developed more extreme enthusiasm and greater bitterness in denunciation than those on any other subject. In the exaggerated words of Mr. Bryan, "brother has been arrayed against brother, father against son. The warmest ties of love, acquaintance, and association have been disregarded; old leaders have been cast aside. . . . and new leaders have sprung up to give direction to the cause of truth." In the present section we are concerned with the practice of governmental debasement of the currency, once almost universal. As the readings indicate, the practice was common in Roman times (it was doubtless universally prevalent among the ancients) and throughout mediaeval history well down to the modern period. The purposes of such debasements are shown to be various, but the most common, aside from the pressing requirements of the royal exchequer, were to increase the volume of currency by making more coins out of the same quantity of metal, and to control the international flow of currency. This latter was obviously for the purpose of insuring at all times within the country as large a quantity of the precious metals as possible. This end was, however, continually defeated by the operation of Gresham's law. 52. METHODS OF DEBASING THE STANDARD1 BY JOSEPH HARRIS First, by altering the denomination of the coins without making any alteration at the mint, or in the coins themselves; as suppose nine-pence should be called a shilling (twelve-pence). Secondly, by continuing the same names and the same weights to the coins, but making them baser, or with less silver and more alloy. Thirdly, by preserving the same fineness of the metal, but making the coins smaller or lighter. Lastly, the two last methods, or all three methods, might be compounded together. 53. ROMAN DEBASEMENT OF THE CURRENCY BY J. S. REID The political importance of sound currency has never been more conspicuously shown than in the century which followed the death of Commodus (A.D. 180). Augustus had given a stability to the 1 Adapted from An Essay on Money and Coins (1757). Reprinted in Select Currency Tracts, 450-51. 2 Adapted from "The Reorganization of the Empire," in the Cambridge Mediaeval History, I, 39-40. (The Macmillan Co., 1911.) Roman coinage which it had never before possessed. But he imposed no uniform system on the whole of his dominions. Gold (with one exception) he allowed none to mint but himself. But copper he left in the hands of the Senate. Silver he coined himself, while he permitted many local mints to strike pieces in that metal as well as in copper. Although the imperial coins underwent a certain amount of depreciation between the time of Augustus and that of the Severi, it was not such as to throw out of gear the taxation and commerce of the Empire. But with Caracalla a rapid decline set in, and by the time of Aurelian the disorganization had gone so far that practically gold and silver were demonetized, and copper became the standard medium of exchange. The principal coin, that professed to be silver, had come to contain no more than 5 per cent of that metal, and this proportion sank afterwards to 2 per cent. What a government gains by making its payments in corrupted coin is always more than lost in the revenue which it receives. The debasement of the coinage means a lightening of taxation, and it is never possible to enhance the nominal amount receivable by the exchequer so as to keep pace with the depreciation. The effect of this in the Roman Empire was greater than it would have been at an earlier time, since there is reason to believe that much of the revenue formerly payable in kind had been transmuted into money. A measure of Aurelian had the effect of multiplying by eight such taxes as were paid in coin. As the chief (professing) silver coin had twenty years earlier contained eight times as much silver as it had come to contain, he claimed that he was only exacting what was justly due, but his subjects naturally cried out against his tyranny. No greater proof of the disorganization of the whole financial system could be given than lies in the fact that the treasury issued sack loads (folles) of the Antoniani, first coined by Caracalla, which were intended to be silver, but were now all but base metal only. These folles passed from hand to hand unopened. 54. THE EFFECT OF ROMAN DEBASEMENTS1 BY GEORGE FINLAY The depreciation in the value of the circulating medium during the fifty years between the reign of Caracalla and the death of Gallienus annihilated a great part of the trading capital in the Roman 'Adapted from A History of Greece, I, 52. (The Clarendon Press, 1877.) Empire, and rendered it impossible to carry on commercial transactions, not only with foreign countries but even with distant provinces. Every payment was liable to be greatly diminished in real value, even when it was nominally the same. This state of things at last induced capitalists to hoard their coins of pure gold and silver for better days; and as these better days did not occur, all memory of many hoards was lost, and the buried treasures, consisting of select coins, have often remained concealed until the present time. Thus the frauds of the Roman emperors have filled the cabinets of collectors and the national museums of modern Europe with well-preserved coins. The laws which regulate the distribution, the accumulation, and the destruction of wealth, the demand for labor, and the gains of industry, attest that the depreciation of the currency was one of the most powerful causes of the impoverishment and depopulation of the Roman Empire in the third century, and there can be no doubt that Greece suffered severely from its operation. 