Advanced Search
MyIDEAS: Login

The Technology and Economics of Coinage Debasements in Medieval and Early Modern Europe: with special reference to the Low Countries and England

Contents:

Author Info

  • John H. Munro

Abstract

Coinage debasement in medieval and early modern Europe remains an ill-understood topic; and indeed an often cited article ("The Debasement Puzzle": Velde and Weber, 1996) sought to demonstrate that coinage debasements were both impractical and economically futile. The purpose of this study is to demonstrate that aggressive debasements were generally very practical and effective, so long as they were properly devised to profit both the merchants who brought bullion to the mints and the princes who earned seigniorage revenues from those mints. To be sure, the general public often suffered the consequences of this seigniorage tax from the consequent inflation. But another goal of this study is to demonstrate that inflation was almost never proportionate to the extent of the debasement, even during Henry VIII's Great Debasement (1542-53); and to demonstrate that both merchants and the prince benefitted from debasements in real terms, provided that they spent the increased quantity of now debased coins (of the same face value) quickly enough, before the full force of inflation was felt. Central to the economic success of such debasements was the pre-modern mint technology: the very crudity of the techniques of "hammered" coinages whose mint outputs did not produce fully identical coins in each issue. For this and many other reasons explored in this study, domestic merchants and the general public almost always accepted coins by tale (number), at face value, and did not discount them for deficiencies in weight and fineness, except for those merchants dealing with gold coins in international trade. The second part of this study is an examination of the European princes' motives for conducting such coinage debasements. As the previous argument and so many previous studies have indicated, an obvious motive was profit-seeking, so that such debasements may be regarded more as fiscal than truly monetary policies. But an equally powerful and perhaps even more widespread monetary motive was defence of the realm's coinages and mints: i.e., necessary defences and retaliations against aggressive, profit-seeking debasements undertaken by neighboring prices (or city states). In essence, that meant a defence against the operations of Gresham's Law, whose frequency and effectiveness in international monetary flows are also examined in this study. The operation of Gresham's Law also involved, however, the deterioration of the general standard of domestic coins through counterfeiting, fraudulent clipping and sweating of the coins, and especially by normal wear and tear in domestic circulation. Such deterioration, for all these reasons, thus meant that freshly minted, full-bodied good coins were soon driven out of circulation (exported abroad, melted down, or just hoarded) by the prevailing circulation of 'bad' coins, thus necessitating a defensive debasement to reduce the mint standard, in weight and fineness, to that of the prevailing circulation. The problem of Gresham's Law, related to both aggressive and defensive debasements, was resolved, to obviate debasements, only by the advent of modern steam-powered machinery to produce perfectly round, milled, and exact replicas of coins struck. The final but brief aspect of this study is to answer the question raised by Sargent and Velde in their recent monograph: The Big Problem of Small Change (2002). Were such coinage debasement ever undertaken as a deliberate policy to expand the money supply (especially during the late-medieval "bullion famines") and in particular to remedy any chronic shortage of petty coins or "small change": other than as a defensive reaction to Gresham's Law? The answer advanced in this study, briefly, is simply NO (for the reasons explored in the conclusion).

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.economics.utoronto.ca/public/workingPapers/tecipa-456.pdf
File Function: Main Text
Download Restriction: no

Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-456.

as in new window
Length: Unknown pages
Date of creation: 06 Jun 2012
Date of revision:
Handle: RePEc:tor:tecipa:tecipa-456

Contact details of provider:
Postal: 150 St. George Street, Toronto, Ontario
Phone: (416) 978-5283

Related research

Keywords: coinage debasements; ‘Great Debasement’; gold; silver; billon; bullion; bullionist policies; mints; mint outputs; seigniorage; brassage; token coinages; ‘small change’; Gresham’s Law; inflation; deflation; ‘bullion famines’ and monetary scarcities; warfare; taxation; France; Flanders; dukes of Burgundy; England; Henry VIII.;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. 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, vol. 25(4), pages 387-423, October.
  2. Munro, John H., 2008. "Money, prices, wages, and ‘profit inflation’ in Spain, the Southern Netherlands, and England during the Price Revolution era, ca. 1520 - ca. 1650," MPRA Paper 10849, University Library of Munich, Germany, revised Jul 2008.
  3. Gandal, Neil & Sussman, Nathan, 1997. "Asymmetric Information and Commodity Money: Tickling the Tolerance in Medieval France," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(4), pages 440-57, November.
  4. Glassman, Debra & Redish, Angela, 1988. "Currency depreciation in early modern England and France," Explorations in Economic History, Elsevier, vol. 25(1), pages 75-97, January.
  5. John H. Munro, 2001. "Money, Wages, and Real Incomes in the Age of Erasmus: The Purchasing Power of Coins and of Building Craftsmen's Wages in England and the Low Countries, 1500 - 1540," Working Papers munro-01-01, University of Toronto, Department of Economics.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:tor:tecipa:tecipa-456. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (RePEc Maintainer).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.