Richard fell back on his previous expedients, crying down by proclamation the value of the Scotch coins, 1387, and of the gold coins of Flanders and Brabant, 1393, and ordaining by enactment that exporters of goods should bring in 1 oz. of gold for every sack of wool which they sold.

Such an ordinance as this last is of the commonest and most frequent occurrence in the enactments of fifteenth-century England, but always unworkable as warring against the most elementary principles of international trade.

On his accession, therefore, Henry IV. found himself heir to an accumulation of monetary evil, through the impolicy and want of courage of Richard.[Pg 55]

He was obliged, at the request of the mayors and merchants of the staple of Calais, to abolish the last unworkable ordinance just referred to, and attempted at the same time to provide a positive remedy by reviving a proclamation against the currency of silver halfpennies brought from Venice, of which three or four only were equal to one sterling in value. In 1401 the Commons complained in Parliament that nobles of Flanders were so common in England that a man could not receive a sum of 100 shillings without taking three or four such nobles, each of them more feeble than the English noble by two-pence.

A statute was accordingly passed, enacting that all money of gold and silver of the coin of Flanders and all other lands, and of Scotland, should be voided out of the land, or put to coin to the bullion.

It was all in vain. Two years later, 1403, the Commons again complained of the depletion of gold, and again a statute was passed, and so on. This futile process actually reproduces itself yearly up to 1411, when at last the question of a recoinage was fairly faced. By the ordinance for, and regulation of, the money of the realm, of that year, it was provided that, "because of the great scarcity of money at the time," the Master of the Mint should make of every pound of gold 50 nobles, and of silver 30 shillings of esterlings of old alloy.

This recoinage was carried out and finished in the third year of Henry V., 1414. Under it the[Pg 56] contents of the silver penny sank from 18 to 15 grs., and of the gold noble from 120 to 108 grs., the consequent change in the ratio being from 11.15, which had prevailed since 1353 to 10.33.

At this latter rate the monetary system of England remained for almost fifty years, viz. up to 1460. But, though the rate endured so long, it is not for a moment to be supposed that the ensuing period was one of repose. Within eight years of the accomplishment of the reform in the English coinage, the ratio in France was lowered to a point somewhat below the established rate in England, and with considerable variation remained lower through all the years in question, 1414-1460. In 1421 it was changed to 10.29, in 1427 to 9, in 1432 to 10.87, and in 1447 to 11.44.

The effect on England, as recorded in the complaints in Parliament, was almost parallel with that in the days of Richard. In 1414 complaints were made against the circulation of galley halfpence by the merchants of Venice. Three years later proclamation was made against the circulation of the gold monies of Flanders, called Burgundy nobles, which were of less value than the English nobles. In 1419 it was found that money was being exported "more largely, and in many other manners, than had been accustomed, to the great mischief and impoverishment of the whole realm." And in the following year the usual statute was enacted, on the petition of the Commons, commanding foreign money to[Pg 57] be taken as bullion. Again, two years later, 1422, the enfeebled and depreciated state of the coinage was so apparent that the collectors of the subsidy granted in that year by Parliament were instructed to accept nobles as of the denominational value of 6s. 8d. (i.e. the full value), "provided they stretched verily to the value of 5s. 8d. by weight." At the same time silver money was so scarce that "though [i.e. even if] a noble were so good of gold and weight as 6s. 8d., yet men could get no white money for it." In 1423 the Commons complained of the want of silver coins in the realm, "to the great unease and harm of the poorer people of this land," "because [says the statute, which was accordingly enacted], that silver is bought and sold uncoined at 32s. the pound of Troy, whereas the same pound is no more of value at the coin than 32s., with an abatement of 12 dens. for the coinage."

From the twenty-fourth chapter of the statute of 1429 it appears, quite consonantly, "that the merchant aliens had of late introduced a custom of refusing to take silver, as they were wont, for their merchandises, and of taking only gold nobles, half-nobles, and farthings, which, from time to time, they carried out of the realm into other foreign countries, where they were changed to their increase and forged into other coins, so that they gained in the alloy of every noble twenty pence, against the tenor of the statutes, etc., and to the prejudice of the King and realm. Therefore the King, willing to provide a[Pg 58] remedy, ordained that no merchant alien should constrain nor bind any of his liege people by promise covenant or liege, to make him payment in gold for any manner of debt due to him, nor refuse to receive payment in silver for any manner of such duty or debt, upon the pain of the double value of the same."

In 1439 provision was again ordered to prevent exportation of money by merchant aliens. It was renewed in 1448, and five years later the Commons petitioned that the silver mines of Devon and Cornwall, which had not been worked for a long time, might be again opened, on account of the great scarcity of money.

The confusion of the Wars of the Roses, however, renders it slightly problematical how far the two successive lowerings of the coinage, which took place in 1460 and 1465 or 1470, are to be attributed to arbitrary action or to a natural process. By the recoinage of 1460 the noble was increased in weight from 108 grs. to 120 grs., and the value from 6s. 8d. to 8s. 4d., being a real appreciation of the grain of gold from .7407 to .7500 of a penny. At approximately the same date, 1464, the weight of the silver penny was lowered from 15 to 12 grs. In the succeeding recoinage of 1465 and 1470 these rates were again altered. A new gold coin, the angel, was instituted, weighing 80 grs., and valued at 6s. 8d., while the weight of the silver penny was left unaltered. The ratio was accordingly changed to 11.15.

This was the last change of the coinage made in[Pg 59] England before the era of the discovery of America. The internal effects which the changes had on the commerce of the time are hidden from us by the disturbing influences of the Wars of the Roses.

But it is, probably, in connection with this change of the English ratio—or with some wider, general movement, acting on both countries alike—that the last monetary ordinances of Louis XI. of France, referred to above, are to be understood.

These acts of conflicting policies mark the conclusion of the first period of European metallic monetary history, for no further changes were enacted previous to the close of the century and the discovery of America. As far as England was concerned, the monetary system remained comparatively unchanged till the days of Henry VII.

On a review of the whole period two simple facts emerge with unmistakable plainness and import.

1. It was a period in which the commercial expanse outstripped the reinforcing supply of the precious metals, and therefore in which a real decline of prices[8] prevails.

2. The evil effects of such decline were enormously increased by shortsighted, crafty manipulation of the currency by the European rulers, and by the rough, unscientific system of the prevailing coinage and exchange rates, and by the inability of the age to[Pg 60] understand, or even to perceive, the hidden working of two metals see-sawing against each other—acting as levers against each other—cutting each other's throats. The discovery of America corrected the fall of prices and saved Europe, but it left her rulers as deadly ignorant as before of the workings of bimetallism—to give a name to what they had not even perceived as a phenomenon, much less as a system.

[Pg 61]

CHAPTER II

From the Discovery of America to the end of the First Cycle of the Influence of the Metals of the New World on European Currencies, 1493-1660

The last decade of the fifteenth century witnessed the discovery of America, and therein the monetary salvation and resurrection of the Old World. The end of the second quarter of the seventeenth century in its turn witnessed the end of the first phase, and the most important, of the New World upon the destinies of Europe. Practically and historically the century and a half intervening between 1493 and 1660 may be treated as a single cycle with a single aspect. It was a time of unexampled increase in the imports of the precious metals, of equally unexampled rise of prices, and at the same time of feverish instability and want of equilibrium in the monetary systems of Europe. Two general statements may be premised.

1. Broadly speaking—of prices, i.e.—no movement of any note is perceptible, or records itself in legislative enactment until about 1520, so gradual[Pg 62] and at first unimportant was the flow of metal from America. What did come at first was not silver so much as gold, and represents the puny and blood-stained plunder of ornaments from the natives. If this import tended to turn the balance in any way, it was in the direction of depreciation of gold as compared with silver. But during this first quarter of the sixteenth century, possibly more influence on the maintaining of equilibrium is to be attributed to the largely increased home production of silver. The silver mining in the Saxon Harz, in Bohemia, and the Tyrol, had received a strong impulse towards the close of the fifteenth century, while gold was obtained during the same period in appreciably greater quantities in the archbishopric of Salzburg, and in Hungary, as well as from Africa.

2. In this second period of European bimetallic history, the centre of European monetary exchanges passes from Italy to the Netherlands. Antwerp takes the place of Venice and Florence. There is a double and deep significance in the fact. It is not merely that the trade route had changed in such a way as to lay the foundation for that development of European commerce, of which England is the highest expression in our own days; it is that by the change was provided a more effective safeguard against precipitate and overwhelming depreciation. The centre of European exchanges—Antwerp in the sixteenth, as London to-day—has always performed one supremest function—that of regulating the flow[Pg 63] of metals from the New World by means of exporting the overplus to the East. The drain of silver to the East, discernible from the very birth of European commerce, has been the salvation of Europe, and in providing for it Antwerp acted as the safety-valve of the sixteenth-century system, as London has done since. The importance of the change of the centre of gravity and exchange from Venice to Antwerp lies therefore in this fact. Under the old system of overland and limited trade, Venice could only provide for such puny exchange and flow as the mediæval system of Europe demanded. She would have been unable to cope with such a flood of inflowing metal as the sixteenth century witnessed, and Europe would have been overwhelmed. But the foundations of the commerce of the Netherlands were laid wider. Together with Portugal she opened an extensive empire along the coasts of Africa and in the Indian East; and the very time which gave birth to the revolution in the production of the precious metals in America saw provision made for the regulation of its outflow through the commerce and exchanges of Antwerp to India. In the modern system this would be a theoretically perfect world-mechanism, and its working would be normal and healthy, and the safest indicator of commerce. That it was not so to seventeenth-century Europe was simply due to the existence of a disordered, understood bimetallic system, and the crisis to which the working of this mechanism brought her has[Pg 64] perhaps not been since equalled at any point of time.

The underlying causes of this crisis have been already described. The currencies of the trading nations of Europe were all unconsciously bimetallic. Throughout, there was in existence one class who grasped the fact without any knowledge of the theory, and profited by it—the merchant exchangers. There was constant oscillation—change of ratio, and the least alteration of the condition of one metal made it a lever for operations upon the other. These operations were arbitrage merely. They had no relation to the ebb and flow of commerce as modern arbitrage transactions have. It was a financier's opportunity of private gain, and for private gain the system was worked. The ebb and flow of European currencies, which the sixteenth and seventeenth centuries witnessed, were as unnecessary (i.e. for the purposes of her commerce) as they were disastrous.

It is sufficient to indicate the tendency of this argument, and to leave the illustration of it to the following pages.

To return to the yield of precious metals during the years under discussion. Any estimate must be conjectural, in the absence of the accounts of the Spanish Mints.[9] This understood, it may be thus tabularly represented.

[Pg 65]

The general tendency of the first years of this period (1493-1520), if discernible at all, seems rather in favour of silver, and to the depreciation of gold. The average ratio was 10.75, speaking very generally, and with every mental reservation as to its applicability at any particular time and place. An equally rough average for the preceding time (see Chapter I.) would give a ratio of 11.28, showing apparently a movement in favour of silver owing to the increased production of gold.

The succeeding quarter of a century, 1521-45,[Pg 66] covers the time from the conquest of Mexico to the commencement of the exploitation of the silver mines of Potosi. Looked at from the point of view of prices in Europe,—as evidenced most circumstantially in the Plakkaats of the Netherlands, to which reference will be immediately made,—these years display stability—i.e. a steady maintaining of the advance gradually and already made between the years 1493 and 1520, and chronicled for us in the prices of 1521—rather than any further great and readily perceptible rise. For example in brief. In the Flemish Plakkaats the French crown is quoted at an equivalent of 1 florin 15 1⁄2 stivers in 1499, and of 1 florin 19 stivers in 1522, when an attempt was made to reduce it to 1 florin 15 1⁄2 stivers again. From 1522 to 1548 no further advance, but retrogression rather is quoted thus:—

This general conclusion will be found quite[Pg 67] invariably illustrated in the tables of Netherland coins (below).

With regard to the annual average production of the metal, there is perceptible a slight movement towards the depreciation of silver or in favour of gold. This might naturally be expected to express itself in a somewhat higher ratio. But the differentiation is so slight as hardly thus to indicate itself, and certainly not consistently, so far as the ratio is capable of ascertainment.

Broadly speaking, therefore, there is a certain homogeneity about the first two periods, 1493-1520 and 1520-48, of the new era. These fifty-five years mark a time of general advance on prices achieved by 1520 and maintained unequally up to 1548, but an advance which was steadily and almost fairly level on the two lines of gold and silver, so that the perfectly well-established advance of prices generally is accompanied with no great disturbance of the ratio in itself.

