mcdaniel@uiuccsb.UUCP (03/24/84)
#N:uiuccsb:19400002:000:6775
uiuccsb!mcdaniel Mar 24 01:24:00 1984
ABSTRACT:
If you don't mind about 120 lines of medieval history lesson, I will
try to refute the claims of "gold bugs" that use of gold and/or silver
money would necessarily be any better than paper money. This is somewhat
inappropriate for net.legal, but that's where I saw the discussion start.
SOURCES:
[1] "A Distant Mirror: The Calamitous 14th Century", Barbara W.
Tuchman, 1978, Ballantine Books, 1st edition (trade paperback), ISBN
0-345-30145-5. Very entertaining, even if you're not into pillage,
plague, and general societal disintegration. Easy to buy -- New York
Times bestseller.
[2] "Henry II", W. L. Warren, 1973, University of California Press, 2nd
printing (trade paperback), ISBN 0-520-03494-5. Also excellent. About
300 pages on the events of his reign, 155 on government, 160 on
church/state. Has details Bloch never even approached.
------------------------------------------------------------------------
"The provincial estates whose consent was required for new taxes were
reluctant, like most representative bodies, to recognize crisis until
it was underfoot. Given an inadequate and obsolete [financial] system,
the King [Philip VI of France, first of the Valois] had to devise
substitutes like the sales tax -- called "malto^te" because it was so
hated -- or the equally unpopular salt tax; or else he fell back on
devaluing the coinage. In disruption of prices, rents, debts, and
credit, the effects of this subterfuge for taxation was regularly
disastrous. 'And in the year 1343 Philip of Valois made 15 deniers
worth three,' wrote one chronicler in sufficient comment." [1, p. 89]
[That's 500% inflation.]
"The crown grasped for money by every means and favored the least
scrupulous, which was debasing the coinage. Less directly obvious than
aids and subsidies, it required no summoning of the Estates for
consent. Coins called in were re-minted with a lower proportion of
gold or silver and recirculated at the old face value, with the
difference being retained by the Treasury. Since the petty coins of
daily use were those affected, the system reduced the real wages and
purchasing power of the common people while bankers, merchants, and
nobles, whose movable wealth was in large gold coins or gold and silver
vessels and plate, were less affected. Under Jean II [Philip VI's
heir], manipulations were so frequent and erratic that they upset all
values and succeeded in damaging and infuriating everyone except the
manipulators themselves and those who could profit by holding back
their gold. Abbot Gilles li Muisis of Tournai found the mysteries of
the coinage even more obscure than the plague and was inspired to a
famous verse:
Money and currency are very strange things. They keep on going
up and down and no one knows why; If you want to win, you lose,
however hard you try.
In 1351, the first year of Jean's reign, the currency suffered eighteen
alterations, and seventy in the course of the next decade." [1, pp.
129-30]
"When death [from the Black Death] slowed production, goods became
scarce and prices soared. In France the price of wheat increased
fourfold by 1350. At the same time the shortage of labor brought the
plague's greatest social disruption -- a concerted demand for higher
wages. . . . Within a year after the plague had passed through northern
France, the textile workers of St. Omer near Amiens had gained three
successive wage increases. In many guilds artisans struck for higher
pay and shorter hours. In an age when social conditions were regarded
as fixed, such action was regarded as revolutionary.
The response of rulers was instant repression. In the effort to hold
wages at pre-plague levels, the English issued an ordinance in 1349
requiring everyone to work for the same pay as in 1347. . . . In both
countries, as shown by repeated renewals of the laws with rising
penalties, the statues were unenforceable. . . . In 1360 imprisonment
replaced fines as the penalty and fugitive laborers were declared
outlaws. If caught, they were to be branded on the forehead with F for
"fugitive" (or possibly for "falsity")." [1, pp.120-1]
"Debasement of the coinage was, of course, a perennial problem of the
middle ages." [2, p. 264] Warren then goes on to described makeshift
ways around the problem (frequent recoinage and assaying of large
payments, or taking a stiff penalty in fake coins) and later reforms
[2, pp. 264-5] These measures take too much space to be repeated here.
CONCLUSIONS:
Unscrupulous governments can always make a profit on "funny money":
either set the printing presses on "stun", or start putting tin or iron
into the coinage, as appropriate to your form of money. Yes, even
silver. The "free silver" movement in the US around 1900 was partially
a demand by some that the government inflate the currency by making
more silver coins. Even silver can debase, if your coins are gold. Do
you think that "in these modern times" no government could get away
with debasing coins? Ha. There's a well-known law that bad money
drives out good. If both types are available and legally backed,
people will hoard the good stuff and palm off debased coins for debts.
Debased coins being legal tender, creditors would have to accept them,
or else cancel the debt. (That's the law -- and it's a pretty good
one, too. If it weren't there, a creditor could say, "Make your
mortgage payment in Zulu quatloos. Oh, you can't get any now, and
can't make your payment? Foreclosure time.") Thus, the debased coins
would quickly become the only coins in use. THE ONLY WAY TO STOP A
GOVERNMENT FROM MAKING INFLATIONARY CHANGES IN THE MONEY SUPPLY IS
VIGILANCE, AND I DON'T CARE IF YOU USE GOLD OR SILVER OR PAPER OR
WAMPUM OR WHATNOT.
Even if you exclude government interference and counterfeiting,
disastrous inflation can occur. Even in an almost static medieval
society, 400% inflation occurred. Inflation can be due to massive
plague or blight, war, terrorism, business competition, labor strikes,
drought, floods, new technology, dwindling resources, or sheer chance.
A major medal strike would be very inflationary (check out the price of
eggs in California in 1849). Even IF there are no more major finds on
this planet, there are metallic asteroids which look promising for lots
of medals (gold and silver included). As an example of inflation:
until this century, England had gold and silver backed money. Before
the end, the "pound sterling" was nowhere near being 16 troy ounces of
silver. GOLD AND SILVER HAS NO MAGIC IMMUNITY FROM INFLATION.
Since I've gone on a long time, and the opposition probably tuned out a
long time ago and won't change their minds anyway, I'll stop.
Tim McDaniel . . . {ihnp4|pur-ee}!uiucdcs!mcdaniel