The History of Currency, 1252 to 1896

The purpose of this book is twofold--first and foremost, to illustrate a question of principle by the aid of historic test and application; secondly, to furnish for the use of historical students an elementary handbook of the currencies of the more important European states from the thirteenth century downwards.

Little need be said as to this latter purpose. The total omission of the historic, reasoned, and consecutive study of currency history--the most important domain of practical economics--from the curriculum of every university in the land is matter for surprise and regret, and can only be attributed to the lack of an initiative and of a handbook.

As to the former purpose, there is no field of history so strewn with scientific (i.e. comparative and prophetic) possibilities as economic history; and in economic history there is no department in which the study of the experience of other times and nations is more necessary and resultful, lesson-full, wisdom-full, than the domain of currency. The verdict of history on the great problem of the nineteenth century--bimetallism--is clear and crushing and final, and against the evidence of history no gainsaying of theory ought for a moment to stand.

Throughout mediæval Europe and up to the close of the eighteenth century the currency of Europe was practically bimetallic--practically, because actually so without the prescription of a law of tender, and without the allowance of any theoretic grasp or conception of the practice as distinctively what nowadays we understand as bimetallic.

The conception of a law of tender is quite modern. And the evolution of the idea of such a law has gone hand in hand with the evolution of a conception of monetary theory on the part of the legislator--that is, with the bitter experience which for want of such a conception Europe endured for centuries. In all systems of jurisprudence money and minting appertains to the kingly office, and the development of the law of tender is to be traced in royal proclamations of the King in Council for long before it became the subject of parliamentary legislation. For centuries, such proclamations were issued, referring to a prohibition of export of the precious metals, banishing foreign coins from the land, or, again, permitting their circulation, and, in that case, prescribing the rough tariff or rate according to which (foreign) coin for (native) coin they should be current. In such proclamations there is no idea of separating the two metals, gold and silver; there is no idea of a law of tender; there is no intention to declare a ratio; there is no conception of bullion apart from coin. The two metals had grown to be the circulating and exchange medium; they were actually there, and all that had to be done was to keep them there. The advantage which was to be derived from a trade in bullion, and from an understanding of the effects of differently-prevailing ratios in different countries, was known only to the Jew and the Italian. They plied their trade in secret, and the legislator was only apprised of the result by suddenly finding a slipping away and dearth of coinage. Then the legislator altered the tariff, and gradually rose to the conception of the ratio as underlying this process of seduction. Then, as a further defence of a particular class of coins, he imposed a limitation on the tender of such, so as to prevent bullion operations on it. This limitation was the first development of a law of tender. Throughout, from the thirteenth to the eighteenth century, both gold and silver had been actually employed in European commerce without any idea either of declaring or of restricting the tender, whether of the one or the other.