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More than 300 autonomous members of the Holy Roman Empire came together to create a common currency based on silver in the mid-sixteenth century. Drawing on a new book, Oliver Volckart explains the background to this important moment in Europe's economic history. In the mid-sixteenth century, the Holy Roman Empire had about 300 largely autonomous members, most of which were still issuing their own currencies.
My book "The Silver Empire" examines why and how they replaced this plethora of monetary systems with one common currency, introduced in 1559 to 1566. While my work pays equal attention to the economic and constitutional conditions that shaped monetary policy decisions, here I focus on economics. Creating a currency One surprising thing my analysis shows is that unlike modern governments that join currency unions, none of the members of the Empire were remotely interested in supporting economic integration.
Rather, they tried to solve problems that resulted from three fundamental conditions which shaped the premodern monetary economy. These were, first, the use of coins with an intrinsic value that made them in principle acceptable anywhere (at the discretion of the consumers). Second, the lack of currency borders that resulted from this fact as well as from weak state capacities.
And third, the integration of markets, which caused not only high-purchasing power trade coins but also growing quantities of small change to travel increasingly large distances. These conditions encouraged many authorities to issue underweight imitations of better coins minted by their neighbours. Merchants could use the poor copies to buy up the better originals, which they then delivered to mints that used them as raw material to produce more copies.
Most consumers being illiterate and poorly informed, they were unable to distinguish imitations from originals, accepting the shoddy copies without questions. Again and again, "bad" money displaced good coins on the markets of..
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