In contrast with this all the succeeding periods have, up to 1660, a distinct character and statistical bearing. An enormous and ever-increasing advance[Pg 68] in general prices occurs, but it is no longer, as before, on level lines of the two metals equally. The proportion of the production of the two metals changes, so rich was the yield of the silver mines of Potosi. From being the same with that of gold, the value of silver produced suddenly rises to three times and then to four times that of its rival; and at once the ratio changes, bringing with it all its accompaniment of feverish instability and flux.

The average result in the ratio was as follows:—

As far as can be ascertained the detailed statement of the ratio during the whole period, 1500-1660, [Pg 69]is as follows:—

[Pg 71]

To treat of these countries in detail.

Netherlands.

During the period under consideration, the seventeenth century especially, the monetary history of the Netherlands supplies the key to that of the surrounding nations. The history of her monetary exchanges has yet to be written, and of her Mint ordinances very little is accessible, as compared, e.g., with France. But this is more than compensated by the numerous "plakkaats" or proclamations of the tariff of coins, which are to us practical indicators of the rates of exchange. The Netherlands, as has been already said, were the centre of European commerce in the sixteenth and seventeenth centuries, as the Italian States had been in the fourteenth and fifteenth; and every change in the precious metals or in the coins showed itself in the Antwerp Bourse as surely and swiftly as to-day in London. As prompt to take knowledge of these changes as Florence had been two centuries earlier, the authorities tabulated the various coinages which were current in the Low Countries,—and practically that meant the coinage of commercial Europe,—tariffed them against their own by proclamation, and instantly accommodated themselves to each new change or variation of value by a new proclamation and a new tariff. These proclamations, therefore, give us the measure and course of the monetary movements of the time in fullest and most welcome details.[Pg 72]

It has been already shown that this action of the government of the Netherlands has a twofold aspect. From one side it expresses and regulates the natural flow and ebb of commerce, just as exchange rates and bullion remittances do to-day. And in this sense it was perfectly normal, healthy, and sound, more especially in so far as it provided for the gradual drawing away overplus metal to the East. But the Governments of Europe were yet under the spell of the delusion as to a balance of trade payable in gold—that delusion which was, later, dignified in history by the name of the mercantile theory. Nor had they yet lost the traces of that mediæval craft and lawlessness which rose from, and prompted to, the mere desire of robbing or pilfering their neighbour's store of precious metal as the first act of self-defence. Further than this the monetary system of Europe—unconsciously bimetallic and with an appalling variety of ratio prevalent at the same moment in different places—lay open, helpless and defenceless, and inviting to the bullionist, financier, or arbitragist. In so far as this element of national greed and dishonesty, or private and unprincipled gain, entered into the legislative enactments of the Netherlands, it condemns them as mercenary, and the monetary straits or tightness, not to say crisis and panic which ensued, as unnecessary and therefore in the highest degree lamentable.

In a blind way the age saw what was going on behind the financier's screen, however little it under[Pg 73]stood the theory of it. In many a sixteenth-century document, preserved among the State papers in the Record Office at London, abuse is piled on the Netherlands for their practices in enticing away the coin of the realm. One of the correspondents of the Privy Council in the days of Elizabeth, 1575, writes thus from the Netherlands: "The Low Country merchants return great stores of money hither by exchanges, and by the proceeds, as the exchange may serve for their purposes, they send away her majesty's coin and bullion into the Low Countries in great quantities, and the rather by reason of the Hollanders trading with the East, by which means the realm will be secretly robbed, if it be not prevented." Twenty years later the whole subject was again gone into, for the fiftieth time, for the advice of the English Privy Council, and it was shown how "foreign exchangers contrived, by arranging a rise or fall in particular monies, to undervalue English monies, and draw them out of the kingdom. Prevention has been vainly attempted by Acts of Parliament, by sending over Sir Thomas Gresham to the Low Countries to complain, and by establishing the office of exchanger, which was discontinued as injurious to the State. A bank was proposed, but the Queen had not to spare the £100,000 needed to start it. It is now proposed to settle the exchange at 10 or 12 per cent., to be fixed yearly, according to the state of affairs, 20 per cent. or more being sometimes paid now."

The naïveté and helplessness of the suggestions[Pg 74] contained in these concluding words need not blind us to the real and pressing gravity of the monetary situation to which they relate, and which periodically beset each and every European Government throughout the centuries under consideration.

Such, therefore, is the aspect of these monetary ordinances or plakkaats of the Netherlands in the sixteenth and seventeenth centuries.

To speak of them in detail.

The first of the Low Country proclamations, containing an evaluatie, or tariff, is dated 2nd January 1516, and it marks the commencement of the influence of the American discoveries. (See table below.) By the succeeding proclamation of 4th February 1520, golden reals were substituted for the golden florin. Its provisions remained nominally in force for twenty years or so, but almost immediately the movement towards higher prices made itself felt, and it was in consequence of this, and after fruitless negotiations with the merchants of Antwerp, that Charles V. issued a series of four closely consecutive proclamations (1521, March 1522, 19th June 1524, 25th November 1525). The first three concern gold, the last only bears witness to the rise of silver by attempting to check it and call it down. Similarly, in his ordinance of 10th December 1526, he enacted that the price ruling on the 4th February 1520 should be again used, and should be reached at two drops or intervals, so as to create the less disturbance between debtor and creditor. The[Pg 75] ordinance proved fruitless, and was twice renewed, in 1531 and 1539. In spite of them all, the rise in prices against which the authorities tried to fight, continued and had to be recognised. By the ordinance of 11th July 1548 a higher limit of values was permitted. Then, for a dozen years or so, attempts were made, by the proclamations of 23rd March 1552 and 24th October 1559, to make those prices of 1548 the basis, and to compel a return to it in the future, while recognising temporarily the higher prices ruling at the moment. And so the process repeats itself continually—a further rise of prices, complaints of the disorder in the currency and exchanges, and a new evaluatie issued, regulating the exchanges at the higher rate for the moment, and providing for the reduction of prices to previous limits, from and after such and such a date.

In the accompanying table wherever two figures are coupled together thus,  2  4
1 19 } the higher figure represents the price ruling at the date of the ordinance, the lower figure is the price to which return was to be made from and after some date fixed thereby. A simple glance at the tables will show how futile and foredoomed was every such attempt to rule and compel the exchanges. For the explanation of these tables it will be sufficient to give the dates of the Netherlands ordinances, premising that up to 1586 the series was applicable to the whole Netherlands, but that from that date there is a separate series for the[Pg 76] Seven United Provinces, and for the Spanish Netherlands.

Netherlands Plakkaats.

The second and separate series of monetary ordinances issuing from their High Mightinesses, the States-General of the United Provinces, is remarkably parallel to the above. It begins with the ordinance of 2nd September 1594: "In view of the rising price of gold and silver," it says, a "lessening of that price to the limit of 1586 is ordered at three intervals, 15th September 1594, 10th November, 10th January 1595."

Like the contemporary enactment of the Spanish Netherlands, it proved ineffectual, and a further rise[Pg 78] had to be recognised in the ordinance of 2nd March 1596, and again of 2nd April 1603. The preambles of these ordinances, which are preserved in the huge collections of Can and Scheltus, generally recite their purpose of providing against the disorders in the coinage, caused by the daily rise in price, by the greed and licence of the times, and by the inrush of the silver coins of other states. Such is specially the tenor of that of 21st March 1606, one of the most famous of these ordinances. Two years later an attempt was made to reduce prices to the limit of 1606. It proved ineffectual, and by the proclamations of 1st July 1610, 26th September 1615, and 13th February 1619, further advances were recorded. By the last-named, renewed on 5th June 1621, an attempt was made to re-establish the prices of 1610.

So much for the ordinances themselves. It is only necessary to add, for their general elucidation, that they generally contain and prescribe in detail the value of each separate coin circulating in the Low Countries at the particular time, coupled with an engraving of the coin, as an assistance to the people in recognising them. Indeed, some of the ordinances, that of 1606 for instance, contain engravings of upwards of 1000 different pieces—a significant witness to the international welter of coins in the Netherlands exchange. Dissected in detail, with regard to only a few of these coins, the tabular result is as follows:[Pg 79]—

France.

In France the result of the American influx of metals did not make itself felt until the time of Francis I. During his reign the value of the mark of gold increased 33 livres 4 sols. 2 dens., and that of silver 1 livre 10 sols.

The main reduction took place at two periods, 1519 and 1540, and with a consequent change in the[Pg 84] ratio slightly in favour of silver. The earliest find in America was gold, and at first this metal shows a tendency to depreciate. Concurrently silver, as the overvalued metal, commenced to disappear from circulation. It was to prevent this export that in 1519 the écu au soleil was advanced to 40 sols., and again in 1532 to 45 sols.—an advance of 12 1⁄2 per cent. The silver testoon was advanced at the same time from 10 sols. to 10 sols. 6 dens., an advance of 5 per cent. Even so equilibrium was not produced, and disorders in the currency continued, along with the prevalence of lower-rated coins. The town of Marseilles complained of it in a petition to the King (8th May 1539), and the important edict of Blois, 1540, which left the écus au soleil untouched at 45 sols., while advancing the testoon to 10 sols. 8 dens., was professedly and purposely issued "to more equalise the silver with the value of the gold, and consequently to make the value of our monies, both red and white, corresponding." Two years later the States-General when they met complained of the lack of currency, and demanded the opening of the Mint at Aix. The request was granted, but without visible result.

The same process of advance, unequally maintained, continued under Henry II. and Charles IX. (see accompanying tables).

[Pg 85]

TABLE OF THE MOVEMENT OF GOLD & SILVER IN FRANCE 1493-1662.

In the case of the latter monarch it is expressly stated that the change, which was effected in 1573, when the ratio was established at 11.77, had been preceded by a period during which "the people" had of themselves augmented the value of the écu d'or to 54 sols. At this limit the Government was obliged to fix it, but by the year 1577 it had risen successively to 58, 60, and 65 sols. The evil, as it was thought to be, of the advance of the monies was attributed to the caprice and unscrupulousness of "the people," and the King called several councils of experts to discuss the matter. Still the process continued unabated, and on the 19th December 1575, Henry III. assembled the States-General. The cour des monnaies—the officials of the Mint—at once approached him with a petition. Their representation is of peculiar significance:—

"In spite of the bad police prevailing, we draw in[Pg 86] times of peace twice as much silver from abroad as the foreigners draw from us. If the reform we advocate were adopted we should double this net gain.... Between us and the Netherlands and Germany, where we generally trade, there is this difference, that 6 écus, at the price at which they are exposed here, only come to 5 in the said places, which has induced a sudden and enormous dearness in the merchandise which we export from there, and besides has caused us a great disorder—to wit, that the merchants have transported all our douzains and other billon money, to save themselves from the loss they would have had to incur in settling in écus or in any foreign species of gold or silver on which, at the price they are current at by the caprice of the people, there would be a loss in settlement of 15, 20, and 25 per cent.... The cause of the enhancement of prices proceeds from the malice of several who turn into bullion the best of your coins in order to fill the kingdom with others of less goodness, enriching themselves thus with the blood and misery of the people....

"The remedy is to lower the rate of the monies.... The écus ought to come down to 50 sols., but for the present we would consent to it being put at 60, awaiting a further reduction. The currency of all foreign coins ought to be prohibited as the chief cause of these evils. For although by all your ordinances they have been valued according to the price of the écu, yet the people have always increased[Pg 87] them more than they have your own monies, so that the écu at this moment, to be in accordance, ought to pass for 78 sols. This arises from the craft of the foreigner, and the only exceptions of importance are the reals and pistoles of Spain, which are of known goodness and profit to the melter. They have never brought us harm, but, on the other hand, they are being melted down all over France, and at the present rate the foreigner gets a profit of about 7 livres on the mark of them, so that we advise prohibition of their circulation. Finally, we advise to do away with the old reckoning by livres and sols, and substitute for it the reckoning by écus."

