The History of Currency, 1252 to 1896 Part 12

fine) is worth, in current money, 27; by alloy of 1/11 it is worth 29, 6s., of which 11s. is allowed the Mint master for coining. In return he gives the merchants 108 crowns of the rose, at 5s., really worth but 4s.

10-1/2d., which makes 26, 6s. 8d. So that there is a clear gain of 48s.

4d."

The investigations of the commission were followed by a proclamation on the 22nd August 1526, fixing an altered tariff of exchange. _Crowns of the sun_ were put at 4s. 6d., which only four years before had been at 4s. 4d., while the _ducat_ was raised from 4s. 6d. to 4s. 8d.

Finding the enhancing of the gold and the export of specie still continue, an inquest was held, on the 30th October 1526, into the fineness and value of the coins. As a result of the verdict of the jury, a second proclamation was issued in the same year, dated November 5th, "to check the exportation of specie arising from the increased value of currency on the Continent." The sovereign was put at 22s. 6d. (having previously been rated at 20s. 6d.), and other gold coins in proportion.

Silver coinage was to pa.s.s at previous rates, but a new issue was to be made, in which the ounce Troy was to be coined into 3s. 9d. Finally, foreign _ducats_ were to be taken as bullion, no rate of exchange being even fixed.

At the same time Wolsey was attempting to negotiate for a supply of gold from Antwerp to replenish the currency. On this subject there exists a curious letter from his agent in Antwerp, dated 21st November 1526.

"These two days," says Hacket, "I have been trying to agree with the princ.i.p.al merchants about the exchange, but none would make any bargain, as you (Wolsey) have limited me to 4s. 6d. for the _ducat_, and as a ducat of such gold as they would be bound to pay would be worth 4s. 10d.

in the Mint. They must receive either _ducats_, or a _crown of the sun_ and a _groat_, for every ducat, or the same in _angellets_. The best thing would be for one or two of their factors to see you (Wolsey). The gold can be kept at home for 2 or 3 more per cent., for they would be glad to give that to take it out of the realm."

The new coinage of 1527 was in complete accordance with the proclamation of the preceding November. As far as the tariff or absolute exchange was concerned, it served to redress the balance, and thus to bring the English coin abreast of the continental. In the matter of the ratio, however, hardly any change was made. In the coins of the old standard (i.e. 23 carats 3-1/2 grs.) the ratio remained as before, 1:11-151/755; in those of the new standard (i.e. 22 carats) it was raised slightly (to 1:11-59/220). Neither in the appointment of the exchange, however, nor in the matter of the ratio, could the measure be more than temporarily successful under the conditions. The necessity remained as constantly as ever to watch the changing continental tariff, and to accommodate the English system to it. One State paper, dating apparently in 1529, thus pictures the situation at the time:--

"Disputes in London between English, Italian, Flemish, and Spanish merchants, as to the exchange, because of the last edict about gold. The writer knows of the importation of 100,000 _crowns_ and 10,000 in gold, which will be exported again unless care is taken. In Flanders, directly after this proclamation, gold was publicly put at a higher price than before--a n.o.ble at 24 _groats_," and so on. The writer, therefore, recommends that the searchers at the various ports should be warned to attend to their duty and see that no gold was carried away from the realm.

[Sidenote: ENGLAND AND THE NETHERLANDS IN 1537]

No recoinage, however, or change in the Mint rates, occurred for some years, and it must be taken as _prima facie_ evidence that the basis of 1527 continued for some years efficient, and witnessed a steady growth in the circulation, accompanying a steady expanse of trade and prices.

