The History of Currency, 1252 to 1896 Part 5

In France, as in Germany, the first coining of gold can only be dated approximately, but for all practical purposes quite safely. The generally accepted view is that the French series of gold coins was initiated in 1254 by Louis IX., "St. Louis," and that the issue was connected with the Sixth Crusade which he had headed five years before.

There is doc.u.mentary evidence extant to disprove this. _Florins d'or appelez Florences_ are mentioned as early as 1180, not vaguely but quite definitely with an exact statement of weight standard and equivalence.

Unless the record of the first minting of the gold florin at Florence is untrustworthy the coin here referred to can only be an imitation in gold of the silver florin of Florence. The same doc.u.ment which contains this reference (De Saulcy, i. 115) also specifies _pet.i.ts royaux d'or_ as minted not only in 1180 by Philip Augustus, but also in the days of his father, Louis VII. Similar mention of at least two gold coins of Louis IX. occurs as early as 1226, one evidently of the florin type, the other a _pavillon d'or_. It is quite safe to a.s.sert, however, that these coins were for show merely, due to an emulation of Byzantine and Italian opulence, and indicate no wide or commercial employment of gold. Of the gold florins of 1226, for instance, thirteen pieces were struck, twelve for twelve peers of France as a gift, the thirteenth for the King himself, "and know you that this is the most beautiful money that can be found, and the finest and best engraved." The interest of such issues is entirely numismatic and not commercial or monetary.[2] It is not until late in the reign of St. Louis--until 1265 or thereabouts--that there is mention in France of any such gold coinage as could have this commercial rather than merely numismatic importance. For the purposes of metallic or currency history proper the real starting-point for France is marked rather by the _gros royaux d'or_, coined in 1295 by Philip le Bel, than by the more meagre coinage of St. Louis and his predecessors. The _gros royaux_ of Philip were double the value of the _pet.i.ts royaux_ of St.

Louis, of which latter Philip le Bel speaks thus in his proclamation.

"We have commanded to be made in our name money of gold after the _pet.i.ts royaux d'or_, which shall be 70 to the Paris mark and cut as the _pet.i.ts royaux_ have been used to be, being issued at an equivalence of 11 sols Parisi." From this date (1295) onward the gold coinage of the French Mint became one of the most important factors in the monetary history of Europe.

In Flanders the first gold coins were struck in 1357, under the rule of Count Louis II.[3] Both the coins issued by him are copied directly from French types----his _real au lion_ from the French _ecu_ of Philip IV., and his _mouton d'or_ from the French coin of the same name. And it was the same French original which furnished the types to William V., Count of Holland (1356-77), when he followed the fashion and coined gold. Of the six types minted by Count William during his reign, two are an imitation of the French _mouton_, and the last is derived from the universally prevailing type, the florin.

[Sidenote: GOLD COINAGE IN SPAIN AND ENGLAND]

In Spain the first coining of gold by the Christian powers fell in the same epoch and derived from the same source. Alfonso XI. (1312-50), surnamed the "n.o.ble," was the first King of Castille who coined the _oro gran modulo_ (_doblas de oro_), while in Aragon Pedro IV. (1336-87), "the Ceremonious," in his _oro florines_ directly imitated the Florentine type, though his later pieces are more original in design.

Finally, with regard to England,--to whose monetary history a central importance attaches,--the course of events was most evidently controlled by the revolution in the continental currencies. It is, at the same time, comparatively easy to ascertain. The first of our kings to issue gold coins was Henry III., who in 1257 coined a penny of fine gold, of the weight of two silver pennies of the time, and ordered it to be current for twenty pence.

There can be no doubt that the idea of such a coinage was derived from that of St. Louis of France; and, just as in France, the issue seems to have been premature. Probably neither in the one country nor the other did there exist a sufficient store of the precious metal itself, nor sufficient activity of trade to attract such a store, or indeed to make a gold coinage at all a matter of mercantile advantage. It is only a developed and active or considerable trade that demands so enhanced a medium of exchange. Accordingly, just as in France, there is a noticeable gap between the first actual minting of gold by the predecessors of St. Louis, and the minting of it in such quant.i.ties as to make a factor in commercial and monetary history, in the days of Philip le Bel (1295); so, in England, the first issue of Henry III. was followed by an interval of nearly ninety years, during which no coinage of gold by our kings took place. The real introducer of this metal into English currency and commerce was Edward III., and the first practical issue of it is to be dated in 1344, rather than 1257. It will be seen at a glance what this statement implies. The issue of Henry III. in 1257 had been premature--an act of kingly rivalry and show, rather than of commercial necessity. But the succeeding century saw a rapid development in the commerce of Northern Europe, and a gold coinage had gradually become both a possibility and a necessity. One after the other--in the order of time just detailed--the various commercial states with which England had intercourse had adopted it and profited by it. That England should follow in the movement scarcely more than sixteen years later than Germany, and a year or two before Flanders, is some evidence of the organisation of her trade, as well as of the intimacy of inter-commercial relationships. So purely a matter of trade and natural growth was this vast movement of the adoption of a gold coinage--a revolution indeed as it proved, though yet unwritten, more momentous in its influence on European civilisation than either the Renaissance or the Reformation.