The States-General, adopting in part the weakest suggestion of this remarkable paper, fixed the écus at 65 sols. The Mint officials at once represented that this only increased the evil. Henry accordingly assembled at Pontoise a conference of experts, and as the outcome of their deliberations decided on the adoption of the chief recommendation of the Mint officials' representation. By his proclamation of 13th November 1577, the reckoning by livres was abolished and that of gold écus substituted, values of under 1 écu or 60 sols. to be settled in divisional coinage, and circulation of all foreign coins prohibited, with the exception of Spanish and Portuguese gold ducats. It was forbidden to constrain payment of any sum above 100 sols. in billon money, and in sums below that amount to present more than the third of the total sum in such billon money.[Pg 88]

This extraordinary and, on the whole, admirably planned reformation merits so much detail because of the intense importance of its bearing. It in effect anticipated the reformation which was only accomplished in England in our own century. So far as it was actually put in practice it made France monometallic. The instinct of the time had found its way to a comprehension of the evil before it, and of the remedy. The evil was due to a badly-regulated, weltering, bimetallic system; the remedy was a monometallic system. It matters little that such terms were not in use and that the theory of the matter was not enunciated. The essential point was that the fact, the situation, was grasped in practice for a moment, dimly it may be, yet sufficiently to illustrate the whole antecedent and succeeding event. As a matter of fact the ordinance remained practically in great part a dead letter. That it did so—that it did not accomplish its purpose—has been attributed to the malheur, the unhappiness, of the time. It was due to no such thing. It was due to the simple fact that in the ordinance two quite distinct, and one of them impossible, reforms were projected. The attempt to tie down the écu to 60 sols. was foredoomed to failure, and as the eye of contemporaries was fixed more entirely on prices rather than on method of tender, the most significant part of the ordinance passed out of mind; already by the time of the death of Henry III., "the people," it is again said, had increased the écu to 64 sols. On the 30th March 1594 a proclamation[Pg 89] was issued to call it down to the value prescribed by the celebrated declaration of 1577, i.e. 60 sols. but, finding it impossible, the whole system created by that declaration was abolished (September 1602); the reckoning by écus was done away with, and the old system of reckoning by livres returned to; the gold écu was tariffed at 65 sols., and the circulation of foreign monies was again permitted. Henry IV., in his proclamation abolishing the almost invulnerable system established by Henry III., attributes to the attempts at working that system "the present dearness of everything." It is almost impossible fully to represent the unwisdom of this counter-reformation. To the eye of the then legislator there was only one evil—the rising of prices. If levelly effected it was, as a matter of fact, no evil at all—far the reverse indeed, and he did not need to concern himself about it at all. Besides, it was irresistible. The evil that escaped his eye, or to which he was blind, was that unceasing process of flux which was caused by the different ratios prevailing in different parts of Europe. The scheme of Henry III. would have proved effective, where no other measure or scheme of the time was or could be, and its abrogation in 1602 by Henry IV. removed a bulwark and a barrier, and made way for catastrophe.

Le Blanc considers that this repeal of the system established in 1577, itself failed of its purpose, because the increase of prices still continued. "In the seven years of peace which followed the ordinance of 1602,[Pg 90] the depreciation of the gold écu was as much as it had been in the preceding sixty-five years of war and trouble." The simple truth was, that it was much more likely to increase in time of peace and trade activity than in time of war. The point to notice was not at all how much the écu did depreciate, but the relativity of such its depreciation with that of the standard currency of other countries, and the monetary disorder which the inequality of ratio and of rate of depreciation induced.

Alarmed beyond measure at the evident failure of his plans, Henry IV. summoned monetary conferences of his wisest and best, and they were not even suspended by his assassination. The complaint again was, that the permission to circulate foreign monies had led to the transport of all the good coinage, to the ruin of commerce and great general disorder. Assemblies were held all over France in the trading towns, and the result of the advice of their delegates was the proclamation of 5th December 1614 (issued early in 1615). By this proclamation silver monies were left untouched, the tariff of the gold écu was increased from 65 to 75 sols., and the value of the mark of gold proportionally increased. The ratio was thereby altered from 12.01 to 13.90. It is hardly too much to say that this step and alteration in the ratio saved France from the catastrophe which befell England and Germany in 1622 and 1623. The arrangement established in 1615 endured unaltered until 1636, when a slight[Pg 91] reduction in the ratio was made to 13.61 (on the 8th May). Two months later it was found that so serious an export of good coinage was ensuing that "our kingdom would be entirely stripped of good currency, to our great damage, etc." A proclamation was accordingly issued (28th June 1636) attempting to regulate the course of exchange. The effort was vain, and on the following 22nd September the ratio was suddenly and violently altered to 15.36.[10]

A glance at the ratio prevalent in other countries will show how masterful was this act of France, but it carried with it the seeds of its own punishment. Such is the nature of the bimetallic law that any overshooting of the ratio, on no matter which side,—in favour of silver or in favour of gold,—establishes a differentiation, and the differentiation at once gives to the one metal a fulcrum or lever point—a purchasing power—against the other, and the undervalued metal, whichever it is, at once tends to disappear. Four years after this autocratic measure of France, it was found that her currency was in so depreciated a state, through exchange, that the only pieces current were lacking one-third of their full weight.

The recoinage established by her proclamation of 31st March 1640, which established the new louis d'or, was intended as a complete and permanent remedy, and it may reasonably claim the praise of having effected so much. The alteration of the[Pg 92] ratio established in 1640-41 by this recoinage (from 15.36 to 14.49) was only made after most serious deliberation. Monetary conferences of experts were held at Paris; and it was found, after careful assays of all the monies of the surrounding nations, that the prevailing ratios (1640-1) were at one and the same time—

It was therefore decided to adopt a higher ratio than all these, viz. 13.5.[11]

The history of the few years succeeding this measure is most instructive. The depreciation of monies continued, and on the 4th April 1652 a proclamation was issued, forbidding the currency of certain old monies of France, and again attempting to restrain the course of the exchanges; and three years later, 1655, under pretext that false moneyers were imitating the louis d'or and the silver écus, the minting of lis d'argent (lilies of gold and silver) was resolved upon. "But," says Le Blanc, "everybody knows that the true motive was the same as when a little later they resolved on the minting of 4-sol. pieces. Under the above pretext, the ratio basis of 1641 was broken. Remonstrances were vain until experience proved their weight, and the minting of[Pg 93] the lis d'or had to be discontinued. The pieces already minted received a value of 7 livres, and to correspond the louis d'or was increased to 11 livres, by proclamation 15th March 1656." As silver was left untouched, the resulting alteration of the ratio was from 13 1⁄2 to 14 5⁄7.

Florence.

With the advance of Antwerp as the centre of European exchanges in the fifteenth century, the mercantile pre-eminence of Florence and Venice decayed, and their monetary history loses its former prime importance. But they by no means thereby lose their interest for us. Instead of profiting as of yore by every veer in the winds of exchanges, they are at the mercy of them, as was every other country outside the charmed circle of the Netherlands. The influence of the changed conditions in the production of the precious metals, due to the discovery of America, does not show itself in Florence before 1531, when (4th August) the price was by law advanced. Three years later, 5th March 1534, it was found that the state was receiving damage from the foreign monies circulating, and that the only native coin circulating was in a worn and depreciated state. A recoinage was accordingly ordered, circulation of all foreign monies of silver was forbidden, and all payments and contracts were commanded to be made in gold scudi of the state. In order to inform the commercial element, the Mint masters were further ordered to[Pg 94] make trial every fifteen days of the value of any foreign scudi, and to publish the result.

There is a wonderful simplicity about this enactment. In order to defend themselves from a flood of cheap and cheapening silver, the Florentine authorities adopted a virtual gold monometallism. That the enactment was not permanently regarded and kept can only be attributed to the strength of commercial custom, and to a true perception in the mercantile community at large of the essential difficulty of the problem and its remedy. The Florentines were simply obliged to circulate all coins, gold as well as silver, because such was the universal custom of mediæval Europe. By 1552 silver foreign monies were again current in Florence, in such quantities and with such effects on the native gold currency, that they had to be again prohibited and banished (by law of 18th May 1552); renewed three years later (28th February 1555), and again in 1557 (29th April). Indeed, within the period here treated of, up to, i.e., 1660, there is a series of thirteen or fourteen separate re-enactments of the prohibition relating to these monies and the depreciated Florentine billon money ("quattrini neri"). If, during this period, Florence had occupied the commanding position that Antwerp did, quite unique interest would attach to the record of this monetary policy or experiment. But not being in that position, and being, too, quite apparently unable to enforce her own enactments in her own territory, even this merely depressive policy was partially broken down. In so[Pg 95] far as it was broken down she lay at the mercy of the monetary changes around her, and of the Netherland financiers, as did every other country of Europe. By the law of 5th April 1630, all species of foreign ducatoons were prohibited, "in consideration that, within the short time they have been introduced, so great a quantity, and of such differing standards, has been imported from the various foreign Mints." Five years later the gold coin was in so depreciated a state as to call for legislative interference (9th February 1635, renewed on 5th February 1645); and again in 1661 (3rd February) it was found necessary to prohibit the circulation of the silver reals of Peru and every other kind of Spanish silver, except at bullion value. These are only a few from a long list of similar enactments, but they serve adequately to show the trend of events on small as well as large fields of operations. What an amount of commercial disturbance and disaster lies behind the dry details of these legal enactments, the case of England will serve to show.

Germany.

The monetary history of Germany is one of extreme confusion and intricacy. The lack of coercive power in the central authority—in the Emperor himself—was as conspicuously displayed in the monetary ordinances of the empire as in the political sphere. The imperial edicts were disregarded, and each separate circle of the empire, or each separate prince or union of princes, left to shift or act[Pg 96] for themselves. Amid all the confusion of such a disorganised and reeling system sufficient is perceptible to indicate the broad tendency of events, and to show how closely analogous was her experience to that of Europe generally within the same period.

In Germany, as in the Netherlands, France, and England, the influence of the discovery of America only begins to express itself about 1520, and in the usual way—influx, movements and disorders in the currency and ratio, and general complaints. In 1520 a monetary convention was summoned to meet at Forchheim. This was followed by the debate in the Reichstag at Nürnberg (1522), where great complaints were made of the unusable, false, and depreciated coinage, "due to the stealing away and exchanging abroad of the gold gulden and silver coins." It was in consequence of the representations of this Reichstag that the first of the series of three imperial Mint ordinances was issued by Charles V. (at Esslingen, 1524). The main details of this ordinance will be found in the accompanying tables and in Appendix V.

The effect of the first imperial ordinance was to change the ratio from something between 10 and 11 to 11.38. The gulden was raised from 17s. 4 pf. to 17s. 6 pf. All foreign gold was to be taken at equivalent rates, and whoever gave more for foreign coins of gold was to suffer a heavy penalty. Further, the export of gold and silver was forbidden, on pain of life and goods.

The ordinance remained a dead letter, and the monetary disorder of the country only increased.[Pg 97]

[Pg 98]

In 1530 the Reichstag of Augsburg demanded the holding of a council, in order to enforce the late edict, and for a due consideration of the monetary situation. Several attempts were made with this object, but fruitlessly, and the princes of the empire fell back on the only feasible but fatal plan of smaller Mint conventions between contiguous states. There is an endless series of these, and they render the history of German currency a perfect jungle of intricacies. Nine years later (1539), a monetary convention was summoned to[Pg 99] meet at Augsburg by Ferdinand, heir to the empire. It proved fruitless. Again, in 1548, after the expiry of a similar period, the Reichstag at Augsburg declared for another monetary convention to relieve the disorder. The opinions of certain deputies to this convention, which met on the 8th October 1550, were as follows: "For fifty or even eighty years and more the ratio between gold and silver has been between 12 and 13. But in a gulden of those days there was an equivalence of more silver than in seventy-six of our kreutzers. Since then we apprise the Rhenish gold gulden and kreutzers less than foreign nations. Therefore France and England seek them."[12]

A thorough inquest into the subject, or evaluation, was therefore ordered, and it was in accordance with the advice of the convention and with the report of the evaluation that the second imperial Mint edict was issued at Augsburg, 1551. This edict was drawn up on a ratio of 10.83 as a basis, and, as might be reasonably expected from the different ratios ruling abroad at the time, it proved as inoperative as its predecessor. The succeeding ten years witnessed a rise in the relative value of gold, or depreciation in that of silver, and the third and last of these imperial Mint edicts, that of the Emperor Ferdinand, issued at Augsburg, 19th August 1559, fixed a higher ratio, viz. 11.44. The Rhenish gulden was raised from 72 to 75 kreutzers. The increasing production of silver indicated by this change is still[Pg 100] more clearly marked in the resumption of the coining of the imperial thalers, at the instigation of the Reichstag at Augsburg, 30th May 1566. The advice of this Reichstag was the outcome of the monetary convention held at Nördlingen two years earlier, at which strong complaints were appointed to be made before the Reichstag of the weak state of the coin, and of its under-valuation.

