The History of Currency, 1252 to 1896

by William Arthur Shaw

There is as little foundation for such an innuendo as there is for the view which regards this depreciation as an issue of base money. It was simply a

measure of precaution, as stopping an invisible and insidious outflow of the currency.

ENGLAND AND FRANCE IN 1360

Looked at historically, and not at all controversially, such results as have been just described can only be attributed to the European monetary system of the time. Apart altogether from the arbitrary debasement of the coin, as, e.g., in France—apart even from changes of the ratio enacted with the mere crafty design of inducing a flow of gold, the monetary system of the time was so rough, so unscientific; the tariffing of the coins of different nations against each other was so inexact, so much a matter of rule-of-thumb, of hasty average, that it was simply impossible to issue such general tables of equivalents of coins and such a ratio as would have given stability to the various coinages of Europe. If the currency system of England had been of silver alone, a single enactment lessening the content of the unit coin, or crying up its denomination, would have stopped any outflow caused by under-valuation as compared with foreign money value. The same if it had been only gold. But being combined of the two, being, as it was, both gold and silver, it was necessary, in the case of such outflow, not merely to call down one or both of them below the value of foreign gold or silver, but also and at the same time to establish such a ratio between the two metals for internal circulation as would give no advantage to exchangers acquainted with a different ratio prevailing in some particular part of the Continent. And just the same for the other European

money systems. If, for instance, the English sterling had been called down to a value which would of itself have forbidden export to the Continent, but at the same time such a ratio had been left standing between these sterlings and the gold nobles (say 12:1) as was so far in excess of the ratio prevailing in some parts of Europe (say 11:1) as to overlap the amount by which the sterling had been called down, then the result could, and doubtless would, be an outflow of silver, in face and spite of the apparent higher tariff of the English sterling, as against the continental silver coins. This is the historic, patent, undeniable defect and weakness in the bimetallic system of the Europe of that day. It must be borne well in mind how different the problem then was from that which now besets the monetary world. To-day the flow of the precious metals is natural, the indicator, facilitator, and safety-valve of international trade. Such a conception was an utter impossibility to the fourteenth century. The rulers of that age had only one idea, the maintenance or increase of the treasure of the realm, first for military purposes, and then for trade; and their mental horizon was limited by the boundaries of each their little dominion. They could not grasp the idea of Europe as a monetary whole, each fought for his own head or land, and each found a ready weapon to hand in the monetary confusion of the time. In any system so rough and so non-uniform as that of Europe in the fourteenth century, any variation of one metal served as a vantage-point against

the other, as a lever to press upon and force it out. One metal would have been safe (so long as no partial depreciation was allowed), two metals served simply as fulcra to each other's oscillations, to the undoing of both. The mediæval legislator could not grasp that there was a double train of principle and event transacting itself under his very eyes—the one, changes of denomination of coins; the other, changes of ratio. In less than thirty years after Edward III. had cried down the English coins to below the competing denominations of the Continent, the changes of the European ratio had produced their effect, and Richard II. found the realm denuded of its treasure and currency.

ENGLAND IN 1378

From 1360 the ratio on the Continent gradually sank from 12:1 till towards the end of the first quarter of the fifteenth century, when it stood in France as low as 9:1.

That France experienced the process, which must have been perfectly natural and due simply to relatively diminishing production of silver in those years, 1360-1425, is seen in her alteration of the ratio from 12 to 10.74 in 1380 and to 10.29 in 1422.

In England the same train of events made itself felt at almost the same moment. In 1378 great complaints were made of the export of gold and silver, and of the enfeebled state of the money which remained in the realm, "so that if a remedy be not speedily applied, the King will receive no more than 4s. where he should receive 5s."