[Sidenote: CHARACTERISTICS OF THE FIRST PERIOD]

Approximately, therefore, the fourteenth century may be taken as the starting-point for a history of European bimetallism. The first period of that history embraces all the movements of the previous metals, from such starting-point up to the discovery of America in 1492--a matter of two centuries, roughly speaking.

The characteristics of this period are perfectly well defined, and repeat themselves with almost faithful and exact similarity of recurrence in the several states comprising the Europe of that date. In brief, such characteristics were those of--(1) a period of commercial expanse, necessitating an increasing currency and advancing prices; (2) a period of stationary production of the precious metals, necessitating a struggle among the various states for the possession of those metals; (3) a period of endless change in the ratio between gold and silver, necessitating continual revision of the rate of exchange. Broadly speaking, those characteristics fall into two cla.s.ses, accordingly as they relate to--(1) the natural movement of prices i.e. having regard merely to the supply of the precious metals; (2) to the unnatural struggle for the metals themselves--for the material for currency--due to international rivalry and bad or crafty legislation.

With regard to the former of these, the period was distinctly one of insufficient and relatively diminishing production of the metals. During these two centuries, 1300-1500, the main sources of the derivation of gold were the Eastern trade and the finds on the eastern sh.o.r.es and northern interior of Africa. The chief supply of silver came from the mines in Germany. These latter--in Hungary, Transylvania, Saxony, and Bohemia--were of such importance and activity, in the fifteenth century and towards the time of the discovery of America, as partially to keep pace with the general trade expanse of the time, thereby helping to arrest a fall of prices that would have been absolutely disastrous to the civilisation of Europe. The combined production during this period cannot even be conjectured. At the close of it--during the reign of Henry VII.--the total coinage of England, both silver and gold, did not probably exceed 3,000,000, while the total stock of both metals in Europe in 1492 has been estimated at no more than 33,400,000. These figures stand alone, for we have no idea of the extent of the commerce which was worked on so small a monetary basis, and very little idea of the amount of aid which was extended to metallic money by such expedients as bills of exchange. To estimate, therefore, whether the period was one of depreciating, stationary, or appreciating currency, we are reduced to the testimony of prices and the Mint records.

[Sidenote: COURSE OF MONETARY DEPRECIATION]

In France, at the beginning of the period (in 1308), the mark of gold was coined into 44 livres, and the mark of silver into 2 livres 19 sols.

At the close of the period, or towards it, in 1475, the mark of gold was coined into 118 livres 10 sols, and that of silver into 10 livres.

In Germany the mark of gold was coined into 66 gulden of 23 carats in 1386, and into 71-1/3 gulden of 18-1/2 carats in 1495--a depreciation of 34.36 per cent. In Spain the mark of silver was coined into 130 maravedis in the year 1312, and into 2210 maravedis in 1474. This latter case is, however, so inextricably complicated with considerations of mere, i.e. arbitrary, debas.e.m.e.nt, as to render it useless for any estimation of the natural appreciation of the metals. In England our earliest gold coin weighed 128-4/7 grains, and was tariffed at 6s. 8d.

In 1489, 80 grains of gold were equivalent to the same, 6s. 8d.--a reduction of 37.94 per cent. Within the same period the weight of the silver penny sank from 22 to 12 troy grains, a reduction of 45.45 per cent. Eliminating cases of arbitrary debas.e.m.e.nt, a rough average for the period might fairly give 40 per cent. of depreciation through the two centuries.

The case need hardly be laboured statistically, for the legislative history of all the countries forming the circle of commercial Europe in the fourteenth and fifteenth centuries witnesses this general downward movement--this appreciation and restriction of currency--in grim and unmistakable manner; and it is the expression of this general movement in their legislations that gives the test and measure of the earliest bimetallic troubles of Europe. In many ways the problem before the various Governments was a more difficult one than that which besets the modern world. There was, for instance, nothing like an equal and generally recognised ratio of value between gold and silver prevailing at any one single point of time. At one and the same date a ratio of 7 or 8 to 1 prevailed in the Moorish parts of Spain, and 12 to 1 in the Christian parts (the kingdom of Castile). Similarly, at a later period, in 1474, the ratio in England was 11.15, in Germany 11.12, and in France 11.00, in Italy 10.58, and in Spain 9.82.