In matter of fact, the Mint edict of 1559 remained a dead letter; nominally, however, it continued in force up to 1600, although no less than seven attempts were made at succeeding diets, from 1566 to 1596, to enforce it and bring it up to date. In the Reichstag of Speyer, 1570, complaints were made of the universal loss arising from the non-observance of the edict. In place of an imperial coinage, nothing circulated but foreign and counterfeit coins, and the necessaries of life had risen to a prohibitive height. Similar were the complaints at the succeeding diets at Frankfort, 1571, and at Regensburg, 12th October 1576, at which last Ferdinand's edict was again re-enacted, with a command that the Burgundian circle and the Swiss should conform themselves to it. Bitter complaints were made of the bad state of the gold and silver coinage, and of the enrichment of the exchangers on the Rhine. The circulation of Dutch and Swiss thalers was forbidden because of the loss by exchange, and the export of all gold and silver again forbidden. As an instance of the depreciation prevalent in the coinage, it was noted that the silver albus had lost one-third of its[Pg 101] weight, so that thirty-six were needed to purchase one gold gulden, whereas formerly twenty-six were equivalent.

Four years later, 1580, Ferdinand, as Archduke of Austria, issued a fresh tariff, with the object of checking exports, and in 1582 the states, having consulted as to the condition of the coinage, strongly advised a renewal of the prohibition of the export of coin, especially by the Italians. This advice was adopted in the Reichstag of Augsburg, which met seventeen days later, 20th September 1582. The preamble of the Act then and there passed speaks of the export of a good portion of the native currency, and of the unmeasured rise of prices, coupled with the circulation of forbidden foreign specie, large and small.

This resolution of the Reichstag was followed by the enacting of the Mint edict of 10th December 1582. It proved as futile as any of the others; and two years later, July 1584, the deputies of the three circles of Franconia, Swabia, and Bavaria complained that within the four years immediately preceding several millions had left the country by way of the Rhine provinces for the Netherlands, very little going to Italy by comparison.

On this representation another useless edict was issued by the Emperor Rudolph II., and in the following year the merchants at Frankfort Fair found themselves obliged to agree upon a tariff of ducats and Reichs-thalers. The Philipps-thaler was put at eighty-two kreutzers, and the Reichs-thaler, which, by[Pg 102] the Imperial Mint edict still nominally in force, should have been at sixty-eight kreutzers, was put at seventy-four. This arrangement of the merchants established a ratio between gold and silver of 11.4.

Certain of these same merchants, examined as to their opinion of the method of the export in January 1586, explained that it went by way of Nürnberg, and that the arbitrage was attended with 9 or 10 per cent. profit.

Nominally, however—or in theory—the arrangement of 1559 continued the unenforced law of the land up to 1600, underneath all these attempts at revision and underneath the different regulations of the various monetary unions of contiguous circles or states. With the latter date commences that extraordinary movement of monetary depreciation and panic which is known as the "Kipper und Wipper" period. In great part the extraordinary acuteness of the panic which ensued was due to internal monetary confusion of Germany, but that internal confusion simply ministered to the export of all good specie and metal, and in the end it became simply a money corner. The movement began by a coining of the lower denominations of monies on a different and depreciated footing or basis. The specie thaler began to part company from the current thaler, and to rise to more than the 24 silver groschen or 36 Marien groschen, to which by the Mint edict of 1559 it was declared equivalent. By 1618 it had risen to 1 thaler 6 silver groschen (= 48 Marien groschen), by 1620 to 2 current thaler, by[Pg 103] 1621 to between 7 and 8 current thaler, while the ducat had risen to 13 florins 30 kreutzers.

Tabularly the statement of the movement of the Reichs-thaler is this:—

The course of the gold gulden which could be given is exactly parallel.

This table speaks volumes. It marks the acuteness of the monetary panic and crisis of 1621-22—the central time of the commercial ruin induced by the disorder of the Kipper und Wipper Zeit. The pamphleteer and polemic literature of this crisis is as[Pg 104] rich and instructive as any which has accompanied the bimetallic agitation and silver question of our later days.

At Hamburg the thaler, which had gradually risen from an equivalence of 24 schillingen to 33 schillingen in 1609, had a correspondingly excited course during these years.

It was in anticipation of the approaching disorder that on the 3rd of March 1609 a Mint treaty had been made between Mecklenburg, Schleswig-Holstein, Lübeck, and Hamburg, "for protection against the Mint disorder, which is most disastrous to land and people, and to take precaution against the advance of the larger silver specie." Seven years later, on the 10th January 1616, the merchants and financiers of Hamburg drew up a petition complaining that, through the monetary disorder, trade and exchange was being driven from the city, as within a short period the exchange with Frankfort had fallen from 74 kreutzer (=32 schillingen Lübeck) to 62[Pg 105] kreutzer (=32 schillingen Lübeck), and the exchange with Amsterdam from 46 stivers (=32 schillingen Lübeck) to 39 stivers. To the Senate's proposal for the erection of an exchange bank, the merchants would, however, have nothing to say, considering it unnecessary and dangerous, and called for the suppression of the notes which the merchants had brought into use to facilitate their settlements.

Three years later, however, the Senate declared more strongly for the establishment of a bank, premising in the preamble of their resolution that "it is many ways known and plain how disastrous a disorder has hitherto been in the currency, both from the rise of the larger silver species and from the excessive importation of smaller depreciated specie, whereby not only private individuals but also common interests, as churches, hospitals, widows, and orphans are greatly pinched in their incomes."

It was as the outcome of this resolution that the celebrated Hamburg bank was instituted in 1619, the later life of which was to become of so much importance for the monetary and commercial history of North Germany.

The curious point to observe is the short time—a few months merely—by which the crisis in Germany preceded that in England, and the analogy of some of the manifestations, although there were no such Mint and coinage disorders in England as had aggravated and in the first place partly induced the movement in Germany.[Pg 106]

In 1623 a great Mint deputation from all the circles was held, and in accordance with its representations the new imperial basis was established, which remained in force until the conclusion of the period of which we here treat. By that basis the mark of silver was coined into 9 Reichs thalers 2 groschen. The thaler was fixed at 90 kreutzers, the gold gulden at 1 florin 44 kreutzers, and the ducat at 2 florins 20 kreutzers. This disposition remained the Mint law over all the weary, disastrous period of the Thirty Years' War, which is practically a blank for the monetary history of Germany. It is not until 1665—the opening of a fresh period—that complaints of the state of the lower denominations of the coinage are again heard. But how far this quiescence is to be attributed to the economic wisdom of the settlement of 1623, or to the mute, dumb, inarticulate agony of Germany during that strife when her commerce, much more even than her national life, was suspended, is hidden from us in almost complete darkness.

Spain.

During the sixteenth and seventeenth centuries the function of Spain was a very simple one in the European system. She was the receiver and distributor of the metallic wealth and finds of the New World, and accomplished her task perfectly naturally and efficiently. But it was at the cost of her political and commercial future and greatness. If Spain had been a commercially independent nation, growing for[Pg 107] herself and supplying herself with her own manufactures, the metallic wealth of the New World would have stayed much longer in her lap, and Europe would have starved. But she was not. She produced little, and manufactured less, and the ill-gotten, blood-stained gain, which flowed to her shores from America, served only to feed an impractical vanity and to further unfit the nation for manufacturing and commercial life. The, to her, disastrous influence of Spain's shortlived empire endure to-day, for she is still as unfitted as ever by temperament and natural training for mercantile life. Such is the penalty her dower of New World gold and silver brought her. Finding she could purchase anything and everything with this gold and silver, she threw herself into her work of conquest, and let commerce go. Her manufactures came to her from England and the Netherlands—countries she sought to conquer and enslave; and thither her gold went in exchange, and before the century was out those countries had risen exulting over her. But the point to notice is this. Assuming this distributing function as her own and proper one, the only condition essential to its proper fulfilment was the maintaining of an absolutely unimpeachable coinage. The rapidity with which the precious metals left her possession was simply due to the fact that Spain did so maintain her coinage and for a sufficiently lengthened period. The goodness of her coins exalted them above the prevailing rates in France and the Netherlands, and they were eagerly[Pg 108] sought in consequence. The monies that did not, and could not, normally leave her possession by ordinary way of trade left her by means of arbitrages working on the system of bimetallism, which existed unacknowledged.[13] It was this commanding quality of the Spanish coins that led to the adoption of their system by France in 1641. That in the case of Spain we hear no complaints of depletion of coinage and commercial disturbance resulting therefrom, such as mark the history of the other countries of Europe, is simply due to the fact that her stock of metals was continually being replenished, and that she had no commerce to be disturbed. The gold and silver of America came to her in a steady stream and left her for the Netherlands and elsewhere in a stream as steady; and so long as that flow was turned through her dominion, so long as the main sources of precious metal-mining were American, and the product a monopoly-possession of Spain, she[Pg 109] stood above, and felt no immediate harm from, the bimetallic law which insatiably sucked away her wealth. Until the time came, therefore, when she lost her monopolist position in this matter the monetary history of Spain is free from those features of disturbance, commercial agitation, monetary conferences and edicts, which are common to the rest of Europe, and consist merely of a record of Mint ordinances regulating the fineness of her coins and slowly adjusting them to the general movements of the century. Only in the case of the first of these—the edict of Juan and Don Carlos, 1537, by which the standard of coronas and escudos was fixed at 22 quilates, "which is the standard of the greater escudos of France and Italy"—has the enactment any comparative or international bearing.

For sixty-one years after the settlement of 1497 there had been no alteration of the monetary system. In 1523 the Cortes of Valladolid had petitioned the King, Charles I., to lower the standard and content of the gold coin, "so that in weight and value they may pass equal with the crowns of the sun which are made in France, so that by these means they will no longer draw our gold from the kingdom." In its ignorance this Cortes also demanded that the silver monies should be reduced and issued on a relatively depreciated footing. It was a matter of thirteen years before Charles yielded and adopted the measure suggested, in the edict of 1537, already referred to, and it may be safely said that by the time of its[Pg 110] adoption the need for the measure had passed away. Any disturbance and loss of her stock of precious metals caused by the general movement which marks itself in European history about 1519-20, and which shows itself in Spain in the petition of the Cortes of 1523, was quickly redressed by the inrush of metals from America. Finding gold and silver come to her easily, Spain cared little how they went. After the edict of 1537 there is only one complaint of the export of coin recorded in the legislative enactments of the country, viz. in 1552, when it was decided to alter the alloy of the billon money in order to avoid its exportation, "as we are given to understand that its intrinsic value is greater in other countries than here."

The Mint edicts of Spain during the years 1500-1660 simply follow in the wake of the general movements of prices in Europe generally. The authorities were perfectly passive to the export of the precious metals, and no attempt was made to manipulate the ratio in such a way as to arrest the outflow. The conduct of Philip II., in 1566, in still further raising the denomination of the gold coins by one-seventh has the same passive aspect, although it has been attributed to a mere base desire on the part of Philip to fill his depleted treasury by a partial debasement. A comparison of the movements of metals and prices in France and Spain will show that the advance was only normal and general, and the further changes which were made in 1609 and 1612[Pg 111] have this same normal character, and call for no comment. At the points enumerated it is quite evident that Spain merely and mechanically followed the general trend of the precious metals and prices through the century. There is no expression of aggrievement, either slight or acute, at the precious metals leaving her. While every other country was occupied seriously, sometimes desperately, with the question of how to guard their stocks of them, the eyes of the Spanish Government and the nation's mind were fixed only on conquest and imperial growth. The cost of her empire was such that at the accession of Philip III., 1598, the national debt was over a hundred million ducats, an absolutely unparalleled sum for the time. When, therefore, the Spanish Government began the enormous issues of base billon money which mark the reign of Philip IV., it is to be looked upon as a financial, or treasury, or budget expedient, and totally unconnected with any currency movement, pure and simple. These issues were so great that, in 1625, the premium on gold and silver, as compared with billon monies, was fixed at 10 per cent.; in 1636, at 25 and 28 per cent.; and, in September 1641, at 50 per cent. (See account of Spanish monies, Appendix III.)

