The history of money – why do we need cryptocurrencies part IV

After leaving ancient Rome, we continue our journey along the time line of the history of money. Going into the medieval period.

There are many myths and distortions on the subject of the Middle Ages today. It is not exactly rightly called “dark times”. True, there was no single commercial market at that time, which was built during the Roman Empire, but within the economy there were changes, which resulted in the creation of a commodity and monetary system.

Wealth is evil!

During the Middle Ages, people who wanted to get rich did not have easy life. In the initial period of the money there was not enough in circulation to meet the needs of the economy. And the rulers gathered their wealth in the form of jewels, not coins. It was only later that it changed.

In addition, the church that preached a fairly minimalist approach to life was unfavorable to “make a living”. He believed that his followers should enjoy what they have and not focus on earning. He opposed the development of financial systems, trade and usury. Thinking, however, did not survive the test of time. This is the fate of impractical ideas …

Liberal (although such a word did not function in that sense at the time) the approach to this theme was Saint. Thomas Aquinas. He described “money” as a property, treating it as “all external goods that serve people’s use, which is why they are called utility goods”. He noted that “there are also other external goods that can be obtained for money, such as pleasures, honors and the like.”

It was revolutionary thinking because the early Christian groups were ideologically close to ideas that could be described as … communist. The first Christians preached the theory that “everything belongs to everyone”. The Fathers of the Church even believed that private property was the creation of original sin.

St. Thomas gave the following arguments in the counter:

Private property contributes to greater diligence of people.
Private property will contribute to the increase of order in social life, because it introduces the division of labor.
In the primary thinking of the Church, he saw the genesis of disputes over the division and use of common goods. Private property restored social peace.

Such a medieval liberal!

Problems of the early economy

In the Middle Ages, the value of ores in circulation was generally small. It only changed the discovery of America, but more on that later. If we add to the fact of a small amount of gold that there were difficulties in its extraction, we must realize that alternative markets have become a necessity – grain, chicken, pepper, beer (this has not changed) – who recently did you favor this nomen? golden liquor?) or skin. In the lands of later Poland, for example, the so-called patches – pieces of linen cloth. Hence the verb “pay” in our language.

The denar enters the stage

However, something had to be done about it. The first attempts were taken by the ruler of the Franks – Pepin the Short (yes, we know that some of you now snorted with laughter), while his son Charles the Great continued (about the nickname given for counterbalance to the predecessor).

The silver denar became a silver coin. As a payment unit, it appeared around 670 in Neustria (the land that is the north-western part of the Frankish state, located north of the Loire valley). It turned out to be such a convenient invention that he quickly came to neighboring Brittany. Denar weighed as much as the golden tremissis, which he replaced, or 1.3 grams or counting more vividly 20 grains of barley. Due to the fact that silver was less valuable, also one denar had a lower value than its predecessor. This, however, was his strength, because it increased functionality in what we would today call micropayments (also you associate with a bitcoin pair – litecoin?). The Frankish rulers then increased the denar’s weight to 1.7 grams, which – as you probably already counted – gives us 20 grains of wheat. Reciprocal money has become a denarius and a half-dollar, and solid account units (12 denarii) and a pound (20 solids or 240 denarii).

Your own mint is the key!

The financial system began to evolve into monometalism. Initially, it was based on increasingly inferior gold coins (spoiling money is not an invention of the 20th century), then on silver. The west of Europe was moving away from Roman coins. Just as today, every large company wants to have its own cryptocurrency or a dedicated blockchain, so in the early period of the Middle Ages, every ruler wanted to have his own coin. Masses, Longobards, Anglo-Saxons and Franks had their own mints.

An interesting issue is that regarding the control over the issue of money. In Gaul there were also local coins originating from private, not state-owned sources (some group of people had their “excavators” there). In the eighth century, the rulers begin to have control over money. And interestingly, in the sources from this time we learn about the first attempts to falsify them. What is interesting, however, falsification did not mean beating denarii with a smaller amount of bullion, but it was an activity that was not subject to central authority. The kings quickly discovered the power of money and began to fight anyone who wanted to take away their monopoly. Not only that, it was not uncommon that they themselves produced worse coins, and severely punished those who did not want to take them later. Does it remind you of anything?

In money, taxes were paid, especially the tribute paid to the monarch by the subjects or ruler stronger by the ruler of the weaker as an expression of recognition of his authority. Huge tributes were paid even to the Vikings by the state of carolings, which caused the outflow of ores from one country to another.

At the end of the 9th century, the Karolin rulers lost control over the mints. Rich priests began to beat their own coins, but unfortunately they succumbed to the temptation to reduce their ores. In the 10th century, the situation changed again. In Germany, rulers from the Saxon dynasty began to mint their coins. In France in various parts of the kingdom different patterns of them began to emerge – the market there was – it could be said – decentralized. On the other side of the English Channel, in England this state has retained a monopoly in this regard.

 

To be continued…

source of image: imf.org

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