In 1535, however, complaints were again heard of the conveyance of coins out of the realm, and on the 15th July a proclamation was issued against it. This movement is perfectly well authenticated. On the 10th of May 1537, Hutton, writing from Brussels to Thomas Cromwell, says: "_Gold_ was formerly carried out of the realm [i.e. of England] for gain; now great sums are sent hither [i.e. to the Netherlands] in sterling groats [i.e. in silver]. This will both diminish the coin at home [i.e. in England] and injure the sale of cloth, for here are but three sorts of money current--_crowns of the sun_, sterling _groats_, and '_Riders Gelderus_' coined in Guelderland." On the 6th of August the same hand writes, again from Brussels: "Exchange is stopped, and much money like to be conveyed over [i.e. hither], though all coins should be called down here.... The act made for money will stop the [English] trade in kerseys, and great sums will be conveyed out of the realm [of England to the Netherlands]."

That the flow-out of gold in 1526 should change into a flow-out of silver in 1539 was simply due to the alteration of the continental ratio. The relatively great depreciation of silver only begins in 1550.

Up to that time the general trend of the two metals was on level lines, but with occasional traces or evidence of an appreciation of silver or relative depreciation of gold. At such a moment the lower-rated, i.e.

cheaper, English silver inevitably tended to flow out in the very teeth of searchers and legislators. At almost the same time--and as showing at once how international this trade in money or "finances" was, and how confused, and conflicting the monetary system of Europe was, with a flow-out in one direction and a flow-in from another--the English merchants at their Calais Fair reported great gain of the precious metals. "We have very good sale of clothes," writes a merchant to the King on the 27th August 1538; "here is great plenty of money, which causes all wares to be dear. Your subjects will bring back above 3000 sterling in _angels_ and _ducats_. We seek all the _angels_ here and give a penny in the piece to have them to carry home, so that I trust there will be few left here in a short time."

[Sidenote: THE CURRENCY MEASURES OF 1544]

The threatened rise of monetary denomination on the part of the Netherlands was accomplished by their ordinance of 15th April 1539, and almost immediately Henry found himself necessitated to change the basis of his currency from that established in 1527. In 1542 the silver penny was reduced from 10-1/2 to 10 grains, and shortly after 1544 the angel was advanced from 7s. 6d. to 8s. The proclamation which enforced the change is dated 16th May 1544. Gold was raised from 45s. to 48s. the oz., and silver from 3s. 9d. to 4s. In the purchase price of the two metals, therefore, there was no change in the ratio, but calculating on the basis of the issue price, i.e. the pieces issued from the Mint, the alteration of ratio was from 11-59/220 to 10-10/23. In the proclamation the change was attributed to "the enhancement of the prices of these metals beyond the sea, as well in Flanders as in France, which would have drawn all the coins out of the realm if a remedy had not been applied. And although the customers of the ports of the kingdom had been ordered to put in execution the statutes for the conservation of the coins, yet for the great gain they were still secretly carried abroad."

The coinage measures, therefore, of the year 1544, when justly considered, do not possess the aspect which has been generally attributed to them. It is incorrect to look upon them as the tentative beginning of that debas.e.m.e.nt of the coinage which disgraced the later years of the reign of Henry VIII. and the days of his son Edward VI. The measures of 1544 were simply acts of justifiable self-defence and currency safeguard. The real debas.e.m.e.nt began two years later, in 1545-46, when, by indenture, the silver coins (_testoons_) were reduced from 10 oz. to 4 oz. fine silver, the 2 oz. of alloy in the former case being increased to 8 oz. in the latter. In 1550 the content of fine silver in the testoon was further reduced to 3 oz.

The plan of this history makes it inc.u.mbent to treat questions of debas.e.m.e.nt as standing apart from the subject-matter of the book, which is restricted to the natural and normal ebb and flow of the precious metals, due to the action of bimetallic law. The operation of debasing a coinage--of lowering it, that is, so far and so arbitrarily as to remove it at once from the action of natural law of prices ruling around--means an arrestation of natural economic processes and laws, and the events which follow thereupon stand apart from such laws and ought to be treated as so separate. In reality, debas.e.m.e.nts always favoured the action of this malignant bimetallic law, and the fact might possibly lead one to attribute to the normal action of a natural law what is in three-fourths of it due to arbitrary action of government.

It would be, therefore, unfair to treat of debas.e.m.e.nts in a history of bimetallism.