Such base monies always tend to become the only visible currency of a land. But, save as thereby facilitating the denudation of Spain's store of precious metals, this matter of the depreciation of her billon[Pg 112] money has practically little or no relation to the general movements of the two precious metals which we are investigating. It has more resemblance to an over-issued and depreciated paper currency.

Of that ebb and flow, that oscillation and instability in the metals, which make the study of the other currency histories of Europe during this period so instructive an object-lesson of the effect and influence of a bimetallic law and system, Spain shows not a trace. She received the metals in a steady stream, and emitted them in a steady stream. They poured through her. Her function was that of distributor, and she performed it. When the time came that her monopoly of the metals ceased, her remedy against the ruin of a bimetallic law was removed, and she became as signal an instance of its malignant operation as any—France, England, or Germany. Until that time came she had her remedy against immediate ruin in her yearly argosy, with its blood- and toil-stained tribute.

England.

To come to England.

The following tables give a succinct synopsis of the general course of her gold and silver coinage during this period:[Pg 113]—

[Pg 114]

TABLE OF THE MOVEMENT OF GOLD & SILVER IN ENGLAND 1500-1680

The testimony of these tables is perfectly general. They establish, roughly speaking, just such an advance of price as befell the whole of Europe. They do not witness the oscillation in the coinage, and the commercial disaster due to the action of bimetallic law. For the evidence of this latter, however, there is ample store of material in the State papers of England throughout the period.

The moment prices began to rise on the Continent good English gold tended to disappear and flow away, being replaced by continental coins of lower contents (or higher denomination). The stress of this practical diminution of the currency was made all the greater by the simple fact that the increasing trade which accompanied such rise of prices demanded an expanding rather than a contracting currency.

The very year, therefore, 1519, which marks the[Pg 115] commencement of the rise for the Continent generally, marks the commencement also of agitation in England with regard to the supply of the precious metals. There is preserved among the State papers at the English Record Office a paper of advice from a German of the name of Herman King to Wolsey, dating in June 1519, "How to provide bullion from Germany for this realm with the greatest profit." He advises contracting for a fixed supply of metal at a certain price, which he puts down, and adds: "If Wolsey will appoint a person to receive the money, I will engage to deliver 2000 or 4000 marks weight yearly at this price, but it must be secretly, as, if the purveyor were discovered, he would be in great danger, and the (German) princes would not suffer any silver to depart because of their own Mints."

Four years later the effects of the exchange had made themselves so felt that Henry was obliged to make a treaty with the Emperor, Charles V., "for the reformation of old and new money," 1523. An attempt was made to tie down the chief coins in exchange—the gold real of Flanders, the gold carolus and the double carolus of Spain—and it was further agreed (Article IV.) that no new money of Germany, Italy, Spain, France, or elsewhere, should be given in payment to English merchants, unless it had a fixed value in sterling money by consent of both princes.

In December of the following year Wolsey was meditating sending commissioners to the Low Countries[Pg 116] to require that all monies valued too high should be reduced to their normal rate, but he was informed by Knight, resident at Mechlyn, that, "having spoken with several who hear daily the council's opinion, they think it is not likely to be done while the war continues, as the chief merchandise now is finances; and, besides, as their 'goldes' are highly esteemed in France, if they lower them they will all be carried thither."

Any such method of procedure as this of Wolsey's was bound to be futile, and Henry's Government fell back on the much wiser plan of altering the denomination of the coins. On the 24th July 1526, a commission was issued to Wolsey "for increasing the sterling value of the coinage to an equality with the rates of foreign currency." The reciting information contained in the commission itself is perfectly succinct and clear in its bearing—"one pound weight of angel gold (i.e. 23 carats 3 1⁄2 grs. fine) is worth, in current money, £27; by alloy of 1⁄11 it is worth £29, 6s., of which 11s. is allowed the Mint master for coining. In return he gives the merchants 108 crowns of the rose, at 5s., really worth but 4s. 10 1⁄2d., which makes £26, 6s. 8d. So that there is a clear gain of 48s. 4d."

The investigations of the commission were followed by a proclamation on the 22nd August 1526, fixing an altered tariff of exchange. Crowns of the sun were put at 4s. 6d., which only four years before had been at 4s. 4d., while the ducat was raised from 4s. 6d. to 4s. 8d.[Pg 117]

Finding the enhancing of the gold and the export of specie still continue, an inquest was held, on the 30th October 1526, into the fineness and value of the coins. As a result of the verdict of the jury, a second proclamation was issued in the same year, dated November 5th, "to check the exportation of specie arising from the increased value of currency on the Continent." The sovereign was put at 22s. 6d. (having previously been rated at 20s. 6d.), and other gold coins in proportion. Silver coinage was to pass at previous rates, but a new issue was to be made, in which the ounce Troy was to be coined into 3s. 9d. Finally, foreign ducats were to be taken as bullion, no rate of exchange being even fixed.

At the same time Wolsey was attempting to negotiate for a supply of gold from Antwerp to replenish the currency. On this subject there exists a curious letter from his agent in Antwerp, dated 21st November 1526. "These two days," says Hacket, "I have been trying to agree with the principal merchants about the exchange, but none would make any bargain, as you (Wolsey) have limited me to 4s. 6d. for the ducat, and as a ducat of such gold as they would be bound to pay would be worth 4s. 10d. in the Mint. They must receive either ducats, or a crown of the sun and a groat, for every ducat, or the same in angellets. The best thing would be for one or two of their factors to see you (Wolsey). The gold can be kept at home for[Pg 118] 2 or 3 more per cent., for they would be glad to give that to take it out of the realm."

The new coinage of 1527 was in complete accordance with the proclamation of the preceding November. As far as the tariff or absolute exchange was concerned, it served to redress the balance, and thus to bring the English coin abreast of the continental. In the matter of the ratio, however, hardly any change was made. In the coins of the old standard (i.e. 23 carats 3 1⁄2 grs.) the ratio remained as before, 1:11 151⁄755; in those of the new standard (i.e. 22 carats) it was raised slightly (to 1:11 59⁄220). Neither in the appointment of the exchange, however, nor in the matter of the ratio, could the measure be more than temporarily successful under the conditions. The necessity remained as constantly as ever to watch the changing continental tariff, and to accommodate the English system to it. One State paper, dating apparently in 1529, thus pictures the situation at the time:—

"Disputes in London between English, Italian, Flemish, and Spanish merchants, as to the exchange, because of the last edict about gold. The writer knows of the importation of 100,000 crowns and £10,000 in gold, which will be exported again unless care is taken. In Flanders, directly after this proclamation, gold was publicly put at a higher price than before—a noble at 24 groats," and so on. The writer, therefore, recommends that the searchers at the various ports should be warned to attend to their[Pg 119] duty and see that no gold was carried away from the realm.

No recoinage, however, or change in the Mint rates, occurred for some years, and it must be taken as primâ facie evidence that the basis of 1527 continued for some years efficient, and witnessed a steady growth in the circulation, accompanying a steady expanse of trade and prices. In 1535, however, complaints were again heard of the conveyance of coins out of the realm, and on the 15th July a proclamation was issued against it. This movement is perfectly well authenticated. On the 10th of May 1537, Hutton, writing from Brussels to Thomas Cromwell, says: "Gold was formerly carried out of the realm [i.e. of England] for gain; now great sums are sent hither [i.e. to the Netherlands] in sterling groats [i.e. in silver]. This will both diminish the coin at home [i.e. in England] and injure the sale of cloth, for here are but three sorts of money current—crowns of the sun, sterling groats, and 'Riders Gelderus' coined in Guelderland." On the 6th of August the same hand writes, again from Brussels: "Exchange is stopped, and much money like to be conveyed over [i.e. hither], though all coins should be called down here.... The act made for money will stop the [English] trade in kerseys, and great sums will be conveyed out of the realm [of England to the Netherlands]."

That the flow-out of gold in 1526 should change into a flow-out of silver in 1539 was simply due to the[Pg 120] alteration of the continental ratio. The relatively great depreciation of silver only begins in 1550. Up to that time the general trend of the two metals was on level lines, but with occasional traces or evidence of an appreciation of silver or relative depreciation of gold. At such a moment the lower-rated, i.e. cheaper, English silver inevitably tended to flow out in the very teeth of searchers and legislators. At almost the same time—and as showing at once how international this trade in money or "finances" was, and how confused, and conflicting the monetary system of Europe was, with a flow-out in one direction and a flow-in from another—the English merchants at their Calais Fair reported great gain of the precious metals. "We have very good sale of clothes," writes a merchant to the King on the 27th August 1538; "here is great plenty of money, which causes all wares to be dear. Your subjects will bring back above £3000 sterling in angels and ducats. We seek all the angels here and give a penny in the piece to have them to carry home, so that I trust there will be few left here in a short time."

The threatened rise of monetary denomination on the part of the Netherlands was accomplished by their ordinance of 15th April 1539, and almost immediately Henry found himself necessitated to change the basis of his currency from that established in 1527. In 1542 the silver penny was reduced from 10 1⁄2 to 10 grains, and shortly after 1544 the angel was advanced from 7s. 6d. to 8s. The proclamation which enforced[Pg 121] the change is dated 16th May 1544. Gold was raised from 45s. to 48s. the oz., and silver from 3s. 9d. to 4s. In the purchase price of the two metals, therefore, there was no change in the ratio, but calculating on the basis of the issue price, i.e. the pieces issued from the Mint, the alteration of ratio was from 11 59⁄220 to 10 10⁄23. In the proclamation the change was attributed to "the enhancement of the prices of these metals beyond the sea, as well in Flanders as in France, which would have drawn all the coins out of the realm if a remedy had not been applied. And although the customers of the ports of the kingdom had been ordered to put in execution the statutes for the conservation of the coins, yet for the great gain they were still secretly carried abroad."

The coinage measures, therefore, of the year 1544, when justly considered, do not possess the aspect which has been generally attributed to them. It is incorrect to look upon them as the tentative beginning of that debasement of the coinage which disgraced the later years of the reign of Henry VIII. and the days of his son Edward VI. The measures of 1544 were simply acts of justifiable self-defence and currency safeguard. The real debasement began two years later, in 1545-46, when, by indenture, the silver coins (testoons) were reduced from 10 oz. to 4 oz. fine silver, the 2 oz. of alloy in the former case being increased to 8 oz. in the latter. In 1550 the content of fine silver in the testoon was further reduced to 3 oz.[Pg 122]

The plan of this history makes it incumbent to treat questions of debasement as standing apart from the subject-matter of the book, which is restricted to the natural and normal ebb and flow of the precious metals, due to the action of bimetallic law. The operation of debasing a coinage—of lowering it, that is, so far and so arbitrarily as to remove it at once from the action of natural law of prices ruling around—means an arrestation of natural economic processes and laws, and the events which follow thereupon stand apart from such laws and ought to be treated as so separate. In reality, debasements always favoured the action of this malignant bimetallic law, and the fact might possibly lead one to attribute to the normal action of a natural law what is in three-fourths of it due to arbitrary action of government.

It would be, therefore, unfair to treat of debasements in a history of bimetallism.

Given, however, the above standpoint, and mental reservation of deduction and innuendo, it is permissible to treat of this debasement as showing how or in what way a debasement does actually facilitate the malignant action of bimetallic law.[14] Further, the present[Pg 123] instance of debasement is the only one on record in English currency history, and the testimonies regarding it are of extreme interest.

For the purpose of external or foreign trade, a debasement of currency is fatuous and pernicious. The coins are estimated at their content of pure metal, and the international exchange is so rated. The consequence is an apparent rise of foreign prices proportioned to the extent of the debasement. This at once unsettles internal or home trade prices, and they rise to the same level, but with such inequality of motion as may happen to follow from friction, local ignorance, want of communication, or from the intricacies of trade. The inequality of exchange-coinage rates which results from this is the bullionist's or the financier's opportunity, and swiftly and invisibly the good species—or any, bad or good, upon which any differential profit can be had—disappear from circulation. The consequence is that the rising prices which instituted the process are no longer accompanied by an expanding or increasing volume of currency, but, on the contrary, with an enormous decrease in the total of acceptable or efficient currency. Hence come decay of trade, and ruin of town and country.

This is no paper, a priori argument. It is the patent unmistakable statement of history and fact.

The staple trade of England in the sixteenth and seventeenth centuries was woollen. Coventry was one of the considerable seats of the industry, and known as a flourishing and wealthy town. In the[Pg 124] third year of Edward VI.—the time when this debasement of our coinage reached the lowest point—its trade was gone, and its population had sunk to 3000, "whereas within memory there had been 15,000."

