The History of Currency, 1252 to 1896 Part 8

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 n.o.bles, and of silver 30 s.h.i.+llings of esterlings of old alloy.

This recoinage was carried out and finished in the third year of Henry V., 1414. Under it the contents of the silver penny sank from 18 to 15 grs., and of the gold n.o.ble 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 n.o.bles_, which were of less value than the English n.o.bles. 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 pet.i.tion of the Commons, commanding foreign money to 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 n.o.bles 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 n.o.ble 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."

[Sidenote: THE MONETARY TROUBLES OF HENRY VI]

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 n.o.bles, half-n.o.bles, 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 n.o.ble 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 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 pet.i.tioned 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 n.o.ble 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 inst.i.tuted, 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 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.

[Sidenote: CONCLUSION OF THE FIRST PERIOD]

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 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.

FOOTNOTES:

[Footnote 1: This is the date accepted by the numismatic authorities. It is adopted by Orsini (_Storia delle Monete della Repubblica Fiorentina_, p. xxiv, where he states the authority for it). It is nevertheless open to serious doubt. See in De Saulcy, Doc.u.ments I. pp. 115-131, references to florins d'or from 1180 onwards. On the other hand, as to the nature of the florin de compte and its distinction from the florin d'or, see M.L. Blancard, _Revue numismatique_, 1886, pp. 48, 218, and 1887, p.

259; and Vicomte D'Avenel, _Histoire de la propriete, etc._, i. p. 41.]

[Footnote 2: Est a notter que le Roi en fit forger aulcune quant.i.te (some slight quant.i.ty) d'or du poids de 12 den. 16 gr. chacune piece laguelle auvrage il dedia seullement pour sou aulmosne aux pauvres ausquels souvent il lavait les piedz par humilite. Et en fut jamais inventee ladite piece d'or pour aultre cause que dessus et non pour monnaie uzuelle et publicque." (De Saulcy, _Doc.u.ments, i._ 115, 122, 125).]

[Footnote 3: See, however, in De Saulcy, i. 31, a mention of _manteletz d'or de Flandre_ in 1265.]

[Footnote 4: Soetbeer considers the standard in 1386 as 23 fine, and a.s.serts that, by the Mint edict of 1402, it was lowered to 22-1/2 carats.]

[Footnote 5: For an estimation of the _commercial_ effect of these debas.e.m.e.nts, see Vicomte D'Avenel, _Histoire de la propriete, etc._, i.

53-54]

[Footnote 6: For a similar table calculated in francs, see Vicomte D'Avenel, _Histoire de la propriete, etc._, i. 62, 481, where the figures are very different. On Le Vicomte D'Avenel's method of calculation, see the _English Historical Review_.]

[Footnote 7: See note on p. 397, infra..]

[Footnote 8: By prices here, and subsequently throughout this volume, is meant the price or tariff and Mint rate of the coins. There is no reference whatever to general prices.]

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 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 quant.i.ties in the archbishopric of Salzburg, and in Hungary, as well as from Africa.

[Sidenote: GENERAL STATEMENT]

2. In this second period of European bimetallic history, the centre of European monetary exchanges pa.s.ses 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 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 mediaeval 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 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 cla.s.s 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 ill.u.s.tration 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.

[Sidenote: PRODUCTION OF THE PRECIOUS METALS]

+-----------+-------------+-------------+--------------+--------------+ | | Annual | Annual | Proportion | Proportion | | Date. | Average | Average | of Gold | of Silver | | | Production | Production | in Total. | in Total. | | | of Gold. | of Silver. | | | +-----------+-------------+-------------+--------------+--------------+ | 1493-1520 | 800,000 | 600,000 | 57% | 43% | | 1521-45 | 1,000,000 | 1,100,000 | 47% | 53% | | 1545-60 | 1,200,000 | 3,850,000 | 23.6 | 76.4 | | 1560-80 | 855,000 | 3,640,000 | 20.8 | 79.2 | | 1581-1600 | 1,030,000 | 4,945,000 | 17.2 | 82.8 | | 1601-20 | 1,190,000 | 4,820,000 | 19.8 | 80.2 | | 1621-40 | 1,157,850 | 3,916,300 | 22.8 | 77.2 | | 1641-60 | 1,223,400 | 3,516,500 | 25.8 | 74.2 | +-----------+-------------+-------------+--------------+--------------+

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, 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 circ.u.mstantially 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:--

+-------+-----------------------------------+---------+-----------+ | Date. | | Florin. | Stivers. | |-------+-----------------------------------+---------+-----------| | 1519 | French Crown quoted at | 1 | 15-1/2 | | 1522 | " " | 1 | 19 | | 1526 | " " {(Real) | 1 | 19 | | | " " {(Attempted) | 1 | 15-1/2 | | 1539 | " " {(Real) | 1 | 17 | | | " " {(Attempted) | 1 | 15 | | 1548 | " " | 1 | 17 | | 1552 | " " | 1 | 19 | +-------+-----------------------------------+---------+-----------+

This general conclusion will be found quite invariably ill.u.s.trated in the tables of Netherland coins (below).

[Sidenote: CHARACTERISTICS OF THE PERIOD, 1493-1548]

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.

In France the ratio in { 1519 was 11.76 { 1540 " 11.82

In the Netherlands the ratio in { 1520 " 10.68 { 1540 " 10.62

In England { 1527 " 11.23 { 1552 " 11.1

In Germany { 1524 " 11.38 { 1551 " 11.38

Broadly speaking, therefore, there is a certain h.o.m.ogeneity 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.