Monetary Instability, Lack of Integration, and the Curse of a Commodity Money Standard. The German Lands, c.1400–1900 A. D.

Roessner, Philipp

doi:10.3790/ccm.47.2.297

Cited by 5 publications

(5 citation statements)

References 2 publications

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“…Within weeks or months after each new mint run, or as soon as the common man received reliable information regarding the new coins’ factual intrinsic value, market or spot exchange rates for debased small-change coins would diverge from their “fixed” or official coin exchange rate stipulated in the government edicts (Sussman 1993; Sargent and Velde 2003; Rössner 2012, chs. III, IV; Rössner 2014a). They would usually adjust downwards, turning debasement into effective devaluation of the new currency.…”

Section: Advocati Diaboli—playing Around With the Exchange Ratementioning

confidence: 98%

“…The only other permissible scenario for “legal” or justified debasement was when society and the common good were in acute danger: for instance, by an imminent foreign invasion. Then the prince would be entitled to collect what modern economics has as “inflation tax” by temporarily increasing seigniorage beyond the acceptable or usual measure (Spufford 1998; Sussman 1993; Rössner 2014a). Generally, coin debasement harmed society and economy, Oresme said, for the following reasons: (1) It increased economic instability, especially when negotiations over a coin’s exchange value made contracts harder to enforce.…”

Section: Advocates Of Stable Money—the Case For Social and Economic Smentioning

confidence: 99%

“…They were heavily debased and of little use in the long run. People tried to get rid of them as fast as they could, as such coins were of no use for saving or storing value (Rössner 2014a, pp. 327–328).…”

Section: Advocates Of Stable Money—the Case For Social and Economic Smentioning

confidence: 99%

“…Revaluations (upwards adjustment of currencies’ precious metal content) took place only during less than a handful of years within the 500 years or so of almost continuous debasement, 1400 to 1900 A.D. (Sargent and Velde 2003; Cipolla 1956; Rössner 2014a). Between 1400 and 1900 German small-change currencies, measured in terms of precious metal content of a sample of seven southern German penny currencies, lost 90% of their intrinsic value (Rössner 2014a). Whilst debasement had been the norm for ages, contemporaries had, for the same time, continuously reminded rulers and kings that it mustn’t.…”

Section: Conclusion—why Does Money Matter?mentioning

confidence: 99%

“…A near persistent undersupply of domestic silver—the main monetary material (Rössner 2012, ch. III; Rössner 2014a)—generated, in continental European political economy discourse before 1800, a quite peculiar line and approach towards promoting domestic welfare through monetary policies addressed at “ordering” the market through measures directed at coping with and overcoming such silver (monetary) scarcity. This entailed strategies to close the liquidity gap triggered by persistently negative trade balances and the absence of native silver supplies in the case of most German and other continental economies of the age (Rössner 2016c).…”

Section: Introduction: Monetary Management and State Intervention As mentioning

confidence: 99%

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Monetary Theory and Cameralist Economic Management, C. 1500–1900 A.D.

Roessner

2018

J Hist Econ Thought

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More than England and other states, the German principalities were, in the pre-industrial period, hampered by silver outflow and persistent pressures on the balance of payments, which led to idiosyncratic models and strategies of economic development usually but not entirely helpfully called “Cameralism.” It is less well understood how Cameralism, as a policy of order and development, and monetary theory went together. The present paper will sketch these working mechanisms as well as provide a few angles for new perspectives and future research. A first section after the brief introduction studies general issues of development in relation to balance-of-payment constraints (II), followed by the discourses on whether the domestic currency ought to remain stable in terms of intrinsic (silver) value (III), or whether it may be debased so as to raise domestic exports and competitiveness (IV). Both options were considered, at times and by varying actors, as valid strategies of promoting economic development, especially export-led growth, although most contemporaries viewed coin debasement as harmful to the economy. A fifth section discusses an alternative to the aforementioned strategies, that of raising effective monetary mass through increasing velocity. Since the Middle Ages and into the nineteenth century, the German economic tradition had a clear understanding of how velocity could be managed and the common weal stimulated by an increase in “vivacity” of circulation (V). In hindsight, it appears that we find here a powerful program towards promoting economic development and Europe’s rise towards capitalism. A conclusion will offer some thoughts for further research (VI).

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Section: Advocati Diaboli—playing Around With the Exchange Ratementioning

confidence: 98%

Section: Advocates Of Stable Money—the Case For Social and Economic Smentioning

confidence: 99%

Section: Advocates Of Stable Money—the Case For Social and Economic Smentioning

confidence: 99%

Section: Conclusion—why Does Money Matter?mentioning

confidence: 99%

Section: Introduction: Monetary Management and State Intervention As mentioning

confidence: 99%

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Monetary Theory and Cameralist Economic Management, C. 1500–1900 A.D.

Roessner

2018

J Hist Econ Thought

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Premodern Debasement: A Messy Affair

Volckart

2018

Handbook of the History of Money and Currency

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The paper argues that in premodern Europe, the practice of debasement was far more 'messy' than research has generally recognised. First, high information costs often prevented the effective control of mint officials who could exploit their resulting autonomy in order to debase coins on their own account. Second, these costs made it impossible to monitor markets closely enough to enforce regulations. Attempts by governments to debase coins by increasing their nominal value therefore 'worked' only if they conformed to the market rates of these coins. Finally, high information costs prevented the creation of closed areas where the domestic currency enjoyed a monopoly. The resulting trade in coinage created incentives for governments to issue inferior copies of their neighbour's coinsa practice that had the same consequences as a debasement-and forced the affected governments to follow suit by debasing their own coinage, too.

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Premodern Debasement: A Messy Affair

Volckart

2020

Handbook of the History of Money and Currency

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Monetary Instability, Lack of Integration, and the Curse of a Commodity Money Standard. The German Lands, c.1400–1900 A. D.

Cited by 5 publications

References 2 publications

Monetary Theory and Cameralist Economic Management, C. 1500–1900 A.D.

Monetary Theory and Cameralist Economic Management, C. 1500–1900 A.D.

Premodern Debasement: A Messy Affair

Premodern Debasement: A Messy Affair

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