In the extraordinary "Dialogue concerning the common weal of this realm of England," the scene of which was probably laid in this very decayed town of Coventry, the advance of prices, and the general tendency of the above argument, is more than amply borne out. "I have well experience thereof," says the "cappe" or hat manufacturer, "for I am fain to give my journeymen 2d. a day more than I was wont to do, and yet they say they cannot sufficiently live thereon. The city which was heretofore well inhabited and wealthy (as ye know every one of you) is fallen for lack of occupiers to great desolation and poverty."

"So the most part of all the towns of England," quoth the merchant, "London excepted; and not only the good towns are decayed sore in their houses, streets, and other buildings, but also the country in their highways and bridges; for such poverty reigneth everywhere that few men have so much to spare as they may give anything to the reparation of such ways, bridges, and common easements. There is such a general dearth of all things as I never knew the like, not only of things growing within this realm, but also of all other merchandise that we bye beyond the seas, as silks, wines, oils, etc. I wot well all these do cost[Pg 125] me more now by the third part well than they did but seven years ago."

"Such of us," says the knight, "as do abide in the country still can not with £200 a year keep that house that we might have done with 200 marks but sixteen years ago."

The course of the enhancement of foreign prices is thus argued between the merchant and the doctor.

Merchant.—"We that be merchants pay dearer for everything that cometh over the sea, even by the third part well. And because they of beyond the sea will not receive our money for their wares, as they were glad in past times to do, we are fain to buy English wares for them, and that doth cost us dearer by the third part, yea almost the one-half, dearer than they did before time, for we pay 8s. for a yard of cloth that within these ten years we might have bought for 4s. 8d. When we have thus dear bought outlandish ware, then we have not so good vent of them again as we have had before time, by reason there be not so many buyers, for lack of power, though indeed in such things as we sell we consider the price we bought them at."

Doctor.—"I doubt not if any men have licked themselves whole [i.e. recovered the loss] you be the same, for what odds soever there happen to be in exchange of things, you that be merchants can espy it anon. Ye lurched some of the coin as soon as ever ye perceived the price of that to be enhanced. Ye, by and by perceiving what was to be won thereon beyond[Pg 126] the sea, raked all the old coin for the most part in this realm and found the means to have it carried over, so as little was left behind within this realm of such old coin [i.e., good undebased coin], at this day, which in my opinion is a great cause of this dearth that we have now of all things." "Thereby" he adds again, speaking of this "basing or rather corrupting of our coin and treasure, we have devised a way for the strangers, not only to buy our gold and silver for brass, and not only to exhaust this realm of treasure, but also to buy our chief commodities in manner for nothing. It was thought it should have been a means not only to bring our treasure home, but to bring much of others, but the experience hath so plainly declared the contrary, so as it were a very dullards part to be in doubt thereof,... Do you not see that our coin is discredited already among strangers, which evermore desired to serve us before all other nations at all our needs for the goodness of our coins; and now they let us have nothing from them, but only for our commodities, as wool, felt, tallow, butter, cheese, tin, and lead. And whereas before time they were wont to bring us for the same either good gold or silver, or else equally necessary commodities again, now they send us other trifles as I spake of before, as glasses, gelly pots, tennis balls, papers, girdles, brooches, etc.... As I told you in your ear before, they send us brass for our treasure of gold and silver, and for our said commodities I warrant you you see neither gold nor silver brought[Pg 127] over unto us as it was here before used, and no marvel. To what purpose should they bring silver or gold hither, where the same is not esteemed. Therefore I have heard say of a truth, and I believe it the rather to be true, because it is likely that since our coin hath been debased and altered, strangers have counterfeited our coin, and found the means to have great masses transported hither, and here uttered it as well for our gold and silver as for our chief commodity; which thing I report me to you what inconvenience it may bring the King's highness, and this realm, if it be suffered, and that in brief time.... And besides this, have you not made proclamations that our old coin specially of gold, that it should not be current here above such a price? Is not that the readiest way to drive away our gold from us, as everything will go where it is most esteemed? And therefore our treasure goeth over in ships.... I hear say that in France and Flanders, there goeth abroad such [brass and billon] coin at these days, but that doth not exile all other good coin, but they be current withal, and plenty thereof, howsoever they use it. Therefore I think it wisdom we did learn of them how we might use the one and the other keeping either of them of like rate as they do so, that they should never desire any of our coin for any greater value than they be esteemed at with them nor we theirs for any greater estimate with us than with them, and then we should be sure to keep our treasure at a stay. And as for recovering of old treasure that[Pg 128] is already gone, there might be order that some commodity of ours were so restrained from them that it should not be sold but for silver or gold, or for the third-part or half in such coins as is universally current, and thus chiefly our treasure might be recovered by the use of means."

When pressed by the knight to show how this merchandise in coins was actually initiated and worked the doctor thus replies: "Well, then, when goldsmiths, merchants, and other skilled persons in metal, perceived that the one groat is better than the other, and yet that he shall have as much for the worse groat as for the better, will not he lap up the better groat always and turn it to some other use, and put forth the worse, being like current abroad? Yea, no doubt, even as they have done of late with the new gold. For they apperceiving the new coin of gold to be better than the new coin of silver that was made to counter value it, picked out all the gold as fast as it came forth of the Mint and laid that aside for other uses, so that now ye have but a little more than the old current, and so both the King's highness is deceived of his treasures, and the thing intended never the more brought to pass, and all is because there is no due proportion kept between the coins, while the one is better than the other in his degree."

"But how," asks the knight, "do they do in France and Flanders, where they have both brass coin, mixed coin, pure silver, and pure gold current together?" "I warrant you," is the doctor's reply,[Pg 129] 'by keeping of due proportion every metal towards other, as of brass towards silver 100 to 1, of silver towards gold 12 to 1. For the proportion of silver towards gold, I think, cannot be altered by the authority of any prince, for if it might have been, it should have been ere this, by some one needy prince or other within 2000 years."

So much in brief for this depreciation of Henry VIII., and for this extraordinary dialogue. The doctor's remedy was a recoinage, such as was later effected. The extent of the knowledge of economic laws displayed by this figure throughout the dialogue is astonishing. The divine was the better merchant, and if he had lived—for Miss Lamond's masterly identification of this character with Latimer hardly admits of question—and ruled in later counsels, he might have shown himself the better legislator.

The recoinage which he advocated was not effectually completed till the second year of Elizabeth's reign, 1559. The basis on which it was then accomplished was that of a ratio of 11.79, as nearly as possible that adopted in the same or the following year, 1560, by France, and slightly higher than that which was established in Germany by the imperial edict of 1559. The coincidence in these rates is remarkable, and it is quite apparent that the action of Elizabeth dictated that of France, as also that this her action secured for England a steady supply of the precious metals during a period in which France was violently agitated by currency crises.[Pg 130]

In the first year of her reign, 1st May, Elizabeth issued a proclamation against the export of bullion. This was followed by one in the second year, 27th September, against the melting of monies, and by two others, of the 4th October and 23rd December of the same year, "for the valuation of certain base monies called testoons ... finding that the ancient good gold and silver is daily transported," etc. Finally, on the 15th November (3 Eliz.), a proclamation was issued forbidding the circulation of French crowns and Flemish or Burgundian crowns. This series of proclamations is to be regarded as one measure with, and as fortifying, the recoinage and the new ratio established. And the efficiency of the system thus instituted is to be judged by the fact that, with the exception of two unimportant proclamations of 16th October (7 Eliz.), and 1st December (8 Eliz.), no further legislation or Privy Council proclamation was needed for a matter of fifteen years.

From 1572-76, however, as has been seen already, the Netherlands issued a closely consecutive series of plakkaats which altered the situation for the whole of Europe, and England, equally with the rest, felt the drain. Contemporary evidence as to this fact has been already quoted (p. 73). Accordingly, on the 20th September (18 Eliz.), Elizabeth issued a proclamation "for the ordering the exchange of monies by enactment, according to laws of the realm, ... because of disorders, ... decay of merchandise, ... and value of monies." Again, in 1582, inquiries were[Pg 131] made respecting the export of gold, and one of the London aldermen wrote to Secretary Walsingham, advising the appointment of four skilful merchants as an advisory body. Finding the drain continue, on the 12th October (29 Eliz.) the Queen issued a proclamation "for reforming of the deceits in diminishing the value of coins of gold current in our dominion, and for remedying the losses which might grow by receiving thereof being diminished." According to the express testimony of this proclamation the gold coins were exported, diminished, and returned, and it accordingly enacted that no coins should be taken as current when beneath such and such a weight, or lacking such and such a remedy.

For a dozen years or so after this no further complaints of a gold drainage are heard, but in 1597 they recommence. "If good provision be not foreseen the coins of gold and silver of England will flow over to the Low Countries as fast as they can be coined," is the testimony of a document of April in that year, "for the angel and sovereign of England are current in Holland and Zealand at 18s. the piece of Flemish money, and our silver much after the same rate." And the writer adds: "I see no harm to this realm, if the French gold coin was permitted to be current for 6s. 2d., the Spanish gold pistole for 6s., and the silver real of eight for 4s."

It was under the influence of this movement, of which more complaints exist among the Domestic State Papers, that the final Elizabethan revision of the Mint[Pg 132] prices of the metals took place. On the 18th March 1600 she issued a proclamation "concerning coin, plate, and bullion of gold and silver," reciting that "bullion of gold and silver, etc., for these later years, have been much more abundantly transported and conveyed away than in any former times," and commanding the observance of the statutes against such transport.

Finding her proclamation mere waste paper, Elizabeth resorted to the only safe and possible expedient, a change in the issue rate of the coinage. But for once her instinct, or the wisdom of her councillors, failed her. Instead of raising the ratio of gold to silver, she lowered it from 1:11 1⁄10 to 1:10 5614⁄5921.

It is inconceivable that such a blunder should have been committed at a time when the production of silver had advanced and was advancing by leaps and bounds beyond that of gold, and when the currency of every European country of commercial note was being accommodated to the depreciation of silver with unerring instinct. But so it was, and the blunder only served to accelerate and intensify the catastrophe under James I.

In matters of currency history it is impossible to separate the Tudor from the Stuart period, and this last and sole blunder of Elizabeth's administration only serves to show the continuity of principle or event, and how little of moral censure attaches in this matter to abused James any more than to lauded Elizabeth. But it is instructive and curious to note[Pg 133] that the currency history of England during all the reign of Elizabeth shows such remarkable quiescence. From 1558 to the fatal blunder of 1601 there was no change in her Mint rates. The complaints of exports of coins, and the evidence of the action of bimetallic law, appears only at three isolated and widely separated periods. The inference can only be—and it is more than an inference—that her reign, besides being a period of currency expansion, was one in which the ratio existing in England facilitated the flow of metals from the Continent, and secured the permanence of that currency expansion. On this increased basis of currency was built that commercial and national, yea even literary, growth and expansion, which have made the Elizabethan age the glory of our history. Similarly, the unrest and commercial credit crises under James I. and Charles I., which resulted from the same wide causes and principles, underlay and played a vitally determining part in the agitation and revolution-sowing of their reigns, and that, too, in a manner which has never yet been appreciated. The uprisal of England, which resulted in the first dethronement of the Stuarts, was as widely and vitally based upon economic causes as upon legal or religious,—possibly, indeed, much more so, if we only knew it.

At first James was determined to proceed with the monies which were being wrought by Elizabeth's warrant. But on the 11th November, in the first year of his reign, a new indenture was made for the[Pg 134] coining of a new piece called the Unite, to commemorate the union of the two crowns of England and Scotland. While preserving the same value as the pound sovereign of Elizabeth's issue of 1601 (viz. 20s.), its weight was only 154 26⁄31 grains, while that of Elizabeth's was 171 61⁄67. In the following year the angel was reduced from 78 66⁄73 grains to 71 1⁄9. The combined effect was to raise the ratio from 10.90 (as in 1601) to 12.15. Elizabeth's blunder was thereby effectually remedied, but it was not before an outcry had been made about the decay in shipping, and in the export of English cloth.

