...top of page

Working paper 361

John H. Munro, "Coinage and Monetary Policies in Burgundian Flanders during the late-medieval 'Bullion Famines',. 1384 - 1482", 2009-06-26
Main Text (application/pdf) (1,277,122 bytes)

Abstract: This paper seeks to answer two questions: were the coinage debasements in Burgundian Flanders (1384-1482) undertaken principally as monetary or fiscal policies; and were they beneficial or harmful? In a recent monograph, Sargent and Velde (Big Problem of Small Change: 2002) contend that monetary objectives governed almost all medieval, early-modern debasements, especially to remedy the chronic shortages of petty coins. Despite overwhelming evidence that Burgundian Flanders, along with most of north-west Europe in the later 14th and 15th centuries, experienced severe monetary scarcities and liquidity crises, especially in the periods ca. 1390 - ca. 1415 and ca. 1440 - ca. 1470, both periods of severe deflations, eras commonly known as �bullion famines�, there is no compelling evidence that the Burgundian rulers debased their coinages on the basis of any such monetary policies. My thesis is that the Burgundian rulers of Flanders, in competition with neighboring princes, undertook their debasements primarily as aggressive fiscal policies, specifically to finance warfare. Their goal was to increase their seigniorage revenues, the tax imposed on bullion brought to their mints, by two means: by increasing the tax rate itself, and by enticing an increased influx of bullion into their mints, both by the debasement techniques themselves and by auxiliary bullionist policies. Those policies were successful so long as three conditions were met: (1) that merchants supplying bullion received more coins of the same face value and thus with a greater aggregate money-of-account value than before (or than from other mints); (2) that the public accepted such debased coins at the same face value, by tale; and (3) that the merchants spent their increased supply of coins quickly, before any ensuing inflation eroded those gains. This study further demonstrates that the inflationary consequences of debasements were always less than those predicted by mathematical formulae � possibly because those debasements failed to counteract the prevailing forces of monetary contraction and deflation. Because so many princes pursued similar fiscal policies, many others engaged in debasement for purely defensive reasons: to protect their mints from foreign competition and to protect their domestic money supplies from influxes of debased and also counterfeit imitations: i.e., to counteract Gresham�s Law. If many debasements were retaliatory measures against a neighbour�s bullionist policies, those policies in general, and not just debasements, were also products of late-medieval warfare, which was also the primary culprit responsible for periodic monetary contractions: by impeding coinage circulations and bullion flows, and by provoking increased hoarding. The answer to the final question is that debasements were usually far more harmful than beneficial.

Note that this is an extensively revised and shortened version of an earlier working paper (no. 355), correcting some errors in that paper (concerning Spanish coinage): with the same tables, but with a new set of graphs,

Keywords: debasements; gold; silver; bullionist policies; mints; seigniorage; inflation; deflation; �bullion famines'

JEL Classification: E31; E41; E42; E51; E52; E62; F33; H11; H27; N13; N23; N43