In his new book The Silver Empire: How Germany Created Its First Common Currency Oliver Volckart examines the reasoning and political process by which the Holy Roman Empire replaced its disparate monetary systems with a single common currency.
The early modern Holy Roman Empire was famously decentralised. It had about 300 largely autonomous members of diverse status, size, and power, ranging from important temporal and spiritual princes, whose rulers took part in electing the emperors, over smaller dukes, counts and barons down to the magistrates of the free imperial cities. In the early sixteenth century, most of these authorities were still issuing their own currencies. In my book The Silver Empire I examine why and how the Empire replaced this plethora of monetary systems with one common currency.
Drawing on a wealth of newly discovered archival evidence, I use lively examples to show that when the members of the Empire planned their common currency, none of them were interested in helping trade or supporting economic integration. On the contrary, the leading authorities generally mistrusted and despised merchants; policies designed to help them were never even considered. In this, the princes of the Empire were able to tap into a rich vein of anti-commercial sentiment. People whom they called the ‘common man’ – mainly the heads of peasant and artisan households – increasingly suspected merchants of giving in to the deadly sin of avarice and of being governed by self-interest, with ‘self-interest’ being the counter concept of the ‘common good’ that politics were expected to realise.
In addition, while long-distance merchants were able to cope with monetary diversity by using bills of exchange and a small number of internationally accepted trade coins (such as the golden Rhenish florin and the silver taler), it was the common man who suffered. As currency borders did not exist and markets became increasingly better integrated over the fifteenth and early sixteenth century, not only high-value money, but also small change travelled increasingly large distances. A direct consequence was, for example, an ordinance published by the elector and duke of Saxony in 1511. This law required the Saxon population to memorise the values of 37 different types of small change, only four of which were domestic – and not only to memorise them, but also to correctly identify these coins and to use them at their correct legal value. No wonder that the terms most often used when talk turned to the money of the Empire were ‘disorder’, sometimes coupled with ‘confusion’.
It was not only the common man who suffered. Increasing integration and the lack of currency borders encouraged many members of the Empire to issue underweight imitations of better coins minted by neighbouring authorities. Merchants could use such imitations to buy up the better originals which they then delivered to mints that used them as raw material to produce more of the poor copies. Most consumers – remember, most of the population was illiterate – were unable to distinguish copies and originals. They therefore tended to accept the shoddy imitations without further questions. Again and again, ‘bad’ money displaced good coins on the markets of the Empire: Gresham’s Law was in full force.
Typically, the victims of the law – the authorities that issued the better originals – tried to defend their own currencies by adopting the standard of the poor imitations. As the producers of the imitation coinage reacted by debasing their poor copies even further, the consequence of such policies was rounds of debasements – debasements that were initially intended to be ‘defensive’ but that quickly turned competitive. Realising this, an increasing number of members of the Empire abandoned minting entirely, concluding that creating a common currency was the only sustainable response to the systematic lack of monetary stability.
My book continues by examining the course of the negotiations that eventually led to an agreement on such a common currency. I discovered that most of the decisive talks did not take place at the imperial diets – the parliaments of the Empire – but at several conferences the diets had called in 1549 and 1557. The two well-attended meetings in 1549 – both in the imperial city of Speyer on the middle Rhine – drafted a currency bill that determined the standard of the common silver and gold coinage. However, the attendants failed to agree on whether gold and silver were to circulate at fixed or floating rates, that is, on whether the Empire should introduce a bimetallic currency such as the one England had at that time, or a duometallic system of the kind typical of much of the late Middle Ages.
Most of the middling and minor princes favoured bimetallism, and they did so because many of them had incurred huge debts that were typically denominated in gold. As the Empire contained some of the most important silver mining districts of Europe, the supply of silver grew, and as the imports of gold – mostly from West Africa – did not keep up, gold was steadily appreciating. For the princes who had incurred gold-denominated debts, this made servicing their obligations increasingly difficult. A bimetallic currency based on a legally fixed value ratio of gold and silver coins would have allowed debts to be serviced in both metals. To be sure, experience showed that sixteenth century state capacities were insufficient to enforce such ratios on the markets of the Empire, but from the perspective of indebted princes, this was an advantage. While they could purchase silver coins at the going market rate, they could count on being able to force their creditors to accept the money at its legal value. Unsurprisingly, when Emperor Charles V’s two representatives at the conferences, Bishop Philipp von Flersheim of Speyer and Count Reinhard von Solms, pointed this out, the delegates of the princes could hardly contain their acclaim. From now on, Flersheim and Solms appeared as ‘his imperial Majesty’s most laudable commissioners’ in the records of their meetings.