Even this higher ratio did not remain permanently, or for long, effective. In 1607 the transportation of specie rose to such a height that a proclamation had to be issued against it, 9th July, and there was again talk of establishing "a true and perfect way to keep the money within the kingdom by instituting a register for all payments made by way of exchange." Again, two years later (10th August 1609 and 18th May 1611), the proclamation had to be twice renewed; no less a person than Sir Francis Bacon drafting the clause in the first case. The anxiety which the subject caused to the Privy Council is quite apparent in the State papers, and much division of opinion prevailed before the only possible remedy—a raising of the denomination of the coinage—was adopted. Salisbury was at first adverse to the measure, but set himself carefully to study the question. The slow working of his mind is still traceable in the paper of notes he[Pg 135] drew up for his own guidance. "All the proportions of bullion ought to be xij for one between the gold and silver unmixed. Our sterling standard is wrought with a mixture of 18 dwt. in every lb. weight, which is 12 oz.; so as every 18 dwt. is 4s. 6d., and therefore that is wanting.

"Now, two things are in question, one the inconvenience of general transportation, the other of the particular, viz. Scotland. In the general this is the mischief, that our gold is not so much alloyed as our silver, and therefore being more worth than silver is bought and carried away. The particular, of Scotland, is more notorious, because it is not forbidden....

"The gold ought to be 24 caretts.

"Now oure angell is not so much but neare it, about 23 caretts 3 grains and 1⁄2.

"4 grains makes a caret. 24 caretts an oz.

"In silver every pound lacks 4s. 6d.

"A pound is 3^li in tale.

"In 6 angells wch is in tale 3^li, and in weight one ounce, there is not such an alloy, for in silver we want 4s. 6d., and in gold but—"

The notes end thus imperfectly, but what Salisbury was toilfully figuring for himself lay ready to his hand in the opinions of experts and of the officials of the Mint. Immediately succeeding these broken notes of his in the State Papers, there exists a series of documents which he doubtless had under his eye, and which exposed the situation with a clearness that was more than convincing. "Statement of the[Pg 136] Loss sustained by England in the Exchange of Coin." ... "Statement by the Officers of the Mint that the Raising the Value of the English Silver Coins by making a Pound Troy of Silver worth £3, 11s. 6d. only equalises the Value of English Money with those of Foreign Countries, and that to prevent the Export of Gold its Price must be raised in Proportion." And so on.

As the result of such representations, and after ten months of wavering Salisbury gave way, and on the 22nd November 1611 he consented to the issuing of a proclamation raising the denominational value of all gold coins 10 per cent. This proclamation was issued on the following day, and the ratio was thereby at a blow raised from 12.15 to 13.32.

Among the many alternative schemes proposed before the adoption of this measure, had been one for "raising £500,000 on loan to the King, by coining brass money to that amount, and compelling their acceptance in certain proportions by the people, on promise to repay within seven years in full value silver." It was fondly asserted that this would be a "means of preventing the export of coin and bullion, caused by the rise and value of foreign coin."

Another project brought forward was "for meeting the increase of value laid upon the coins of the Low Countries by issuing a copper coinage, corresponding thereto, and by raising the value of English silver and gold coins in order to prevent losses of merchants in foreign trade, etc."[Pg 137]

A year later a third scheme was proposed to remedy the under-valuation of English monies, "by the coinage of small silver monies of coarser silver, so as to raise the value of the larger money in proportion; the old standard to be observed in payments of rents, the new in ordinary bargains."

The step actually and finally adopted, however, by the proclamation of 1611, did not equalise the exchange for more than a twelvemonth. The rise on the Continent continued, and the outflow recommenced. In 1612 the Council took note of the persons concerned in this trade of transporting, with a view to proceeding against them, while on their side the general commercial public, or such of them as did not share the secret and the gain of bullion-broking, demanded that the under-valuation of English monies should be redeemed by further raising the value of the coins one penny in the shilling. On the 14th May 1612 a proclamation was issued forbidding merchants to exceed Mint prices in buying bullion. A year later (4th July 1613) we are told that the Privy Council had sat twelve or thirteen hours on the Sunday, and "have been forced to dismiss the gold and silver business, and also that of the fishing, as involving many points in the treaties with Burgundy and Holland."

The State papers of this year contain quite numerous references to the subject: "Statement of the Undervalue set upon English Money in Foreign Countries, as proved by the last Placard of the Low[Pg 138] Countries"; "Notes of the Advantage arising to the Crown of England from raising the Shilling to 13 1⁄2 Pence, and the Proportion of Gold from 12 1⁄2 to 13"; "Suggestions as to the Means of Preventing Foreign Nations from taking Advantage of the English in the Exchange of Monies, viz., raising English Coins in Nominal Value," etc.

On the 23rd March 1615 a further proclamation was issued against the export of gold and silver coin, and in the following year the exports of the East India Company were limited to £6000 in bullion or specie. The Mint officials proposed a raising of the denomination, and again the matter was hotly debated in and out of the Council. But a different race of men from Raleigh had succeeded, and, on the 31st December 1618, the Privy Council determined that "silver shall not be raised in value at present, and uniformity in the weight of the coin is to be observed; the melting of gold for braid or plate forbidden, but further regulations postponed till the committee for exchanges bring their report."

As it happened, owing to the necessity of replenishing the King's finances, the question had become complicated, and some of the measures proposed for staying the coin had a more sinister bearing, as is apparent in one of the schemes referred to (supra, p. 136), being, in short, cloaked proposals of debasement. In setting its face against such proposals of debasement the Council was right, but such proposals had relation only to the King's finances, and not to the[Pg 139] currency crux, and in delaying the proper tariffing of the English against the continental coins the Council did wrong. By 1619 the evil had risen to so great a height that the Council determined to act upon its own proclamations. Eighteen merchants were sentenced in the Star Chamber for exporting gold (8th December 1619), five being acquitted. The total of the fines imposed on the sentenced men reached £140,000, and it was stated that since the beginning of the reign a matter of £7,000,000 of gold had been surreptitiously exported. On the 31st July 1619 proclamation was issued for a new coinage. The gold angel was reduced in weight from 71 1⁄9 grs. to 64 11⁄15, being equivalent to an increase of an eleventh in its denominational value: and in January 1620, following the convictions of the merchants referred to, the Council busily debated "the erecting an exchange for monies, to prevent the export of silver by the goldsmiths who have been the offenders."

All these steps were taken too late, and the currency crisis which shook Germany ran its full course, too, in England.

In 1620 there was a great scarcity of silver in the country, and the trade of the Eastland merchant was gone—a scarcity and decay which they attributed "to the rise of foreign coin, especially that of Poland and Holland, during the last four years in which the Hollanders have farmed the King of Poland's Mint." The export of cloth had sunk to one-third the output[Pg 140] of the previous year. By May 1621 the situation had become pressing. The secret export of money still continued, and it was again proposed to register bills of exchange, and also to make Spanish and French coins current in the country. In June the Privy Council issued circulars to the East India, Turkey, French, Eastland, and Spanish companies, and the Company of Merchant-Adventurers—practically the whole mercantile corporation of London—desiring them to choose experienced persons from each of these companies, to consult upon the best means of managing the exchange of monies, so as to encourage the import of silver, and prevent its export. Their statement on the 17th June was simply that the export was due to the under-valuation of the English monies. The Council considered their report on the following day, and ordered it to be further considered, "but the Lords think it best for some agreement to be made with neighbouring states for a due correspondence in the value of the coins now used."

But while the Lords of the Council talked of treaties the crisis came. By the end of the year there was no money in the country, and trade was at a standstill. In February 1622, Locke informs Carleton "money is very scarce. In the clothing counties the poor have assembled in troops of forty or fifty, and gone to houses of the rich and demanded meat and money, which has been given through fear. The Lords ordered the clothiers to keep their people[Pg 141] at work, but as they complained that they cannot sell their cloth, usurers and monied men though not in the trade are ordered to buy it." In March the Justices write from Gloucestershire: "The people begin to steal, and many are starving; all trades are decayed; money very scarce." Stocks of cloth accumulated in the London "halls" or warehouses of the various districts, and notes of them were submitted to the Privy Council.

The merchant-adventurers were appealed to, to buy up these stocks, but they were unable. The ordinary taxes of the country could not be levied, or, when levied, proved only a fraction of the estimated amount, and invariably the commissioner attributed the deficiency to the want of money and the general decay of trade. "Wools and cloth are grown almost valueless," write the justices of Somerset, on the 15th of May 1622, "and the people desperate for want of work."[Pg 142]

The expectations of outbreaks were great, and in Nottingham musters were held, and the trained bands ordered to be ready for instant service, to suppress riots, if any occurred (July 1622).

Meanwhile the Council was busy conferring with merchant delegates from every part of the country. A new proclamation against exporting coin was talked of (15th June 1622), and a declaration issued (same day), that the King purposed to establish a Royal Exchange, to regulate all exchanges.

"Treatises on Exchanges," "Statements of the Disadvantages of a Low Exchange," and similar documents crowd the State papers; and on the 28th July a proclamation was issued ordering nothing to be worn at funerals but English-made cloth, forbidding the export of raw wool or yarn, and declaring the establishing of a Standing Commission on matters of trade. On the 30th of August the Goldsmiths' Company returned their answers to the Council's queries with regard to the comparative weight and value of Spanish reals and English shillings, and suggested that the pound of silver should be cut into 65s. instead of 62s. The officers of the Mint followed up this advice by confirmatory testimony. "The business is weighty," wrote Sir Robert Heath to Secretary Calvert, in enclosing him the above reports. "For we are drawn dry. Coin must be brought in from elsewhere [i.e. abroad], which can only be by assurance of gain to the merchants in equalling our coin to that of other States." As a corollary it was proposed on[Pg 143] the following day, August 31, to encourage the bringing in of money by making the Spanish real pass current at 4s. 8d., its true value in English coin. "The merchants will bring them in at this profit, though they can gain more for them in Holland, and they press for an immediate reply, as the Spanish fleet is coming in, and the money will be brought hither if the merchant can make a reasonable profit."

In September the clothworkers and dyers of London complained in a petition of their want of employment, and that many thousands of them were in the greatest distress. So great was the want in the country districts that a proclamation was issued ordering all persons of quality in London and Westminster to go to the country, and reside on their estates, for the relief of the poor in the dearth. In January 1623 fears of disturbance in Essex were rife, "because of poor clothworkers, the masters being unable to employ the men, and many who were thought the wealthiest were likely to become bankrupt." On the 7th of February the officers of the Mint reported to the Council that they found the value of the Spanish real of eight to be equal to 4s. 6 1⁄2d., as compared with the new shilling coin; and on the 4th of March following a proclamation was issued to make these Spanish reals current at 4s. 6d., "in hopes of bringing some of that coin to the Mint."

From this time onwards no further references, save one laconic remark in May 1623, "the poor do not complain much," occur in the State papers to this, one of[Pg 144] the acutest currency crises in our history; and we are left to follow the process of recovery and the dumb, inarticulate agony of the widespread ruin in sympathy and imagination merely. The details here given are taken entirely from the State papers, stolid and ungarnished, but the tale they tell is momentous and dire in its importance.

When consulted by the Privy Council, the various committees and delegates of the merchants attributed the crisis to the deceits practised in the manufacture of cloth, to the embargo on its sale, and other such causes, as well as to the scarcity of money, and the loss in exchange. The first suggestion is hardly worth a moment's consideration. Every testimony points to the fact that the crisis was as purely a monetary or currency crisis, as later crises have been distinguishedly credit crises. Between 1613 and 1621 hardly any silver monies were coined in the English Mint; for example, between 1617 and 1620 the total silver coinage was only £1070, whereas in the four succeeding years the silver coinage at the Tower Mint amounted to £205,500.

"From the year 1621," says one of the informers of 1638, to whose petition reference will be shortly made, "many goldsmiths and cashiers of London culled the weighty shillings and sixpences to make into plate, silver wire, and to other manufactures; for most of that time, we having wars with Spain, little or no silver came from thence; so likewise hath little or no silver from France in that time, and no[Pg 145] silver could be brought out of Holland by reason it went so high by the placard. For sterling silver passed in Holland for 4d. per ounce higher than it was made in our Mint, sterling being in Holland at 5s. 4d. per ounce, so that no silver could be imported from Holland to supply our Mint, which the goldsmiths and others perceiving presently fell a-culling the silver monies current, and the money being coined in the Mint at 5s. 2d., the goldsmiths, finers, and wire-drawers did raise it up to 5s. 3d. per ounce, and melted down into the weight of shillings and sixpences, and left none to pass betwixt man and man but light monies and clipped, and did exceed the rate of the Mint by giving for sterling 5s. 3d. per ounce, and 5s. 3 1⁄2d., and sometimes more; by which means there was no silver brought into the Mint for ten years to speak of but the silver which came from Wales. This will appear by the Mint books."

