43. THE BEGINNINGS OF EUROPEAN MONETARY

HISTORY1

By W. A. SHAW

The monetary history of Europe begins in the thirteenth century, and in the Italian peninsula. Its starting-point is the era of the reintroduction of gold into the coinages of the Western nations, and is definitely marked for us by the minting of the gold florin of Florence in 1252. For all practical purposes gold had gone out of use since the seventh century, and after the submersion of the Roman Empire; and the currencies of the nations of mediaeval Europe rested on a silver basis entirely.

The explanation of the reintroduction and recoinage of gold is to be found in the history of the Crusades and of the commercial growth of the petty independent states which sprang from the political confusion of Italy. No sooner had they achieved each their little autonomous existence than they threw themselves with feverish activity into the development of trade with the East. Florence and Venice, Pisa and Genoa, led the way and reaped the fruits; and it was in her most flourishing time, when she had conquered her rivals, Pisa and Siena, and was enjoying a prosperous peace and active trade, that Florence, at the instance of the chief of her merchants, resolved on the coining of the gold florin.

The mere idea of such a gold coinage could only be derived from the East, from Byzantium. But it is a curious fact that the importation of it should be due in the first place to the Crusades. Frederick II of Italy was elected Emperor of the Holy Roman Empire in 1212. Sixteen years later he headed the Fifth Crusade, and the gold coin (Augustale) which he issued sometime between his return from that crusade and his death probably commemorates his wish to rival the appearance of opulence of the Eastern court. This Sicilian coin is the direct ancestor of the florin of Florence, and to it would fitly belong the honor of leading in a new era, were it not that the superior beauty gave it universal currency and reputation and extinguished the memory of its predecessor.

Two conditions were essential to bringing about so momentous a revolution as this, however little the mind of contemporaries may have known it as such. In the first place, the foreign trade of the Italian republics must have become so extensive as to demand a currency medium of higher denomination than silver; and secondly, that trade must have developed in such directions as to tap gold-using

1 Adapted from The History of Currency, pp. 1-14. (G. P. Putnam's Sons, 1896.)

or gold-bearing regions in order to supply the Italian mints. It is a curious fact that both these conditions were realized through the instrumentality of the Crusades. The quickening effect of these vast movements on the trade of the Mediterranean is well known, but their influence in the second direction has not hitherto been pointed out. In the Fourth Crusade Venice lent the force which captured Byzantium (1203), and when, by her arms, Baldwin, Count of Flanders, had been seated on the Eastern throne, Venice reaped her reward in three-eighths of the territories of the Eastern Empire. She received Peloponnesus and a chain of islands in the Aegean, and by the hold she had on Constantinople secured the virtual control of the Black Sea. In its turn the control of the Black Sea brought with it the monopoly of the overland trade with India.

At one and the same moment, therefore, Venice acquired possession of a huge treasure of gold wrested from the conquered city, and of the then only gold-yielding districts-the Crimea and of an intercolonial trade, demanding a more enhanced currency medium. The result of such a combination of circumstances was irresistible. During the continuance of the "Latin Empire" at Byzantium, Venice and her sister-state were practically the only merchants of Europe.

The characteristics of this early period are perfectly well defined, and repeat themselves with almost faithful and exact similarity of recurrence in the several states comprising the Europe of that date. In brief, such characteristics were those of (1) a period of commercial expanse, necessitating an increasing currency and advancing prices; (2) a period of stationary production of the precious metals, necessitating a struggle among the various states for the possession of those metals; (3) a period of endless change in the ratio between gold and silver, necessitating the continual revision of the rate of exchange. Broadly speaking, those characteristics fall into two classes, according as they relate to (1) the natural movement of prices, i.e., having regard merely to the supply of the precious metals; (2) to the unnatural struggle for the metals themselves-for the material for currency -due to international rivalry and bad or crafty legislation.

With regard to the former of these, the period was distinctly one of insufficient and relatively diminishing production of the metals. During these two centuries, 1300-1500, the main sources of the derivation of gold were the Eastern trade and the finds on the eastern shores and northern interior of Africa. The chief supply of silver came from the mines in Germany. These latter in Hungary, Transylvania, Saxony, and Bohemia were of such importance and activity,

in the fifteenth century and toward the time of the discovery of America, as partially to keep pace with the general trade expanse of the time, thereby helping to arrest a fall of prices that would have been absolutely disastrous to the civilization of Europe.

