The History of Currency, 1252 to 1896

by William Arthur Shaw

SPAIN: FUNCTION IN SEVENTEENTH CENTURY

During the sixteenth and seventeenth centuries the function of Spain was a very simple one in the European system. She was the receiver and distributor of the metallic wealth and finds of the New World, and accomplished her task perfectly naturally and efficiently. But it was at the cost of her political and commercial future and greatness. If Spain had been a commercially independent nation, growing for

herself and supplying herself with her own manufactures, the metallic wealth of the New World would have stayed much longer in her lap, and Europe would have starved. But she was not. She produced little, and manufactured less, and the ill-gotten, blood-stained gain, which flowed to her shores from America, served only to feed an impractical vanity and to further unfit the nation for manufacturing and commercial life. The, to her, disastrous influence of Spain's shortlived empire endure to-day, for she is still as unfitted as ever by temperament and natural training for mercantile life. Such is the penalty her dower of New World gold and silver brought her. Finding she could purchase anything and everything with this gold and silver, she threw herself into her work of conquest, and let commerce go. Her manufactures came to her from England and the Netherlands—countries she sought to conquer and enslave; and thither her gold went in exchange, and before the century was out those countries had risen exulting over her. But the point to notice is this. Assuming this distributing function as her own and proper one, the only condition essential to its proper fulfilment was the maintaining of an absolutely unimpeachable coinage. The rapidity with which the precious metals left her possession was simply due to the fact that Spain did so maintain her coinage and for a sufficiently lengthened period. The goodness of her coins exalted them above the prevailing rates in France and the Netherlands, and they were eagerly

sought in consequence. The monies that did not, and could not, normally leave her possession by ordinary way of trade left her by means of arbitrages working on the system of bimetallism, which existed unacknowledged.[13] It was this commanding quality of the Spanish coins that led to the adoption of their system by France in 1641. That in the case of Spain we hear no complaints of depletion of coinage and commercial disturbance resulting therefrom, such as mark the history of the other countries of Europe, is simply due to the fact that her stock of metals was continually being replenished, and that she had no commerce to be disturbed. The gold and silver of America came to her in a steady stream and left her for the Netherlands and elsewhere in a stream as steady; and so long as that flow was turned through her dominion, so long as the main sources of precious metal-mining were American, and the product a monopoly-possession of Spain, she

stood above, and felt no immediate harm from, the bimetallic law which insatiably sucked away her wealth. Until the time came, therefore, when she lost her monopolist position in this matter the monetary history of Spain is free from those features of disturbance, commercial agitation, monetary conferences and edicts, which are common to the rest of Europe, and consist merely of a record of Mint ordinances regulating the fineness of her coins and slowly adjusting them to the general movements of the century. Only in the case of the first of these—the edict of Juan and Don Carlos, 1537, by which the standard of coronas and escudos was fixed at 22 quilates, "which is the standard of the greater escudos of France and Italy"—has the enactment any comparative or international bearing.

For sixty-one years after the settlement of 1497 there had been no alteration of the monetary system. In 1523 the Cortes of Valladolid had petitioned the King, Charles I., to lower the standard and content of the gold coin, "so that in weight and value they may pass equal with the crowns of the sun which are made in France, so that by these means they will no longer draw our gold from the kingdom." In its ignorance this Cortes also demanded that the silver monies should be reduced and issued on a relatively depreciated footing. It was a matter of thirteen years before Charles yielded and adopted the measure suggested, in the edict of 1537, already referred to, and it may be safely said that by the time of its

adoption the need for the measure had passed away. Any disturbance and loss of her stock of precious metals caused by the general movement which marks itself in European history about 1519-20, and which shows itself in Spain in the petition of the Cortes of 1523, was quickly redressed by the inrush of metals from America. Finding gold and silver come to her easily, Spain cared little how they went. After the edict of 1537 there is only one complaint of the export of coin recorded in the legislative enactments of the country, viz. in 1552, when it was decided to alter the alloy of the billon money in order to avoid its exportation, "as we are given to understand that its intrinsic value is greater in other countries than here."

SPAIN: PASSIVE ATTITUDE

The Mint edicts of Spain during the years 1500-1660 simply follow in the wake of the general movements of prices in Europe generally. The authorities were perfectly passive to the export of the precious metals, and no attempt was made to manipulate the ratio in such a way as to arrest the outflow. The conduct of Philip II., in 1566, in still further raising the denomination of the gold coins by one-seventh has the same passive aspect, although it has been attributed to a mere base desire on the part of Philip to fill his depleted treasury by a partial debasement. A comparison of the movements of metals and prices in France and Spain will show that the advance was only normal and general, and the further changes which were made in 1609 and 1612

have this same normal character, and call for no comment. At the points enumerated it is quite evident that Spain merely and mechanically followed the general trend of the precious metals and prices through the century. There is no expression of aggrievement, either slight or acute, at the precious metals leaving her. While every other country was occupied seriously, sometimes desperately, with the question of how to guard their stocks of them, the eyes of the Spanish Government and the nation's mind were fixed only on conquest and imperial growth. The cost of her empire was such that at the accession of Philip III., 1598, the national debt was over a hundred million ducats, an absolutely unparalleled sum for the time. When, therefore, the Spanish Government began the enormous issues of base billon money which mark the reign of Philip IV., it is to be looked upon as a financial, or treasury, or budget expedient, and totally unconnected with any currency movement, pure and simple. These issues were so great that, in 1625, the premium on gold and silver, as compared with billon monies, was fixed at 10 per cent.; in 1636, at 25 and 28 per cent.; and, in September 1641, at 50 per cent. (See account of Spanish monies, Appendix III.)