The testimony only confirms the previous inference. The whole reign of James I. was a period of inefficient attempts to rate the English coinage to the incessant rise in the continental coinages, of consequent drain of specie to the Netherlands, and of practical closing of the Mints at home. The cause, opportunity, channel, or machinery of the drain was the incessantly shifting, badly tariffed, imperfectly understood bimetallic system of the times; and the crisis of 1622 was only the most patent expression of its malignant action. It is doubtful whether the political effect of that crisis has been properly estimated by the consti[Pg 146]tutional student of the popular revolution under the Stuarts. Its commercial, currency, and economic and theoretic influence has certainly, and much more, been hitherto overlooked.

The reign of Charles I., and the period of the Commonwealth, display similar characteristics to that of James I., but in a more modified and less malignant measure. Putting aside, after one nearly fatal slip in August 1626, the various propositions for a debasement which were made early in his reign, Charles made, throughout, no change in the denomination or value of his coins, and no change in the ratio. In 1627 the export of coinage became again perceptible, and a warrant was issued for erecting a Royal Exchange between England and Scotland, September 28, and for a proclamation forbidding all indirect practices of merchants, and underhand buying of uncurrent coin and foreign bullion.

In the following March, 1628, a committee was appointed to advise his Majesty concerning the coins, and to observe from time to time all accidents at home and abroad touching coins. Numerous schemes were proposed for the arresting of the process of export. They bear generally two characters—(1) as proposing a change of the ratio; (2) as proposing a differential issue of the silver issue coinage, i.e. coining 4d., 3d., and 2d. silver pieces at a different and higher rate than the larger silver pieces. Such schemes have no importance at the present day, save as foreshadowing the mechanism by which England finally evolved a mono[Pg 147]metallic system which permitted of the fullest retention of silver. The flow of coinage which these proposals were intended to meet was not now to the Netherlands but to France, and it must be attributed to the course of the French currency already indicated. In 1630 the names of certain merchants engaged in the transport of gold and silver were reported to the Council, together with the names of the French merchants who received the same in France. In June 1635 certain of these were arrested, and in 1638 not less than thirty-seven of them were prosecuted in the Star Chamber for this unlawful transportation. The drain went steadily on during the whole of the decade. On January 18, 1635-6, a proclamation was issued for restraint of the consumption of coin and bullion. In the following March an order of the King in Council was issued against the exportation of English and Scotch coin, and by gentlemen crossing the sea, and forbidding the wearing of jewels, etc., "because of the great quantity of money exported." Any such enactments were doomed to be futile. The true remedy, or rather the keynote of the situation, was contained in a proposition submitted to the Privy Council for the making current of certain foreign coins. "The forbidding of Spanish money in England," says the author Barrett, "was to enrich the Mint, which brought forth contrary effects, for the French, Dutch, and other nations, by advancing Spanish coins, received the greatest profit." He accordingly proposed that the King should raise the Spanish money to be[Pg 148] current in England by proclamation. The double pistolets weighing 16s. to be raised to 15s.; the piece of eight weighing 5s. to be raised to 4s. 6d., "and when there is store brought into the kingdom, then have a new proclamation to call in these coins to be stamped with a mark and apprised to the intrinsic value." The step was not adopted, and by his Majesty's declaration of 1639 in the Star Chamber, gold and silver were to be considered commodities of merchandise. "By 1640 there was not in the kingdom a million of silver," says Sir Ralph Maddison in a memorial. "Gold and silver," said Sir Thomas Roe in his speech on trade in the Commons, "are very scarce, and the kingdom is impoverished. Money has been drawn away into other kingdoms, especially into France and Holland, where it is worth more." One of the informants, who had been employed by the Government in the prosecutions of 1638, thus gave his testimony in a petition which he subsequently drew up: "Divers goldsmiths of London are become exchangers of bullion of gold and silver, and buy it of merchants and others, pretending to carry it to the Mint. But indeed they are the greatest instruments for transporting that are, and in a manner they are only those who furnish transporters with English and foreign gold, Spanish money, rixdollars, pistolets, cardacues, etc. Some of the goldsmiths make it their use and practice to buy light English gold of shopkeepers and others, which, by the laws of this kingdom, wanting beyond remedy, ought to be[Pg 149] bought as bullion, and upon the sale ought to be defaced and new-coined in the Mint. But they take another way, for they sell all this gold to transport, though it want four, five, or six grains above the allowance, and that a 20s.-piece will not make 19s. to be coined in the Mint. Yet the goldsmiths will not abate above 2d. or 3d., and sometimes but 1d. in the piece, let the gold want what it will, by which means they outgive the Mint, and the gold which the goldsmiths buy of the subjects, thinking it is to carry to the Mint to be new-coined, to pass in current payment, they put it into a dead sea, never to be made coin of in our commonwealth. For, weekly, French and English have bought up this gold, let it be as light as it will, at 19s. 9d., 19s. 10d., 19s. 11d., and so after that rate for all other gold, to the value of many hundred thousand pounds. Many thousands of dollars and Spanish money they furnish yearly to merchants that trade for Norway and Denmark, to transport silver for those parts."

The drain of coinage to France he distinctly attributes to the raising of the French coins. "At this present in France the native merchants there match us with such a point of policy that it would be hard for our merchants to be master of.... Since the raising of our 20s.-piece to 26s. there ... they have advanced the price of their commodities according to their advanced monies, to the full sum of 6s. in the pound more than they were before."

During the Civil Wars there is a remarkable[Pg 150] paucity of reference to the subject, doubtless owing to the supreme importance of the war itself. On the 26th August 1643, and on the 24th February 1643-4, the Long Parliament issued orders, on the petition of merchant strangers who were prevented from importing bullion by the rigours of the search of their vessels, for their due encouragement. The petitions would argue a tendency towards an importation of specie, but in 1649 this was again changed, and a heavy export became perceptible. There can be little doubt that the initial impulse came from the new coinage which was instituted by the Act of 17th July 1649, and by the table of weights for the Commonwealth coins which that Act adopted. For two years and more both Council and Parliament were exercised in mind with regard to this export of specie and the consequent decay of trade, and draft Acts to prevent the export, as well as many other propositions, were had under long consideration. No measures were adopted, and an Amsterdam correspondent of Sir Robert Stone, in May 1652, thus gave his opinion of the wisdom of the Mint officials and the Government in this process of drift: "Experience has taught me that when the State does not keep extraordinary watch, and the laws are not put into execution against culling and sorting out the heaviest coins to be transported, and the light and clipped left behind, it is a great debasing of the current value of coin. All your silver money (i.e. in England) is thus abused by goldsmiths and others. And when the State does not employ such as can[Pg 151] discover those offenders, but puts persons into the Mint who have had no experience, great damage must follow. For there are bankers and exchangers in Holland who know the ignorance of all your present Mint men that have any place of trust, and laugh at them. They say when the Mint in the Tower flourished, old Andrew Palmer, Mr. Rogers, and one Cojan were there, who were all subtle Mint men, and held correspondence here (i.e. in Amsterdam), and knew what to do to advance the Mint, and would always find a way to bring grist to the mill. But now your Mint comes to be neglected and money adulterated. Many of our bankers here have a great trade with your goldsmiths and merchants in London for English gold and heavy English silver. Your Mint will never go until this be discovered, for these men are the sluices that drain all your money. I believe there is at this day forty times more gold and silver in the Low Countries than in England. About twelve years since the French were forced to call in all their money, it being so clipped that their commerce ran into confusion, and you have almost brought yourself to the same point, the coin in Ireland being 20 per cent. less value since the war. In England almost all your gold is transported, and the little that is left is in hucksters' hands, that go to an exchange in Lombard Street, and you must pay from £6 to £10, and sometimes more, to have £100 in gold for silver. For who will take gold to the Tower to be coined, and lose 2s. in 20s. of what[Pg 152] they can make by transporting it? We have more English gold in Amsterdam than you have (in England), all sent within those twenty years, and great quantities of English silver have weekly come over in pinks and Dutch men-of-war for years, to the value of many hundred thousands of pounds, in return for coin. I wondered at first how the merchants transported all the weighty and culled English money into Holland, until one of the bankers told me. I would have you inquire it and prevent it, for it is a most pernicious thing. It is the goldsmiths, especially those in Lombard Street, which are the greatest merchants, and London cashiers, and who will receive any man's money for nothing, and pay it for them the same or next day, and meantime keep people in their upper rooms to cull and weigh all they receive, and melt down the weighty, and transport it to foreign parts, sometimes without melting, and keep banks for all the principal coin in Christendom in their shops."

The succeeding years of the Commonwealth saw little change in the situation. In 1659 and 1660 the Council was still anxiously debating the question of the transport of bullion and coin. But this chain of phenomena refers to the third period in this history, and are to be treated of in that connection.

In broadest and hastiest résumé, and this by way of justification of the length to which this chapter has been drawn out, the influence of American gold and silver makes itself perceptible in 1520. For forty years a level and equal advance in each of the[Pg 153] precious metals and in prices records itself, then the relative and absolute production of silver increases enormously over that of gold, and the ratio is disturbed. The inequality of the rate at which this change of ratio spreads to successive countries, and is adopted in their various Mint regulations, is the bullionist's or exchanger's opportunity, and the disastrous effect of their activity results in the crisis of 1570 in France, and 1622 in England and Germany. Properly speaking there has been no subsequent crisis in European history fitly comparable with the latter of these. If at all, there is only one comparison possible, and that is the currency situation in which the monetary world is at this moment, or which has come upon it since 1850—a period of bullion inflation in which silver has, finally as yet, outweighed gold, to the violent disturbance of the ratio. But, as will be seen, the other conditions of the comparison are not reducible to, or expressible in, similar terms, and so far the legitimate deduction fails. None the less, the currency history of Europe during the sixteenth and seventeenth centuries has a vital didactic importance.

[Pg 154]

CHAPTER III

From the End of the First Cycle of American Influences to the Present Day, 1660-1894

Up to the close of the eighteenth century the production of silver shows a remarkable steadiness and uniformity—the decrease on the yield of the Potosi mines being compensated by the increased output of Mexican silver. In the condition of the output of gold, however, there is a perceptible alteration, due to the increasing imports of that metal from Brazil. The change in the relative production of the two metals appears from the table on p. 155.

The effect on the ratio of this increased relative and absolute amount of gold was, however, considerably diminished by the increasing favour with which gold came to be regarded for currency purposes, from the end of the seventeenth century onwards. In general terms this process or tendency in favour of gold continued through the first sixty years of the eighteenth century, at which time the proportion of gold to the production of the two metals had risen as high as 40 per cent., whereas in 1600 it had only formed 17.2 per cent. of the total.

From 1760, however, such relative preponderance[Pg 155] of gold was not maintained. It gradually sank back until, by the beginning of the present century, it had come to form only a little over 23 per cent. of the total. From 1820 to 1840 a recovery took place, but it was not until the Californian gold discoveries that the second great disturbance in the relative production of gold and silver took place; such a disturbance, i.e., as can be fitly compared with that which the sixteenth century witnessed.

[Pg 156]

As far as this relative production is concerned, the period, 1660-1840, is one of gradual and not abnormal variation, neither small nor inconsiderable in effect, but certainly not revolution-working, as had been the case in the sixteenth century with American silver, and as was to be in the nineteenth century with Californian and Australian gold, and in our own days with American silver for the second time.

With regard to the absolute production—gold shows a rise up to 1760, then a steady decline to 1820, followed by a second rise up to 1840. In the case of silver the decline in the absolute amount was steady from 1600 to 1680, then ensued a steady and strong rise to 1800, followed by an abrupt drop in the second decade of the present century, and then by a strong and steady recovery, commencing from 1830 and continuing until the present.

The larger question of the relative distribution of this mass of precious metals depends for its determination upon a full understanding of the law of the various Mints. Speaking in large, during the eighteenth century the Mint ratio was in favour of silver in France, and her currency was almost entirely silver throughout the century; conversely the Mints[Pg 157] favoured gold in England and Spain, and gold was almost the only constituent of the currency of either country for the greater part of the century. There can be little doubt that these simple facts had a great influence in actually determining the great currency legislation which closed the century and finally decided England in favour of gold, and France and the United States in favour of a bimetallism strongly favouring silver.

The statement of the ratio is as follows:—