44. PRODUCTION OF GOLD AND SILVER IN THE WORLD SINCE THE DISCOVERY OF AMERICA'

From Annual Report of Director of the Mint, 1914, p. 268.

D. Principles of Coinage

45. INVENTION OF COINAGE'

BY HENRY V. POOR

Coinage is of comparatively recent origin. No traces of it have been found among the remains of Assyrian or Egyptian art; and Egyptian civilization, running through periods far greater than those which measure the life of subsequent nations, had begun to decline before coinage was used. Among all the ancient nations, including the Hebrews and Phoenicians, as well as the Assyrians and Egyptians, the precious metals passed by weight. When Abraham weighed out at Ephron the silver which he had named in the audience of the sons of Heth-"four hundred shekels of silver, current money with the merchant"-he undoubtedly used scales and denominations of weight common to the whole East. The language indicates as thorough a familiarity with the use of money as does that used in financial newspaper articles of the present day. So Joseph gave to Benjamin "three hundred pieces of silver." These pieces were undoubtedly of very nearly equal weight-consequently of equal value. The word piece had a significance precisely similar to that which we attach to the word dollar.

The invention of coinage has been ascribed to Pheidon, who reigned about 750 B.C., in the island of Aegina, a dependency of Argos, and at that time one of the greatest commercial emporiums of Greece. Previous to its invention, the form in which the precious metals were used was that of pins, or wires, silver being the metal chiefly employed. Of these, a certain number made a conventional handful, or drachma. This form was gradually exchanged for that of solid pieces, or wedges, which may be considered as a step toward coinage.

Jevons says: "The mode in which the invention happened is sufficiently evident. Seals were familiarly employed in very early times, as we learn from the Egyptian paintings or the stamped bricks of Nineveh. Being employed to signify possession, or to ratify contracts, they came to indicate authority. When a ruler first undertook to certify the weights of pieces of metal, he naturally employed his seal to make the fact known, just as, at Goldsmith's Hall, a small punch was used to certify the fineness of plate. In the earliest forms of coinage there were no attempts at so fashioning the metal that its 'Adapted from Money, Its Laws and History, p. 11. (H. V. and H. W. Poor, 1877.)

I

weight could not be altered without destroying the stamp or design The earliest coins struck, both in Lydia and in the Peloponnesus were stamped on one side only."

46. FORM, DESIGN, AND SIZE OF COINS2

BY W. STANLEY JEVONS

From time to time coins have been manufactured in very many forms, although circular coins vastly predominate in number. Among the innumerable issues of the German states may be found octagonal and hexagonal coins. A singular square coin, with a circular impress in the centre, was issued from Salzburg by Rudbert in 1513. Siegepieces have been issued in England and elsewhere in the form of squares, lozenges, etc. Some of the most extraordinary specimens of money ever used are the large plates of pure copper which circulated in Sweden in the eighteenth century. These were about three-eighths of an inch in thickness, and varied in size, the half-daler being 3 inches square, and the two-daler piece as much as 7 inches square and 3 pounds in weight. As the whole surface could not be covered with a design, a circular impress was struck near to each corner, and one in the centre, so as to render alteration as difficult as possible.

Among Oriental nations the shapes of coins are still more curious. In Japan, the principal part of the circulation consists of silver itsibus, which are oblong, flat pieces of silver, covered on both sides with designs and legends, the characters being partly in relief and partly incised. The smaller silver coins have a similar form. Among the minor Japanese coins are found large, oval, moulded pieces of copper or mixed metal, each with a square hole in the centre. The Chinese cash are well known to be round discs of a kind of brass, with a square hole in the centre to allow of their being strung together. The present circulation of China is composed of the so-called Sycee silver, which consists of small shoe-shaped ingots, assayed and stamped, according to some accounts, by the government. The coins of Formosa are similar, except that they are much larger and thicker. All the copper and base metal coins of China, Japan, and Formosa are distinguished by a broad, flat rim, and they have characters in relief upon a sunk

'This paragraph is taken from Money and the Mechanism of Exchange, p. 55. 1875. (D. Appleton & Co.)

2

Adapted from Money and the Mechanism of Exchange (1875), pp. 55-62. (D. Appleton & Co.)