Much ink has been spilled on the gold standard as the first truly international monetary regime (1870s–1914). Perhaps blinded by the benefit of hindsight, a generation of scholars sought to explain the process as an almost preordained happening, a natural course of events, either because of the innate deficiencies of bimetallism and the silver standard or because of the perceived benefits that a common gold standard promised. Recently, a revisionist strand has taken issue with this view. Notably, Flandreau (Reference Flandreau2000, Reference Flandreau2004), following Milton Friedman’s remarks (1990), has demonstrated that bimetallism was not the “knife-edge” as many contemporaries depicted it. On the contrary, because of France’s critical mass in the world’s monetary geography, it worked remarkably well. It must be understood as the single factor in stabilizing the gold-silver parity before the 1870s. In my research (Schiltz Reference Schiltz2020), I have taken this argument beyond the contours of the European and North American continents and explained how exchange banking practice—in particular, the innovation of setting off equal amounts of trade contracts denominated in different metals against each other, thus hedging exchange risk—absorbed pressure to engage in costly monetary reform and thus delayed adoption of the gold (exchange) standard in the periphery. Silver was, in other words, for a long time an indispensable ingredient in international finance, if not for sovereign debt, then certainly for trade finance—which in turn may explain why it took so long to be overtaken by gold.
These debates do, however, not explain how the nineteenth century got there in the first place. Why and how did hybrid and highly fragmented monetary systems persist for such a long time? How did, for instance, the Holy Roman Empire fare with its diffuse monetary system (if we can call it a system at all)? How did it go about trying to alleviate the very real pressures of monetary mayhem?
We should count ourselves lucky to have a historian of Oliver Volckart’s caliber to take it upon himself to explore these questions. Writing about events pre-1800 is no sinecure. Because of a host of largely interrelated technological conditions (related to matters of transportation, communication, assaying, administration, etc.) and the difficulties for a twenty-first-century public to imagine their ramifications, we have to tread carefully. In the following paragraphs, we will see how the book makes its case.
Chapter 1 outlines the culprit for the Empire’s monetary travails: a rampant trade in coinage among the empire’s regions. What happened was as follows: wealthy merchants purchased large amounts of coins struck in a particular estate, which they shipped and sold to the authorities of another estate or, directly, to their respective mints. There, the money was broken, the alloy mixed with base metal, and new coins struck, which were shipped back to the estate where the money had been purchased in the first place. Interestingly, this was not the same thing as counterfeiting, although even contemporaries sometimes misunderstood it as such. Instead, the practice was directly related to the byzantine administrative set-up of the Empire. Volckart explains (p. 22): “Looked at from a modern perspective, early sixteenth century Germany barely resembles what we would call a state. It had no capital where the central government had its seat; in fact, it did not have a central government worthy of that name in the first place. It did not even have any clearly defined borders. […]. What Germany had were pretensions.” Indeed, the only thing lending any sense of unity in the empire was (feudal) law: mountains of well-established and age-old rights and privileges, including coinage, lived on through negotiations and consensus building, and local elites were, for obvious reasons, ready to exploit their privileges. Exploiting they did. The Silver Empire explains that the Empire saw a remarkable amount of so-called Beischläge, a term for which there exists no English counterpart, but which can be translated as “side strikes.” After all, it is easy to see that an attempt at profiting from one’s neighbor would rarely be an isolated event. Once set in motion, debasements led to countermeasures and retaliation, exacerbating the effects of Gresham’s Law (“bad money drives out good”).
These did not go unnoticed. We possess numerous examples of flysheets, meticulously documenting public opinion on monetary matters (Chapter 2). They do not only note disgruntlement (of which there existed quite a bit, especially towards the merchant class, which was believed to profit off the coin trade) but also prescribe policies to mitigate the negative effects of monetary diversity. Attempts to take control of the borders of the estate, competitive debasements, and more extreme measures such as “putting down the hammer” (i.e., closing the mint) were ad hoc and impossible to lead to even a midterm solution. Monetary unions, established with the specific aim of curtailing the trade in coinage, were not long-lived either.
In what is arguably the most speculative yet very compelling chapter, Volckart develops several arguments for the policy-making impediments that the Empire faced in tackling the currency issue (Chapter 3). Whether rituals or selective incentives, it is remarkable that the decision-making process during the Münztäge, or “monetary conferences,” remained largely local and constrained by the geographical boundaries of the estates.
In the end, a few external and, again, technological shocks forced a way out of the deadlock of the pre-1500 ways of managing the Empire. First of all, new metallurgic technologies (“water art” and the newly developed liquation process) fueling the mining boom forced a different level of scale, for example, the way the mining sector was financed, yet ultimately leading to new technologies for effectively making diverse interests within the Empire fall into line (Chapter 4). Later, the arrival of New World silver eroded the profits of the Bergherren and, crucially, forced a paradigm shift in the “insights into the value of money” (p. 149) and the factors to be considered in its production (not seigniorage, but solely the cost of mining and producing the coins). Around the same time, the proliferation of international trade and yet other bouts of arbitrage in precious metals (this time gold; Chapter 5) broke the back of the proverbial camel. With feudal ideas about currency out and new leadership (King Ferdinand I) in, monetary reform could finally be given the urgency it deserved.
The result (Chapter 6) was the famous compromise of 1559 (known as the “Augsburg Imperial Coinage Ordinance”), which has received ample attention from historians. Volckart is subtle in his judgment, rightly assessing the currency union in terms of what it sought to establish and not against how modern currencies function, as other historians have done (compare as well: Volckart Reference Volckart2022). Interestingly, the chapter also contains a very ingenious reconstruction and explanation of the contemporary rejections of bimetallism—an explanation of which I was not aware and which I leave to the readers to discover and evaluate for themselves.
With The Silver Empire, Oliver Volckart has written a book about what is arguably a lesser-known or even obscure topic; it should be enjoyed for its historiographical grid and methodological elegance.
