Silver Money Research Articles

The Vagaries of the Sea: Evidence on the Real Effects of Money from Maritime Disasters in the Spanish Empire

Abstract We estimate the effect of money supply changes on the real economy by exploiting a recurring natural experiment: maritime disasters in the Spanish Empire (1531–1810) that resulted in the loss of substantial amounts of silver money. We find that negative money supply shocks caused Spanish real output to decline. A transmission channel analysis highlights slow price adjustments and credit frictions as mechanisms through which money supply changes affected the real economy. Especially large output declines occurred in textile manufacturing against the backdrop of a credit crunch that impaired merchants’ ability to supply their manufacturers with inputs.

A BRIEF HISTORY OF FINANCIAL SYSTEM AND THE BIRTH OF MONEY

In the beginning, human life was very simple. In a sense, for meet their needs, humans simply catch fish, hunt animals or picking fruits that are already in the forest. With increasinghuman population, the longer the needs become more complex in type and the number is getting bigger. So that it is impossible for someone to fulfillhis own necessities of life. Everyone feels the need for products the efforts of others, because human nature as social beings is already a sunnatullah in this world. Therefore, the system of exchange of goods and services is veryneeded to facilitate the process of meeting the needs of life. Developmentthe transaction system continues to evolve to this day. The development begins with barter system, gold and silver money system, paper money system, and probably will continue develop in accordance with the demands of human needs.

САМАРҚАНД СЎҒДДАН УМАВИЙ ДИРҲАМЛАРИНИНГ ЯНГИ ХАЗИНАСИ

The article focuses on the importance of expanding the resource base in assessing the circulation and characteristics of coins in Movarounnahr in the VIII-X centuries.The prospects of using local data to determine the role and place of Central Asia in the international economy of the middle Ages are highlighted. Historically, this treasure does not provide fundamentally new data, but the collection and analysis are organically integrated into the collection of data on the circulation of silver money in Mavorounnahr, which is the main direction of my scientific and practical work

How Can Money Conquer France? On the Question about the Monetary Policy of King Henry V in 1415–1422

This article studies the peculiarities of the monetary policy of English king Henry V in the territories of the Kingdom of France occupied by him between 1415 and 1422. The purpose of the study is to establish its influence on the state of finance in France and, first of all, on the sharp depreciation of silver money following the defeat. Within the framework of English politics, two stages can be clearly traced: the first one lasted from 1415 to 1420, when monetary policy was indirect in nature, influencing the French economy by the fact of conquest and becoming an additional factor in the aggravation of the domestic political struggle, and the other one lasted from 1420 to 1422 and was connected with the intention of Henry V as regent of the Kingdom of France, to bring the financial system into relative order. The author refers to French and English chronicles, The Diary of a Parisian Citizen, as well as the ordinances of the kings of France, which reflected the peculiarities of the monetary policy, more particularly, changes in the exchange rate and weight of silver coins and attempts to carry out reforms. The study carried out makes it possible to find out that the depreciation of the French silver coin was associated with the beginning of the British conquest of Normandy and the transfer of mints located there. A sharp drop in the money rate occurred after the transfer of Paris into the hands of the Burgundians and the formation in the fall of 1418 of an independent financial administration in the south of France under the control of the dauphin. On the contrary, some stabilisation followed the conclusion of the Treaty of Troyes, and the General States adopted a course towards reforms in December 1420. The author determines the stages of the reform and the reasons for its delay. These include: the lack of control over all the mints of the kingdom, the lack of coin metal and the required number of qualified personnel. Finally, the premature death of Henry V in the summer of 1422 did not allow the completion of the monetary reform.

Destabilizing the Global Monetary System

In 1871-73, newly unified Germany adopted the gold standard, replacing the silver-based currencies that had been prevalent in most German states until then. The reform sparked a series of steps in other countries that ultimately ended global bimetallism, i.e., a near-universal fixed exchange rate system in which (mostly) France stabilized the exchange value between gold and silver currencies. As a result, silver currencies depreciated sharply, and severe deflation ensued in the gold block. Why did Germany switch to gold and set the train of destructive events in motion? Both a review of the contemporaneous debate and statistical evidence suggest that it acted preemptively: the Australian and Californian gold discoveries of around 1850 had greatly increased the global supply of gold. By the mid-1860s, gold threatened to crowd out silver money in France, which would have severed the link between gold and silver currencies. Without reform, Germany would thus have risked exclusion from the fixed exchange rate system that tied together the major industrial economies. Reform required French accommodation, however. Victory in the Franco-Prussian war of 1870/71 allowed Germany to force accommodation, but only until France settled the war indemnity and regained sovereignty in late 1873. In this situation, switching to gold was superior to adopting bimetallism, as it prevented France from derailing Germany’s reform ex-post.

