When Henry I reached the throne in the early twelfth century, the value of the English currency was falling. The Mints of England that manufactured and stamped the coinage were substituting the silver content with base metals like tin. This is the origin of the term debasement to describe a devaluing currency. Apart from precious metal substitution, coins were tampered with by clipping off the edges. By collecting scraps of silver, one could effectively conjure up coins from nothing. In common with similar episodes when a currency is debased, a period of inflation – or rising prices – sets in. In order to receive the same quantity of silver in exchange for one’s goods, a greater number of these clipped coins would be required, so higher prices had to be charged.
By 1124 Henry I had had enough of this abuse and summoned the various Mints to Winchester (then the capital of England) in what was called the ‘Assize of Moneyers’. Two thirds of them were found guilty of debasing the currency and they either had their right hand cut off or were castrated: it was unlikely that they were given a choice between the two options. The law and logic of the day dictated that they were effectively stealing, so the removal of a hand was called for. Likewise, clipping the edges off coins was de-facing the image of the King so castration resulted. Perhaps castration – which of course prevents procreation – was an apt punishment. Debasing currency is the same as stealing wealth from the next generation, much like we do with debt today. The harshness of these penalties did not completely prevent further abuse. All coins were later recalled and replaced by the Short Cross penny, lasting some 70 years.
Debasement has frequently been a deliberate policy of kings and emperors to expand the monetary base. However, in the twelfth century a combination of coin makers’ greed and shortage of precious metals was at fault. The Crusades had cost a fortune while the ransom for the ‘never-present’ Richard the Lionheart had stripped the coffers bare at the Treasury. Although his younger brother King John was legendary for his unpopularity, we should try to take into account the appalling financial legacy that he was left with. In the space of a generation, John had lost much of the family land which at one point stretched from the North of Scotland to the South of France. It was created by the union of the ultimate power couple of the era: his parents Eleanor of Aquitaine and the Plantagenet King Henry II. Little wonder that he was seen as the black sheep of the family who sported the disparaging nickname of Jean Sans Terre (‘Johnny No Lands’ in modern parlance). His loss of Normandy eight centuries ago crystallised the decision of The Channel Islands to give their loyalty to the English Crown, rather than the French.
The rationale for this history tour is that the same elements of greed, war and religion emerge time and again. The reduction of precious metals in coins is equivalent to the dilution of a currency today, as debt creation reduces its worth or purchasing power. In wartime, governments lose their financial discipline to win at any cost, which ends up costing everything. Yet another conflict in the Middle East reminds us that a modern debasement is brewing, this time for the US dollar. Surveying today’s scene it is clear that our behaviour bears a striking resemblance with the Crusades era.
Next in the series Gold History coming soon.
Source by Toby Birch
Devaluation Currency - Gold History Part 2
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