The natural result of such a state of chaos, if it had been permitted to work itself out unhindered, would have been arbitrage transactions of such a nature--a flux and reflux of the European currencies so perpetual--as would have induced a yearly and universal bankruptcy. In spite of frantic efforts on the part of ruler after ruler, such results did partially come about, and they sufficiently account both for the distraction of Governments and the hatred universally visited upon the Jew in the Middle Ages. The measures which were adopted by the various States to counteract this invisible, insidious, and wasting process, partake of the roughness and unscientific character of the age. The export of gold and silver was forbidden on pain of death; and it was no mere paper threat, for prominent London merchants were drawn and quartered for the offence. The rates of exchange of foreign coins were fixed by proclamation, and the office of exchanger limited to a particular place. When all this proved ineffectual, the coins were cried down, and violent and sudden changes in the ratio enacted. What made the jerk and friction of such a process worse was that such measures were not merely defensive, but intentionally offensive. The wish of the fourteenth and fifteenth century ruler was not merely to defend his own stock of precious metals from depletion, but--having gained the conviction of the insufficiency of the production of those metals for the needs of Europe--to attract to himself the stock of his neighbours by whatever craft. There was a general struggle for the coverlid of gold, and the methods of that struggle were almost barbaric in their rudeness, violence, craft, and dishonourableness.

Italy.

On account of their knowledge and practice of the science of exchanges and finance, the metallic history of the Italian states is of chief importance for this earliest period. At a time when the northern nations show signs of an infancy of commerce merely, Italy was advanced in the art and practice of a most highly developed commercial and financial state. It is to her that we owe our system of book-keeping and the use of bills of exchange, not to speak of the p.a.w.nbroking and funding systems; and it is permissible to conjecture that Italy, keeping her finger as she did on the monetary pulsations of Europe, reaped her harvest, and far the largest harvest, from the bimetallic fluctuations of the fourteenth and fifteenth centuries. In their turn those fluctuations acted on herself, and occasionally disastrously. On account of their pre-eminence as the commercial states of the peninsula, Florence and Venice are chosen to ill.u.s.trate in brief the monetary history of Italy. The account of the general course of depreciation in both these states, and of the fluctuations of Mint rates is given in the Appendix (Nos. I. and II.). As regards the bimetallic influence of these changes of rates, there is one telling record in the history of Florence.

[Sidenote: THE FLORENTINE TROUBLES OF 1345]

The second quarter of the fourteenth century witnessed a decided rise in the value of silver as against gold. It told immediately upon Florence, on account of her Mint rates. By the regulation of 1324 the ratio in Florence was 13.62, whereas in France the ratio was approximately 12.6, and twenty years later, 1344, hardly more than 11 in both France and England. The result on Florence was immediate, and silver disappeared from circulation. In 1345, says her historian, Villani, there was great scarcity. There was no silver money with the exception of the _quattrini_. It was all melted down and transported. Silver of the alloy of 11-1/2 oz. fine was worth in other parts out of Florence more than 12 _lire a fiorino_, whence arose great discontent to the woollen merchants, who feared that the gold florin, in which they received their foreign payments, should fall too much. Being a powerful factor in the little state, they agitated, and the recoinage of 1345 was the result.

The precedent evil and the remedy applied by this recoinage may be thus ill.u.s.trated:--

By law--

Fiorino d'oro = 29 soldi.

20 of these soldi = la lira a fiorino.

Therefore 12 lire a fiorino (the price of the libbra of silver as above, purchased abroad) = 8 fiorini 8 soldi.

= 26 lire 8 soldi di piccioli.

One fiorino d'oro being then current for about 3 lire 2 soldi piccioli.

The silver species current in Florence in 1345 were _quattrini_ and _Guelfi del fiore_. These coins were of the same standard as above (11-1/2 oz.), were coined at a tale of 167 to the libbra, and issued at an equivalence of 30 piccioli. The libbra of this silver, therefore, by Florentine Mint rate was valued at 20 _lire_ 17 _soldi_ 6 _denari di piccioli_. Abroad, therefore, the price of silver was a matter of slightly more than 5 lire higher than in Florence.

The same result could be got by taking the billon money of Florence and calculating from its silver contents.