55. KING JAMES' BRASS MONEY1 BY THOMAS BABINGTON MACAULAY When James II, after abdicating and fleeing to France, had returned to Dublin in 1689 and was seeking to regain his throne by the aid of an Irish Parliament, he found himself hampered by an empty treasury. Could he at once extricate himself from his financial difficulties by the simple process of calling a farthing a shilling? He reasoned that since the right of coining money belonged to the royal prerogative, the right of debasing the coinage must also belong to it. Pots, pans, knockers of doors, pieces of ordnance which had long been past use, were carried to the mint. In a short time lumps of base metals, nominally worth near a shilling sterling, intrinsically worth about one-sixteenth part of that sum, were in circulation. A royal edict declared these pieces to be legal tender in all cases whatsoever. A mortgage for a thousand pounds was cleared off by a bag of counters made out of old kettles. Any man who belonged to the caste now dominant could walk into a shop, lay on the counter a bit of brass worth three pence, and carry off goods to the value of half a guinea. Legal redress was out of the question. Indeed, the sufferers thought themselves happy if by the sacrifice of their stock in trade. they could redeem their limbs and their lives. Of all the plagues of 1 Adapted from History of England (1848), chap. xii. that time none made a deeper or a more lasting impression on the minds of the Protestants of Dublin than the plague of brass money. 56. COINAGE DEBASEMENTS IN ENGLAND' BY JAMES MACLAREN When the method of reckoning by pounds, shillings, and pence was introduced into this country by William the Conqueror, a certain amount of pure silver was allotted to each coin; the pound sterling and the shilling were then, indeed, but imaginary money, the largest silver coin in existence being the penny, which contained the two hundred and fortieth part of a pound of silver; but a shilling if then coined would have contained the twentieth part of a pound, and the pound sterling would have weighed a pound. Our kings soon began to debase the currency by diminishing the quantity of pure metal contained in the coins without altering their denomination; their motive, according to Lord Liverpool, being not merely the gain which they themselves obtained by making more money out of the same amount of bullion, but also a desire to increase the wealth of their subjects, which they supposed to depend upon the quantity of money in the country, so ancient is the theory which attributes a power of increasing the national prosperity to an extension of the currency. These debasements were practiced to a great extent in the later years of the reign of Henry VIII, and in the beginning of that of his son, who, however, afterwards prepared a scheme for the restoration of the coinage to its former standard, which, with some modification, was carried into effect by Elizabeth. 57. REASONS FOR DEBASING THE STANDARD2 The causes of the adulteration of our coinage may be listed as follows: I. I have often heard it asserted that our standard of money is too good, and should therefore be debased. 2. Debasing the standard is urged as a means of increasing the currency, by giving old names to smaller pieces of money. 1 Adapted from History of the Currency, pp. 1–2. (Edward Bumpus, 1879.) 2 Adapted from An Essay on Money and Coins (1757). Reprinted in Select Currency Tracts, pp. 566–67. 3. Debasements are necessary to keep coin from being melted or exported. 4. A gradual debasement would not be perceived and would therefore do no injury to anyone. 5. Many of our coins are light from long use, and to prevent confusion the new coins should be of the same weight as the abraded ones. 58. A DEFENSE OF THE PRACTICE1 BY DAVID HUME While an increase in the quantity of specie will in time raise prices and thus offset the apparent gain, it may increase to a considerable pitch before it has this latter effect. In the frequent operations of the French king on the money, it was always found that the augmenting of the numerary value did not produce a proportional rise in prices, at least for some time. In the last year of Louis XIV money was raised three-sevenths, but prices augmented only one-seventh. Coin in France is now sold at the same price, or for the same number of livres, it was in 1683, though silver was then 30 livres the mark, and is now at 50. This seems to be one of the best reasons for a gradual and universal augmentation of the money which can be given. Were all our money, for instance, recoined, and a penny's worth of silver taken from every shilling, the new shilling would probably purchase everything that could have been bought by the old; the prices of everything would thereby be insensibly diminished; foreign trade enlivened; and domestic industry, by the circulation of a greater number of pounds and shillings, would receive some increase and encouragement. In every kingdom into which money begins to flow in greater abundance than formerly, everything takes on a new face; labor and industry gain life; the merchant becomes more enterprising; the manufacturer more diligent and skilful; and even the farmer follows his plow with greater alacrity and attention.2 Adapted from Political Discourses (1752), pp. 46–49. Hume points out, however, that in time, if the debasement is considerable, the rising prices will prove rather a disadvantage than an advantage.-EDITOR. |