The History of Currency, 1252 to 1896 Part 11

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 weight, so that thirty-six were needed to purchase one gold gulden, whereas formerly twenty-six were equivalent.

[Sidenote: GERMANY: DISORDERS OF 1580]

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 pa.s.sed 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 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 Nurnberg, and that the arbitrage was attended with 9 or 10 per cent.

profit.

[Sidenote: GERMANY: THE KIPPER UND WIPPER ZEIT]

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 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:--

+--------------+--------+---------++--------------+--------+---------+ | Date. | Florin.| Krtzers.|| Date. | Florin.| Krtzers.| +--------------+--------+---------++--------------+--------+---------+ | 1582 | 1 | 8 || 1621 Jan. | 2 | 20 | | 1587 | 1 | 9 || Feb. | 2 | 24 | | 1590 | 1 | 10 || March | 2 | 30 | | 1594 | 1 | 11 || April | 2 | 36 | | 1596 | 1 | 12 || May 25 | 2 | 48 | | 1603 | 1 | 14 || May 31 | 3 | 15 | | 1604 | 1 | 14 || June | 3 | 6 | | 1605 | 1 | 15 || July | 3 | 15 | | 1607 | 1 | 16 || Aug. | 4 | 0 | | 1608 | 1 | 20 || Aug. 10 | 3 | 15[A] | | 1609 June 15 | 1 | 22 || Sept. | 4 | 30[A] | | July 7 | | || Oct. | 5 | 0[A] | | Dec. 19 | 1 | 24 || Nov. | 5 | 30[A] | | 1610 | 1 | 24 || Dec. | 6 | 30[A] | | 1613 Sept. | 1 | 26 || Dec. 20 | 3 | 15 | | 1614 Aug. | 1 | 28 || 1622 Jan. 18 | 7 | 30[B] | | 1615 March | 1 | 28 || Jan. 27 | 4 | 30 | | Nov. 1 | 1 | 24 || Feb. 10 | 10 | 0[C] | | Nov. 17 | 1 | 30 || Mar. | 10 | 0[C] | | 1616 | 1 | 30 || Mar. 12 | 6 | 0 | | 1617 | 1 | 30 || June 16 | 3 | 15[A] | | 1618 | 1 | 32 || Oct. | 5 | 0[B] | | 1619 Oct. | 1 | 48 || Nov. | 6 | 0[B] | | Dec. | 2 | 4 || 1623 April | 1 | 30 | | 1620 June | 2 | 8 || And at this last figure | | Nov. 9 | 2 | 20 || standing up to 1669. | +--------------+--------+---------++--------------+--------+---------+ [Footnote A: Nurnberg.] [Footnote B: Augsburg.] [Footnote C: Vienna.]

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 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.

+-----------+------------+----------++-----------+------------+---------+ | |Schillingen.|Pfennige. || |Schillingen.|Pfennige.| +-----------+------------+----------++-----------+------------+---------+ |Oct. 1609 | 36 | 0 ||July 1618 | 42 | 6 | | 1610-13 | 37 | 0 ||Sept. | 43 | 0 | |Dec. 1614 | 37 | 6 ||Nov. | 44 | 0 | |Aug. 1615 | 38 | 9 ||Sept. 1619 | 46 | 6 | |Jan. 1616 | 40 | 0 ||Oct. | 48 | 0 | |Aug. | 41 | 0 ||Aug. 1620 | 52 | 0 | |April 1617 | 40 | 6 ||Feb. 1621 | 53 | 0 | |Aug. | 41 | 0 ||Mar. | 54 | 6 | |Sept. | 41 | 6 ||May | 54 | 0 | |Nov. | 42 | 0 ||May 1622 | 48 | 0 | +-----------+------------+----------++-----------+------------+---------+

It was in antic.i.p.ation of the approaching disorder that on the 3rd of March 1609 a Mint treaty had been made between Mecklenburg, Schleswig-Holstein, Lubeck, 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 pet.i.tion 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 Lubeck) to 62 kreutzer (=32 schillingen Lubeck), and the exchange with Amsterdam from 46 stivers (=32 schillingen Lubeck) 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. .h.i.therto 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."

[Sidenote: GERMANY: HAMBURG IN 1619]

It was as the outcome of this resolution that the celebrated Hamburg bank was inst.i.tuted 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 a.n.a.logy 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.

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.

[Sidenote: SPAIN: FUNCTION IN SEVENTEENTH CENTURY]

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 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 sh.o.r.es 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.

a.s.suming 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 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 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 pet.i.tioned the King, Charles I., to lower the standard and content of the gold coin, "so that in weight and value they may pa.s.s 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 adoption the need for the measure had pa.s.sed 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 pet.i.tion 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."

[Sidenote: SPAIN: Pa.s.sIVE ATt.i.tUDE]

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 pa.s.sive 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 pa.s.sive aspect, although it has been attributed to a mere base desire on the part of Philip to fill his depleted treasury by a partial debas.e.m.e.nt. 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 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 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:--

[Sidenote: ENGLAND, 1500-1660]

TABLE OF ENGLISH SILVER COINS, 1500-1660.

