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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,

Suggested Citation

  • John H. Munro, 2009. "Coinage and Monetary Policies in Burgundian Flanders during the late-medieval 'Bullion Famines',. 1384 - 1482," Working Papers tecipa-361, University of Toronto, Department of Economics.
  • Handle: RePEc:tor:tecipa:tecipa-361
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    References listed on IDEAS

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    1. 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.
    2. Rolnick, Arthur J & Weber, Warren E, 1986. "Gresham's Law or Gresham's Fallacy?," Journal of Political Economy, University of Chicago Press, vol. 94(1), pages 185-199, February.
    3. 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, vol. 54(01), pages 104-127, March.
    4. John H. Munro, 2000. "The West European Woollen Industries and their Struggles for International Markets, c.1000 - 1500," Working Papers munro-00-04, University of Toronto, Department of Economics.
    5. Sargent, Thomas J & Velde, Francois R, 1999. "The Big Problem of Small Change," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 31(2), pages 137-161, May.
    6. 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 440-457, November.
    7. N. J. Mayhew, 1974. "Numismatic Evidence and Falling Prices in the Fourteenth Century," Economic History Review, Economic History Society, vol. 27(1), pages 1-15, February.
    8. 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, issue Fall, pages 8-20.
    9. Sussman, Nathan & Zeira, Joseph, 2003. "Commodity money inflation: theory and evidence from France in 1350-1436," Journal of Monetary Economics, Elsevier, vol. 50(8), pages 1769-1793, November.
    10. Selgin, George, 1996. "Salvaging Gresham's Law: The Good, the Bad, and the Illegal," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 637-649, November.
    11. 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.
    12. John Munro, 2002. "Gold, Guilds, and Government: The Impact of Monetary and Labour Policies on the Flemish Cloth Industry, 1390-1435," Working Papers munro-02-05, University of Toronto, Department of Economics.
    13. Motomura, Akira, 1997. "New Data on Minting, Seigniorage, and the Money Supply in Spain (Castile), 1597-1643," Explorations in Economic History, Elsevier, vol. 34(3), pages 331-367, July.
    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. C. C. Patterson, 1972. "Silver Stocks and Losses in Ancient and Medieval Times," Economic History Review, Economic History Society, vol. 25(2), pages 205-233, May.
    16. John H. Munro, 1998. "English 'Backwardness' and Financial Innovations in Commerce with the Low Countries, 14th to 16th centuries," Working Papers munro-98-06, University of Toronto, Department of Economics.
    17. 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.
    18. 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, vol. 53(01), pages 44-70, March.
    19. Sussman, Nathan, 1998. "The Late Medieval Bullion Famine Reconsidered," The Journal of Economic History, Cambridge University Press, vol. 58(01), pages 126-154, March.
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    More about this item

    Keywords

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

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • N43 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: Pre-1913

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