The History of Currency, 1252 to 1896 Part 7

In our own country the same truth had been quickly grasped. It was found that the new gold money was 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 By a proclamation of the same year, therefore, 9th July, it was withdrawn and ordered to be taken only as bullion, and a new indenture was made for the coining of gold n.o.bles--39-1/2 out of the pound Tower, and at the value of 6s. 8d. The n.o.bles were at once made current and tenderable along with silver, by proclamation; gold being ordered to be received in payment of 20s. and upwards.

[Sidenote: GOLD n.o.bLES COINED]

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.

TABLE OF THE VARIATIONS OF THE GOLD AND SILVER COINS OF ENGLAND, 1300-1500.

+----------------------+---------------------------------------------------+ | Silver. | Gold. | +-------+--------------+-------+--------+----------+-----------+-----------+ | | Weight of | | | Weight | | Price in | | Date. | the Silver | Date. | Coin. | in | Value | Pence per | | | Penny in | | | Grains. | Declared.| Grain of | | | Troy Grains. | | | | | Gold. | +-------+--------------+-------+--------+----------+-----------+-----------+ | | | | | | _s._ _d._ | | | 1300 | 22 | 1344 | Florin | 108 | 6 0 | 0.6666 | | 1344 | 20-1/4 | 1344 | n.o.ble | 138-6/13 | 6 8 | 0.5777 | | 1346 | 20 | 1346 | ... | 128-4/7 | 6 8 | 0.6222 | | 1351 | 18 | 1353 | ... | 120 | 6 8 | 0.6666 | | 1412 | 15 | 1414 | ... | 108 | 6 8 | 0.7407 | | 1464 | 12 | 1460 | ... | 120 | 8 4 | 0.7500 | | | | 1470 | Angel | 80 | 6 8 | 1.0000 | +-------+--------------+-------+--------+----------+-----------+-----------+

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 pet.i.tioned Edward most urgently to interfere, instancing in special the Lombards, "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.

[Sidenote: EDWARD III.'S CHANGES OF RATIO]

[Ill.u.s.tration: 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 n.o.bles 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.

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 debas.e.m.e.nt 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 a.s.suming 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 measure of precaution, as stopping an invisible and insidious outflow of the currency.

[Sidenote: ENGLAND AND FRANCE IN 1360]

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 debas.e.m.e.nt 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 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 n.o.bles (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 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 mediaeval 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.

[Sidenote: ENGLAND IN 1378]

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 diminis.h.i.+ng 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."

[Sidenote: THE MONETARY INQUIRY OF 1381]

Three years later--one year after the French King had lowered his ratio from 12.1 to 10.74--the Commons presented a pet.i.tion 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 pet.i.tion 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 _n.o.bles_ which came from Calais were gone into Flanders, and the English _n.o.bles_ were carried beyond the sea, to the great profit of those who exported them, etc. etc.

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 quant.i.ty 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, 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 n.o.ble 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 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 n.o.bles (but which pound, by reason of clipping and otherwise impairing, was then valued at 41-1/2 n.o.bles) should be made into 48 n.o.bles, 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 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 acc.u.mulation of monetary evil, through the impolicy and want of courage of Richard.

[Sidenote: THE RECOINAGE OF 1414]

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 n.o.bles of Flanders were so common in England that a man could not receive a sum of 100 s.h.i.+llings without taking three or four such n.o.bles, each of them more feeble than the English n.o.ble by two-pence.

A statute was accordingly pa.s.sed, 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 pa.s.sed, and so on.