Given, however, the above standpoint, and mental reservation of deduction and innuendo, it is permissible to treat of this debas.e.m.e.nt as showing _how_ or _in what way_ a debas.e.m.e.nt _does actually_ facilitate the malignant action of bimetallic law.[14] Further, the present instance of debas.e.m.e.nt is the only one on record in English currency history, and the testimonies regarding it are of extreme interest.

[Sidenote: THE TUDOR DEBAs.e.m.e.nT]

For the purpose of external or foreign trade, a debas.e.m.e.nt of currency is fatuous and pernicious. The coins are estimated at their content of pure metal, and the international exchange is so rated. The consequence is an apparent rise of foreign prices proportioned to the extent of the debas.e.m.e.nt. This at once unsettles internal or home trade prices, and they rise to the same level, but with such inequality of motion as may happen to follow from friction, local ignorance, want of communication, or from the intricacies of trade. The inequality of exchange-coinage rates which results from this is the bullionist's or the financier's opportunity, and swiftly and invisibly the good species--or any, bad or good, upon which any differential profit can be had--disappear from circulation. The consequence is that the rising prices which inst.i.tuted the process are no longer accompanied by an expanding or increasing volume of currency, but, on the contrary, with an enormous decrease in the total of acceptable or efficient currency. Hence come decay of trade, and ruin of town and country.

This is no paper, _a priori_ argument. It is the patent unmistakable statement of history and fact.

The staple trade of England in the sixteenth and seventeenth centuries was woollen. Coventry was one of the considerable seats of the industry, and known as a flouris.h.i.+ng and wealthy town. In the third year of Edward VI.--the time when this debas.e.m.e.nt of our coinage reached the lowest point--its trade was gone, and its population had sunk to 3000, "whereas within memory there had been 15,000."

In the extraordinary "_Dialogue concerning the common weal of this realm of England_," the scene of which was probably laid in this very decayed town of Coventry, the advance of prices, and the general tendency of the above argument, is more than amply borne out. "I have well experience thereof," says the "cappe" or hat manufacturer, "for I am fain to give my journeymen 2d. a day more than I was wont to do, and yet they say they cannot sufficiently live thereon. The city which was heretofore well inhabited and wealthy (as ye know every one of you) is fallen for lack of occupiers to great desolation and poverty."

"So the most part of all the towns of England," quoth the merchant, "London excepted; and not only the good towns are decayed sore in their houses, streets, and other buildings, but also the country in their highways and bridges; for such poverty reigneth everywhere that few men have so much to spare as they may give anything to the reparation of such ways, bridges, and common eas.e.m.e.nts. There is such a general dearth of all things as I never knew the like, not only of things growing within this realm, but also of all other merchandise that we bye beyond the seas, as silks, wines, oils, etc. I wot well all these do cost me more now by the third part well than they did but seven years ago."

"Such of us," says the knight, "as do abide in the country still can not with 200 a year keep that house that we might have done with 200 marks but sixteen years ago."

The course of the enhancement of foreign prices is thus argued between the merchant and the doctor.

_Merchant._--"We that be merchants pay dearer for everything that cometh over the sea, even by the third part well. And because they of beyond the sea will not receive our money for their wares, as they were glad in past times to do, we are fain to buy English wares for them, and that doth cost us dearer by the third part, yea almost the one-half, dearer than they did before time, for we pay 8s. for a yard of cloth that within these ten years we might have bought for 4s. 8d. When we have thus dear bought outlandish ware, then we have not so good vent of them again as we have had before time, by reason there be not so many buyers, for lack of power, though indeed in such things as we sell we consider the price we bought them at."