(Left) Rheinard von Solms, and (Right) Philipp von Flersheim, Imperial Commissionersat the 1549 currency conferences
However, bimetallism had strong opponents. Four of the most powerful princes of the Empire ruled territories that straddled the Rhine: The archbishop-electors of Mainz, Trier, and Cologne, and the elector Palatine where not only entitled to take part in choosing the emperor but were also among the wealthiest rulers of Germany. To a large extent, this was due to the commercial importance of the Rhine. Since the Hundred Years’ War between England and France forced merchants to seek an alternative to the traditional route from Italy to the Netherlands that led along the rivers Rhône and Saône, the Rhine had developed into the most important transcontinental trade route of Europe. The four Rhenish electors took full advantage of this situation: They taxed trade up to a level that equalled the costs merchants would have to bear when they used alternative routes – and they did not only tax it in any way that seemed convenient but insisted on traders paying the dues in gold. A bimetallic currency, where the ratio between gold and silver coins was once and for all legally fixed, was in no way in their interest. When Charles V, who was himself heavily in debt, tried to use his authority as emperor to decide the dispute in favour of bimetallism and published a bill intended to introduce a bimetallic currency in 1551, the four electors on the Rhine refused to implement it. Other members of the Empire took their cue from them, and the result was that the new currency turned out to be a resounding failure.
As long as Charles V ruled the Empire, a solution remained elusive. However, having seen not only his common currency fail, but also his attempt to contain Protestantism and to strengthen his own constitutional position, he abdicated and retired to a monastery in Spain. In 1556, his younger brother Ferdinand I took over. Ferdinand quickly realised that a compromise was required to solve the currency problem. The basics were discussed at another conference that took place in Speyer in 1557, though it was the imperial diet of Augsburg of 1559 that made the final decisions. The silver standard agreed a decade before was retained, but bimetallism was abandoned. At the end of the 1550s, the Empire did finally have its common currency, though universal acceptance took time and few more adjustments. It was only in 1566 that the imperial diet decided to integrate a variant of the silver taler in the currency. High-quality talers that markets strongly overvalued were issued by electoral-Saxony; the variant the diet adopted was comparatively base. However, once this variant was legalised and given all the backing the Empire was able to confer, the Saxon elector decided to accept it and with it the common currency. The alternative would have been to continue producing his better talers, only to see them disappear in the mints of his neighbours. There they would be used as raw material for the talers the Empire had legalised – the ‘Reichstalers’ or Imperial Dollars which continued to set the standard of German money into the nineteenth century.
Of course, it is impossible to discuss politics without knowing how decision making is organised. My book therefore pays a lot of attention to the constitution of the Holy Roman Empire, and not only to the legal provisions that shaped it, but also to how it worked in practice. In this context, I am entering a long-standing debate. On the one hand, some historians follow Georg Schmidt in interpreting the Empire as a regular premodern state, in principle no different from England and France. What distinguished it was that decision making took place at several levels: The level of the Empire (where politics were made at the diets and at conferences such as those I examined) and that of the territories and free cities complemented each other. On the other hand, there are historians who stress the dysfunctional elements present in the Empire; according to them, it appears as a system that was at best partially modernised in the sixteenth century.
In my own interpretation, the Empire was a specifically premodern system of multilateralism: premodern because its members were not equal, and multilateral because dozens of authorities were involved in decision making, following rules that all respected and adhering to values all shared. I did encounter instances of dysfunctionality: remember Charles V trying to impose a bilateral currency that important princes then refused to implement. I am tracing these elements to specific features of the constitution such as the voting procedures imperial assemblies followed, and to conditions such as high information costs. While voting procedures remained unchanged, information costs fell precipitously over the sixteenth century. The consequence was that over time, the Empire became better at making decisions that could actually be implemented. By the second half of the sixteenth century, the disorder and confusion that used to characterise the money of the Empire had given way to a much simpler and more functional currency system. As travellers from abroad attested, Germany had turned into a well-governed country. In sum, in analysing these changes my book brings Renaissance Germany to life, from the everyday doings of the common folk to high politics.
