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Coinage and Monetary Policies in Burgundian Flanders during the late-medieval 'Bullion Famines',. 1384 - 1482

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  • John H. Munro

Abstract

This paper seeks to answer two questions: were the coinage debasements in Burgundian Flanders (1384-1482) undertaken principally as monetary or fiscal policies; and were they beneficial or harmful? In a recent monograph, Sargent and Velde (Big Problem of Small Change: 2002) contend that monetary objectives governed almost all medieval, early-modern debasements, especially to remedy the chronic shortages of petty coins. Despite overwhelming evidence that Burgundian Flanders, along with most of north-west Europe in the later 14th and 15th centuries, experienced severe monetary scarcities and liquidity crises, especially in the periods ca. 1390 - ca. 1415 and ca. 1440 - ca. 1470, both periods of severe deflations, eras commonly known as �bullion famines�, there is no compelling evidence that the Burgundian rulers debased their coinages on the basis of any such monetary policies. My thesis is that the Burgundian rulers of Flanders, in competition with neighboring princes, undertook their debasements primarily as aggressive fiscal policies, specifically to finance warfare. Their goal was to increase their seigniorage revenues, the tax imposed on bullion brought to their mints, by two means: by increasing the tax rate itself, and by enticing an increased influx of bullion into their mints, both by the debasement techniques themselves and by auxiliary bullionist policies. Those policies were successful so long as three conditions were met: (1) that merchants supplying bullion received more coins of the same face value and thus with a greater aggregate money-of-account value than before (or than from other mints); (2) that the public accepted such debased coins at the same face value, by tale; and (3) that the merchants spent their increased supply of coins quickly, before any ensuing inflation eroded those gains. This study further demonstrates that the inflationary consequences of debasements were always less than those predicted by mathematical formulae � possibly because those debasements failed to counteract the prevailing forces of monetary contraction and deflation. Because so many princes pursued similar fiscal policies, many others engaged in debasement for purely defensive reasons: to protect their mints from foreign competition and to protect their domestic money supplies from influxes of debased and also counterfeit imitations: i.e., to counteract Gresham�s Law. If many debasements were retaliatory measures against a neighbour�s bullionist policies, those policies in general, and not just debasements, were also products of late-medieval warfare, which was also the primary culprit responsible for periodic monetary contractions: by impeding coinage circulations and bullion flows, and by provoking increased hoarding. The answer to the final question is that debasements were usually far more harmful than beneficial. Note that this is an extensively revised and shortened version of an earlier working paper (no. 355), correcting some errors in that paper (concerning Spanish coinage): with the same tables, but with a new set of graphs,

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Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-361.

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Length: 79 pages
Date of creation: 26 Jun 2009
Date of revision:
Handle: RePEc:tor:tecipa:tecipa-361

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Keywords: debasements; gold; silver; bullionist policies; mints; seigniorage; inflation; deflation; �bullion famines';

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  1. Sussman, Nathan & Zeira, Joseph, 2003. "Commodity money inflation: theory and evidence from France in 1350-1436," Journal of Monetary Economics, Elsevier, Elsevier, vol. 50(8), pages 1769-1793, November.
  2. Sargent, Thomas J & Velde, Francois R, 1999. "The Big Problem of Small Change," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 31(2), pages 137-61, May.
  3. Selgin, George, 1996. "Salvaging Gresham's Law: The Good, the Bad, and the Illegal," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 28(4), pages 637-49, November.
  4. Rolnick, Arthur J & Weber, Warren E, 1986. "Gresham's Law or Gresham's Fallacy?," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 94(1), pages 185-99, February.
  5. C. C. Patterson, 1972. "Silver Stocks and Losses in Ancient and Medieval Times," Economic History Review, Economic History Society, Economic History Society, vol. 25(2), pages 205-233, 05.
  6. John H. Munro, 1998. "English 'Backwardness' and Financial Innovations in Commerce with the Low Countries, 14th to 16th centuries," Working Papers, University of Toronto, Department of Economics munro-98-06, University of Toronto, Department of Economics.
  7. John Munro, 2002. "Gold, Guilds, and Government: The Impact of Monetary and Labour Policies on the Flemish Cloth Industry, 1390-1435," Working Papers, University of Toronto, Department of Economics munro-02-05, University of Toronto, Department of Economics.
  8. Munro, John H., 2002. "The medieval origins of the 'Financial Revolution': usury, rentes, and negotiablity," MPRA Paper 10925, University Library of Munich, Germany, revised Sep 2002.
  9. Munro, John H., 1988. "Deflation and the petty coinage problem in the late-medieval economy: The case of Flanders, 1334-1484," Explorations in Economic History, Elsevier, Elsevier, vol. 25(4), pages 387-423, October.
  10. Munro, John H., 2004. "Before and after the Black Death: money, prices, and wages in fourteenth-century England," MPRA Paper 15748, University Library of Munich, Germany.
  11. Sussman, Nathan, 1993. "Debasements, Royal Revenues, and Inflation in France During the Hundred Years' War, 1415–1422," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 53(01), pages 44-70, March.
  12. Motomura, Akira, 1997. "New Data on Minting, Seigniorage, and the Money Supply in Spain (Castile), 1597-1643," Explorations in Economic History, Elsevier, Elsevier, vol. 34(3), pages 331-367, July.
  13. Motomura, Akira, 1994. "The Best and Worst of Currencies: Seigniorage and Currency Policy in Spain, 1597–1650," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 54(01), pages 104-127, March.
  14. Munro, John H., 2002. "Wage-stickiness, monetary changes, and real incomes in late-medieval England and the Low Countries, 1300 - 1500: did money matter?," MPRA Paper 10846, University Library of Munich, Germany, revised Sep 2002.
  15. Gandal, Neil & Sussman, Nathan, 1997. "Asymmetric Information and Commodity Money: Tickling the Tolerance in Medieval France," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 29(4), pages 440-57, November.
  16. John H. Munro, 2000. "The West European Woollen Industries and their Struggles for International Markets, c.1000 - 1500," Working Papers, University of Toronto, Department of Economics munro-00-04, University of Toronto, Department of Economics.
  17. Arthur J. Rolnick & Francois R. Velde & Warren E. Weber, 1997. "The debasement puzzle: an essay on medieval monetary history," Quarterly Review, Federal Reserve Bank of Minneapolis, Federal Reserve Bank of Minneapolis, issue Fall, pages 8-20.
  18. Sussman, Nathan, 1998. "The Late Medieval Bullion Famine Reconsidered," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 58(01), pages 126-154, March.
  19. N. J. Mayhew, 1974. "Numismatic Evidence and Falling Prices in the Fourteenth Century," Economic History Review, Economic History Society, Economic History Society, vol. 27(1), pages 1-15, 02.
  20. Arthur J. Rolnick & Warren E. Weber, 1986. "Gresham's law or Gresham's fallacy?," Quarterly Review, Federal Reserve Bank of Minneapolis, Federal Reserve Bank of Minneapolis, issue Win, pages 17-24.
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