_Doctor._--"I doubt not if any men have licked themselves whole [i.e.

recovered the loss] you be the same, for what odds soever there happen to be in exchange of things, you that be merchants can espy it anon. _Ye lurched some of the coin as soon as ever ye perceived the price of that to be enhanced. Ye, by and by perceiving what was to be won thereon beyond the sea, raked all the old coin for the most part in this realm and found the means to have it carried over, so as little was left behind within this realm of such old coin [i.e., good undebased coin], at this day, which in my opinion is a great cause of this dearth that we have now of all things._" "Thereby" he adds again, speaking of this "basing or rather corrupting of our coin and treasure, we have devised a way for the strangers, not only to buy our gold and silver for bra.s.s, and not only to exhaust this realm of treasure, but also to buy our chief commodities in manner for nothing. _It was thought it should have been a means not only to bring our treasure home, but to bring much of others, but the experience hath so plainly declared the contrary, so as it were a very dullards part to be in doubt thereof,..._ Do you not see that our coin is discredited already among strangers, which evermore desired to serve us before all other nations at all our needs for the goodness of our coins; and now they let us have nothing from them, but only for our commodities, as wool, felt, tallow, b.u.t.ter, cheese, tin, and lead. And whereas before time they were wont to bring us for the same either good gold or silver, or else equally necessary commodities again, now they send us other trifles as I spake of before, as gla.s.ses, gelly pots, tennis b.a.l.l.s, papers, girdles, brooches, etc.... As I told you in your ear before, they send us bra.s.s for our treasure of gold and silver, and for our said commodities I warrant you you see neither gold nor silver brought over unto us as it was here before used, and no marvel. To what purpose should they bring silver or gold hither, where the same is not esteemed. Therefore I have heard say of a truth, and I believe it the rather to be true, because it is likely that since our coin hath been debased and altered, strangers have counterfeited our coin, and found the means to have great ma.s.ses transported hither, and here uttered it as well for our gold and silver as for our chief commodity; which thing I report me to you what inconvenience it may bring the King's highness, and this realm, if it be suffered, and that in brief time.... And besides this, have you not made proclamations that our old coin specially of gold, that it should not be current here above such a price? Is not that the readiest way to drive away our gold from us, as everything will go where it is most esteemed? And therefore our treasure goeth over in s.h.i.+ps.... I hear say that in France and Flanders, there goeth abroad such [bra.s.s and billon] coin at these days, but that doth not exile all other good coin, but they be current withal, and plenty thereof, howsoever they use it. _Therefore I think it wisdom we did learn of them how we might use the one and the other keeping either of them of like rate as they do so, that they should never desire any of our coin for any greater value than they be esteemed at with them nor we theirs for any greater estimate with us than with them, and then we should be sure to keep our treasure at a stay._ And as for recovering of old treasure that is already gone, there might be order that some commodity of ours were so restrained from them that it should not be sold but for silver or gold, or for the third-part or half in such coins as is universally current, and thus chiefly our treasure might be recovered by the use of means."

When pressed by the knight to show how this merchandise in coins was actually initiated and worked the doctor thus replies: "Well, then, when goldsmiths, merchants, and other skilled persons in metal, perceived that the one groat is better than the other, and yet that he shall have as much for the worse groat as for the better, will not he lap up the better groat always and turn it to some other use, and put forth the worse, being like current abroad? _Yea, no doubt, even as they have done of late with the new gold. For they apperceiving the new coin of gold to be better than the new coin of silver that was made to counter value it, picked out all the gold as fast as it came forth of the Mint and laid that aside for other uses, so that now ye have but a little more than the old current, and so both the King's highness is deceived of his treasures, and the thing intended never the more brought to pa.s.s, and all is because there is no due proportion kept between the coins, while the one is better than the other in his degree._"

"But how," asks the knight, "do they do in France and Flanders, where they have both bra.s.s coin, mixed coin, pure silver, and pure gold current together?" "I warrant you," is the doctor's reply, 'by keeping of due proportion every metal towards other, as of bra.s.s towards silver 100 to 1, of silver towards gold 12 to 1. For the proportion of silver towards gold, I think, cannot be altered by the authority of any prince, for if it might have been, it should have been ere this, by some one needy prince or other within 2000 years."