The natural result was a disappearance of silver. The only remedy was a recoinage, and this was applied by the law of 19th August 1345. By this law the standard of 11-1/2 oz. was retained, the tale of the _Grossi_ was increased to 134 pieces to the libbra (132 being rendered to the merchant, and 2 retained for Mint expenses), and each piece issued at an equivalence of 4 soldi.

4 x 132 = 528 soldi.

(= 26 lire 8 soldi di piccioli.)

It will be seen at a glance that this equalised the internal and external price of silver.

Rather strangely this enactment of the 19th of August was followed by another no more than four days later (23rd August 1345), by which a slight reactionary change was made in favour of silver. The tale was decreased from 134 to 132 pieces, to be struck from the libbra of the same standard, and issuable at the same equivalence.

Slight as the backward change was, it was sufficient to leave the monetary system exposed to the same influence of differential exchanging, and within two months it had to be repealed by the law of October 1345. Under the name of _Nuovi Guelfi_ a fresh coin was thereby inst.i.tuted of the same standard and equivalence as above, but at a tale of 142 per libbra (140 being rendered back to the merchant, and 2 retained for expenses of coinage).

140 x 4 = 560 piccioli.

(= 28 lire di piccioli.)

This established a considerable advantage, and turned the flow of silver back again to Florence.

[Sidenote: FLORENCE IN 1345]

The process might in many respects be compared to our raising of the bank rate, were it not that the two operations represent quite different and separated financial epochs. It is noteworthy, too, because the process will be found immediately imitated in both France and England, that these laws of 1345 represent preponderatingly the sense of the cla.s.s of exchangers of Florence,--i.e. the financiers professed,--men who would profit individually in their exchange operations as much as the state would in its restored currency of silver. "The above lords,"

says the preamble to the first-cited Act, "considering the numerous pet.i.tions made to them by many artificers, merchants, and honourable citizens, of the incredible lack of silver money in the state of Florence, on account of which the citizens of the said state suffer many inconveniences and wants, have determined to have and have had counsel of the twenty-one guilds of the city, who have [by a roundabout method]

chosen eight men, skilled and prudent in the aforesaid, who have had counsel with the officers of our Mint and with certain others of the trade of exchangers," etc., with such result as above.

Yet even so, the effort was only temporarily successful. Before two years was out the price of silver abroad, outside of Florence, had advanced to 12 _lire_ 15 _soldi a fiorino_ = 27 _lire_ 14 _soldi di piccioli_, whereas the price fixed by a fresh Mint law of 1345 had been again reduced to under 26 _lire_ 10 _soldi di piccioli_. The result was a second melting down and disappearance of the silver coins of the state, a second agitation on the part of the Florentine woollen merchants, and renewed legislation.

By the Mint regulation of 1347, a new-named money was introduced called _Guelfi Grossi_, coined at a tale of 117 to the libbra (111-3/5 being rendered cash to the merchants, and 5-2/5 retained by the Mint for the state), at the same standard as before (11-1/2 oz.), but at an equivalence of 5 instead of, as previously, 4 piccioli per piece.

117 x 5 = 585 piccioli.

(= 29 lire 5 soldi di piccioli);

a figure which is considerably above the 27 _lire_ 14 _soldi piccioli_, which Villani gives as the price of foreign silver at the time. Even taking the lower tale of 111-3/5 pieces, which the importer of silver to the Mint got for his bullion, there is a distinct margin of profit.

111-3/5 = 558 piccioli.

(= 27 lire 18 soldi di piccioli.)

Indeed, in its entirety, this operation of 1347 has a sinister look. At home the woollen merchants of Florence were obliged to pay wages in silver, abroad to receive payment in gold. It was to their interest to cry down the equivalence of silver; they paid less and received more.

The means by which they brought the state to put upon silver a price so far removed from the market price could only be the bribe contained in the relinquishing of 5-2/3 pieces in each libbra. But such a process is in reality the beginning of debas.e.m.e.nt.

If this is not the true import of the Act of 1347, it testifies all the more to the only other possible motive--the monetary straits of Florence, her want of silver for currency, and the violent effort she was prepared to make to get it.

Whether by way of effect or cause it is hard to say, but certainly silver in the middle of the succeeding century had so far disappeared in the Italian peninsula, or gold so far increased during the fifteenth century, that the commercial ratio remained persistently low--1: 9.25, both in Milan and Florence; and the Mint regulations of 1460 adopted by the latter state (see under table of Florentine silver coins, Appendix), can only be looked upon as a simple repet.i.tion of the measures of 1345 and 1347.