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

In our story, we are still stuck in the Middle Ages. The rulers have for good discovered the power of money and are beginning to make full use of this knowledge.

The currency is deteriorating, in some parts of Europe its emission is decentralizing (which was not always bad practice in this period, but about it at other times). Some of the rulers wanted to save coins honestly, so they implemented reforms. The attempt to strengthen the penny (English denari) was made in the tenth century by King Edgar, even though the currency was stable compared to its continental counterparts. As you can see, certain elements of the world do not change – the English have been caring for money for centuries. In the Polish lands similar actions were carried out two hundred years later by Bolesław Krzywousty.

Spoil of coins

Unfortunately, over time, these reforms took the form of cheating subjects and introducing worse quality coins into circulation. Again, this sounds familiar? The chronicler of Kosmas, the Czech chronicler, took it as plainly as he could. He emphasized in his writings that “no defeat, no pestilence, no mortality or desolation of the whole world with booty and fires would do more harm to the people of God than the frequent change and treacherous deterioration of the coin.” As you can see, the guy knew about the economy, like hardly anyone at that time!

The evil activities of the monarchs led to – how else – the introduction of alternative means of payment by their subjects. The need had to be really strong, because the punishment for this “falsification” could be terrible. Kaci guaranteed in return to throw into boiling water or pouring molten lead into the throat. Do you still think that the rulers today are persecuting crypto-currency supporters?

In these more developed parts of Europe, where the circulation of money was large, the coins had to be solid enough to last longer to exchange them continuously in trade. In the twelfth century in Germany, Scandinavia or Eastern Europe there was no such need, so someone came up with the idea of ​​beating brakteats (from the Latin brother – leaf). They were tin discs (it’s hard to call them coins) thin so much that the stamp could only be knocked out on one side. At that time, in Germany, cereal appeared in the payment as a means of payment, while in Friesland – barrels of beer (I already see a smile of approval on your faces).

Why, however, coins? Because it was income for the ruler (he had more coins, using less ore). Let’s also remember that in this period there was not enough gold in Europe so that the right number of payment units could be knocked out. Despite this, it is difficult to fully justify those in power.

In the Polish history, the ruler, who registered himself as the first currency pest, was Prince Mieszko Stary. Let the numbers testify to the scale of its economic excesses. In 1173, 694 coins were produced from a fine silver, but already four years later – 1310 (!!!). They did not have to wait long for reaction – the prince was overthrown.

Land is a rebellion!

In Western Europe, gentlemen were handled more delicately, but they did not want to use bad coins. Again, the answer was silver bars. It was such a smart circumvention of bans that they did not have the shape of coins, so it was difficult to accuse someone of someone for falsification and give him a boiling bath or lead tasting. In 1241, Emperor Frederick II “for the good of the princes” officially forbade the use of bars in commercial transactions. He did so a bit like modern governments, which force citizens to use national currencies, despite the fact that they are infected with hyperinflation.

What is even more interesting, however, did not force the German subjects to stop exchanging silver (despite its uncomfortable form). The rulers were prevented by the political crisis (“the big interregnum” in 1250-1274) and the fact that the bars began to be even improved by standardizing their weight. A common weight measure was the Cologne (about 234 grams.), Although this measure had a different value in different parts of Europe – for example, in Poland it was 197.68 g). In addition, the bars were stamped to cheat fraud (some kind of confirmation of blockchain transactions).

Pennies are entering the stage of history

The breakthrough occurred only during the penny reform. And at least he did not mean a coin worth little. When he appeared on the stage of history in 1172, Genia was worth 4 denarii and had 1.5 g of silver in him. He was even called a big denarius, he was a big fish among the money. With time, pennies weighing 1.7 g started and then they were worth 6 denarii. They came to circulation in France in 1266, England in 1279, Italy – 1253, and Germany – 1271. In 1300, the King of Bohemia (and for some time Polish lands) Wacław II introduced a Czech penny who played an important role in the history of our country. Besides, the Czech work was a real economic panzerfaust – it weighed as much as 3.8 g and became a model for coins minted in the Reich and in Central Europe. Even our king, Kazimierz Wielki, issued his own pennies weighing 3.2 g, following the model of Wenceslas.

Gold returns to the game

The 13th century is also the return of gold. The already mentioned Fryderyk II from 1231 beat gold Augustów (4.48 g). From this metal, Florence (Florentine) or Genoa started to use it. Filip the beautiful – the ruler of France – released a coin masse d ‘or. From 1360, the frank d ‘or. In 1344, the English King Edward III emits the Golden Nobel. At the end of the fourteenth century, the Rhenian Union of Men is formed, which creates the golden Rhine gulden.

The return of gold to the markets was a sign of economic recovery. Its further dissemination was also possible due to increased extraction and imports from West Africa, from where they were transported by the Portuguese.

There was also a tendency to create a currency that could be used more widely. Thanks to Florentine bankers, the Florentine also became something of a pan-European coin.

The return to the gold favors was, however, equal to the introduction of a parallel currency, i.e. a currency whose exchange rate of gold and silver coins varies depending on the supply and demand for both bullion. Such an operation required the interference of the central authority. Research has begun on what we would today call a monetary policy. The rulers began to announce official exchange rates.

To be continued…

 

image: imf.org

Leave a Reply

Your email address will not be published.

Pin It on Pinterest