So much in brief for this depreciation of Henry VIII., and for this extraordinary dialogue. The doctor's remedy was a recoinage, such as was later effected. The extent of the knowledge of economic laws displayed by this figure throughout the dialogue is astonis.h.i.+ng. The divine was the better merchant, and if he had lived--for Miss Lamond's masterly identification of this character with Latimer hardly admits of question--and ruled in later counsels, he might have shown himself the better legislator.

[Sidenote: ELIZABETH'S RECOINAGE]

The recoinage which he advocated was not effectually completed till the second year of Elizabeth's reign, 1559. The basis on which it was then accomplished was that of a ratio of 11.79, as nearly as possible that adopted in the same or the following year, 1560, by France, and slightly higher than that which was established in Germany by the imperial edict of 1559. The coincidence in these rates is remarkable, and it is quite apparent that the action of Elizabeth dictated that of France, as also that this her action secured for England a steady supply of the precious metals during a period in which France was violently agitated by currency crises.

In the first year of her reign, 1st May, Elizabeth issued a proclamation against the export of bullion. This was followed by one in the second year, 27th September, against the melting of monies, and by two others, of the 4th October and 23rd December of the same year, "for the valuation of certain base monies called _testoons_ ... finding that the ancient good gold and silver is daily transported," etc. Finally, on the 15th November (3 Eliz.), a proclamation was issued forbidding the circulation of French _crowns_ and Flemish or Burgundian _crowns_. This series of proclamations is to be regarded as one measure with, and as fortifying, the recoinage and the new ratio established. And the efficiency of the system thus inst.i.tuted is to be judged by the fact that, with the exception of two unimportant proclamations of 16th October (7 Eliz.), and 1st December (8 Eliz.), no further legislation or Privy Council proclamation was needed for a matter of fifteen years.

[Sidenote: ELIZABETH'S FINAL REVISION]

From 1572-76, however, as has been seen already, the Netherlands issued a closely consecutive series of plakkaats which altered the situation for the whole of Europe, and England, equally with the rest, felt the drain. Contemporary evidence as to this fact has been already quoted (p.

73). Accordingly, on the 20th September (18 Eliz.), Elizabeth issued a proclamation "for the ordering the exchange of monies by enactment, according to laws of the realm, ... because of disorders, ... decay of merchandise, ... and value of monies." Again, in 1582, inquiries were made respecting the export of gold, and one of the London aldermen wrote to Secretary Walsingham, advising the appointment of four skilful merchants as an advisory body. Finding the drain continue, on the 12th October (29 Eliz.) the Queen issued a proclamation "for reforming of the deceits in diminis.h.i.+ng the value of coins of gold current in our dominion, and for remedying the losses which might grow by receiving thereof being diminished." According to the express testimony of this proclamation the gold coins were _exported_, _diminished_, and _returned_, and it accordingly enacted that no coins should be taken as current when beneath such and such a weight, or lacking such and such a remedy.

For a dozen years or so after this no further complaints of a gold drainage are heard, but in 1597 they recommence. "If good provision be not foreseen the coins of gold and silver of England will flow over to the Low Countries as fast as they can be coined," is the testimony of a doc.u.ment of April in that year, "for the _angel_ and _sovereign_ of England are current in Holland and Zealand at 18s. the piece of Flemish money, and our silver much after the same rate." And the writer adds: "I see no harm to this realm, if the French gold coin was permitted to be current for 6s. 2d., the Spanish gold _pistole_ for 6s., and the silver _real of eight_ for 4s."

It was under the influence of this movement, of which more complaints exist among the Domestic State Papers, that the final Elizabethan revision of the Mint prices of the metals took place. On the 18th March 1600 she issued a proclamation "concerning coin, plate, and bullion of gold and silver," reciting that "bullion of gold and silver, etc., for these later years, have been much more abundantly transported and conveyed away than in any former times," and commanding the observance of the statutes against such transport.