+------+--------------+------------++------+--------------+------------+ |Date. |Denomination. | Weight in ||Date. |Denomination. | Weight in | | | |Troy Grains.|| | |Troy Grains.| +------+--------------+------------++------+--------------+------------+ | 1504 | Penny, | 12 || 1552 | Penny, | 8 | | | Groat, | 48 || | s.h.i.+lling, | 96 | | | s.h.i.+lling, | 144 || | | | | | | || 1553 | Penny, | 8 | | 1527 | Penny, | 10-1/2 || | Groat, | 32 | | | Groat, | 42-1/2 || | s.h.i.+lling, | 96 | | | | || | | | | 1543 | Penny, | 10 || 1560 | Penny, | 8 | | | Groat, | 40 || | Groat, | 32 | | | s.h.i.+lling, | 120 || | | | | | | || 1601 | Penny, | 7-3/4 | | 1549 | s.h.i.+lling, | 80 || | s.h.i.+lling, | 92-3/4 | +------+--------------+------------++------+--------------+------------+

TABLE OF THE ENGLISH GOLD COINS, 1500-1660.

+----------------------+--------------+---------+---------------+---------+ | |Denomination. |Weight | Fineness. | | | Date. | |in Troy +-------+-------+ Equiv- | | | |Grains. |Carats.|Grains.| alents. | +----------------------+--------------+---------+-------+-------+---------+ |Henry VII., 1489 |Sovereign, | 240 | 23 | 3-1/2 |1 0 0 | | | | | | | | |Henry VIII., 1527 |Rose n.o.bel | 120 | 23 | 3-1/2 | 0 11 3 | | |or Rial, | | | | | | |Sovereign, | 240 | 23 | 3-1/2 | 1 2 6 | | 1544 |Angel, | 80 | 22 | 0 | 0 8 0 | | |Crown, | 57-21/67| 22 | 0 | 0 5 0 | | |Pound, | 200 | 22 | 0 | 1 0 0 | | 1545 |Crown, | 48 | 20 | 0 | 0 5 0 | | |Pound, |192 | 20 | 0 | 1 0 0 | | | | | | | | |Edward VI., 1549 |Pound, |169-7/17 | 20 | 0 | 1 0 0 | | 1550 |Angel, | 80 | 23 | 3-1/2 | 0 8 0 | | |Sovereign, |240 | 23 | 3-1/2 | 1 4 0 | | 1551 |Pound, |178-8/11 | 22 | 0 | 1 0 0 | | | | | | | | |Mary, 1553 |Angel, | 80 | 23 | 3-1/2 | 0 6 8 | | | | | | | | |Elizabeth, 1558 |Angel, | 80 | 23 | 3-1/2 | 0 10 0 | | |Sovereign, |240 | 23 | 3-1/2 | 1 10 0 | | |Pound, |174-8/11 | 22 | 0 | 1 0 0 | | 1601 |Angel, | 78-66/73| 22 | 0 | 0 10 0 | | |Pound, |171-61/67| 22 | 0 | 1 0 0 | | | | | | | | |James I., 1603 |Pound, |171-61/67| 22 | 0 | 1 10 0 | | 1604 |Unit and its |154-2/3 | 22 | 0 | 1 0 0 | | |fractions, | | | | | | |the Double | | | | | | |Cr., Brit- | | | | | | |ish Crown, | | | | | | |and Thistle | | | | | | |Crown, | | | | | | 1605 |Angel, | 71-1/9 | 23 | 3-1/2 | 0 10 0 | | 1610 |Angel, | 71-1/9 | 23 | 3-1/2 | 0 11 0 | | | | | | | | |Gold raised 10 p. ct. |Unit, |154-26/31| 22 | 0 | 1 2 0 | | 1619 |Angel, | 64-11/15| 23 | 3-1/2 | 0 11 0 | | | | | | | | |Charles I. 1625 |Angel, | 64-11/15| 23 | 3-1/2 | 0 10 0 | | |Unit, |140-20/41| 22 | 0 | 1 0 0 | +----------------------+--------------+---------+-------+-------+---------+

TABLE OF THE VALUE IN PENCE OF THE GRAIN OF GOLD (23 c. 3-1/2 gr. Fine) IN THE VARIOUS GOLD COINAGES OF ENGLAND, 1500-1660.

+-------------------+--------++------------------+--------+ | | Pence || | Pence | | Date. | per || Date. | per | | | Grain. || | Grain. | +-------------------+--------++------------------+--------+ | 1527 | 1.125 || 1601 | 1.626 | | 1544 (22 carats) | 1.281 || 1603 (22 carats) | 2.236 | | 1545 (20 carats) | 1.470 || 1604 | 1.655 | | 1549 (22 carats) | 1.518 || 1605 | 1.27 | | 1550 | 1.2 || 1610 | 1.856 | | 1551 (22 carats) | 1.425 || 1619 | 2.052 | | 1553 | 1.0 || 1625 | 1.851 | | 1558 | 1.5 || 1625 (22 carats) | 1.838 | | 1558 (22 carats) | 1.425 || | | +-------------------+--------++------------------+--------+

[Ill.u.s.tration: 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.

[Sidenote: WOLSEY'S ADMINISTRATION OF THE MINT]

The very year, therefore, 1519, which marks the 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 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.