Finding her proclamation mere waste paper, Elizabeth resorted to the only safe and possible expedient, a change in the issue rate of the coinage. But for once her instinct, or the wisdom of her councillors, failed her. Instead of raising the ratio of gold to silver, she lowered it from 1:11-1/10 to 1:10-5614/5921.

It is inconceivable that such a blunder should have been committed at a time when the production of silver had advanced and was advancing by leaps and bounds beyond that of gold, and when the currency of every European country of commercial note was being accommodated to the depreciation of silver with unerring instinct. But so it was, and the blunder only served to accelerate and intensify the catastrophe under James I.

[Sidenote: ECONOMICS OF THE PURITAN REVOLUTION]

In matters of currency history it is impossible to separate the Tudor from the Stuart period, and this last and sole blunder of Elizabeth's administration only serves to show the continuity of principle or event, and how little of moral censure attaches in this matter to abused James any more than to lauded Elizabeth. But it is instructive and curious to note that the currency history of England during all the reign of Elizabeth shows such remarkable quiescence. From 1558 to the fatal blunder of 1601 there was no change in her Mint rates. The complaints of exports of coins, and the evidence of the action of bimetallic law, appears only at three isolated and widely separated periods. The inference can only be--and it is more than an inference--that her reign, besides being a period of currency expansion, was one in which the ratio existing in England facilitated the flow of metals from the Continent, and secured the permanence of that currency expansion. On this increased basis of currency was built that commercial and national, yea even literary, growth and expansion, which have made the Elizabethan age the glory of our history. Similarly, the unrest and commercial credit crises under James I. and Charles I., which resulted from the same wide causes and principles, underlay and played a vitally determining part in the agitation and revolution-sowing of their reigns, and that, too, in a manner which has never yet been appreciated. The uprisal of England, which resulted in the first dethronement of the Stuarts, was as widely and vitally based upon economic causes as upon legal or religious,--possibly, indeed, much more so, if we only knew it.

At first James was determined to proceed with the monies which were being wrought by Elizabeth's warrant. But on the 11th November, in the first year of his reign, a new indenture was made for the coining of a new piece called the Unite, to commemorate the union of the two crowns of England and Scotland. While preserving the same value as the pound sovereign of Elizabeth's issue of 1601 (viz. 20s.), its weight was only 154-26/31 grains, while that of Elizabeth's was 171-61/67. In the following year the angel was reduced from 78-66/73 grains to 71-1/9. The combined effect was to raise the ratio from 10.90 (as in 1601) to 12.15.

Elizabeth's blunder was thereby effectually remedied, but it was not before an outcry had been made about the decay in s.h.i.+pping, and in the export of English cloth.

Even this higher ratio did not remain permanently, or for long, effective. In 1607 the transportation of specie rose to such a height that a proclamation had to be issued against it, 9th July, and there was again talk of establis.h.i.+ng "a true and perfect way to keep the money within the kingdom by inst.i.tuting a register for all payments made by way of exchange." Again, two years later (10th August 1609 and 18th May 1611), the proclamation had to be twice renewed; no less a person than Sir Francis Bacon drafting the clause in the first case. The anxiety which the subject caused to the Privy Council is quite apparent in the State papers, and much division of opinion prevailed before the only possible remedy--a raising of the denomination of the coinage--was adopted. Salisbury was at first adverse to the measure, but set himself carefully to study the question. The slow working of his mind is still traceable in the paper of notes he drew up for his own guidance. "All the proportions of bullion ought to be xij for one between the gold and silver unmixed. Our sterling standard is wrought with a mixture of 18 dwt. in every lb. weight, which is 12 oz.; so as every 18 dwt. is 4s.

6d., and therefore that is wanting.

[Sidenote: SALISBURY ON CURRENCY]

"Now, two things are in question, one the inconvenience of general transportation, the other of the particular, viz. Scotland. In the general this is the mischief, that our gold is not so much alloyed as our silver, and therefore being more worth than silver is bought and carried away. The particular, of Scotland, is more notorious, because it is not forbidden....

"The gold ought to be 24 caretts.