Back to the future: returning to silver-backed money in Sri Lanka

Purpose The purpose of this paper is to investigate the drivers of the behaviour intention to use the Silver-Backed Mobile Payment System (SBMPS) among the residents of Kattankudy, Sri Lanka. Design/methodology/approach Based on technology adoption model theory, a conceptual framework was devised, which was later tested via structural equation modelling (SEM) using valid responses from a survey questionnaire. Findings The results indicated that perceived usefulness and subjective norms have positive relationships and perceived risk a negative relationship with people’s behavioural intention to adopt SBMPS. In addition, the respondents were primarily motivated by faith (Islam) and also by economic advantages to adopt SBMPS. Research limitations/implications Religion, culture, gender, income level, age and educational level could be used as moderating factors for better understanding of people’s behaviour intentions. A Multi-cultural demographic may shed further light. Social implications This paper not only makes awareness of the importance of real (commodity) money but also provides the understanding of people’s willingness and the underlying motivations to practically implement the system without threatening the legal tender. Originality/value Extant research has mainly focused on the validity and the conceptual ideas to return to gold and silver money. This paper has been an extension to practically implement real money without threatening the legal tender by investigating the determinants of people’s willingness to return to silver money and understanding their motivations underlying those decisions

Destabilizing the Global Monetary System: Germany's Adoption of the Gold Standard in the Early 1870s

In 1871-73, newly unified Germany adopted the gold standard, replacing the silver-based currencies that had been prevalent in most German states until then. The reform sparked a series of steps in other countries that ultimately ended global bimetallism, i.e., a near-universal fixed exchange rate system in which (mostly) France stabilized the exchange value between gold and silver currencies. As a result, silver currencies depreciated sharply, and severe deflation ensued in the gold block. Why did Germany switch to gold and set the train of destructive events in motion? Both a review of the contemporaneous debate and statistical evidence suggest that it acted preemptively: the Australian and Californian gold discoveries of around 1850 had greatly increased the global supply of gold. By the mid-1860s, gold threatened to crowd out silver money in France, which would have severed the link between gold and silver currencies. Without reform, Germany would thus have risked exclusion from the fixed exchange rate system that tied together the major industrial economies. Reform required French accommodation, however. Victory in the Franco-Prussian war of 1870/71 allowed Germany to force accommodation, but only until France settled the war indemnity and regained sovereignty in late 1873. In this situation, switching to gold was superior to adopting bimetallism, as it prevented France from derailing Germany’s reform ex-post.

Methods for identifying counterfeit money in the territory of the Principality/Kingdom of Serbia in the 19th century

Counterfeiting is one of the oldest and most persistent criminal offences. Scientific and technological development has enabled the emergence of a more modern money manufacturing technology and improvement of money protection systems, though at the same time it broadened the possibilities for criminal offences, notably the production of counterfeits. In the mid-1860s, the money in circulation in the Principality/Kingdom of Serbia was of foreign origin, comprising 43 types of different metal coins and one type of paper money. Gold and silver money of European origin was deemed by the people to be better and ?purer? than Turkish money. In an effort to establish control over the technological process of manufacturing the national currency and at the same time prevent the counterfeiting of money of different types and origin, the Principality of Serbia appointed chemists Mihajlo Raskovic and later Sima Lozanic, as ?examiners of ores and false money?. Almost all counterfeit currencies appeared immediately in circulation in the territory of the Principality/Kingdom of Serbia. This paper presents the methods used in the process of identifying false/suspect money, methods used to determine the nominal value of money, the importance of introduction of those scientific methods in the criminal and legal sphere of the Principality/Kingdom of Serbia, which can be considered the beginning of the forensic chemistry in Serbia.

JOHN LOCKE AND THE POLITICS OF MONETARY DEPOLITICIZATION

During the Coinage Crisis of 1695, John Locke successfully advocated a full recoinage without devaluation by insisting on silver money's “intrinsick value.” The Great Recoinage has ever since been seen as a crucial step toward the Financial Revolution and it was long regarded as Locke's most consequential achievement. This article places Locke's intervention in the context of the postrevolutionary English state at war and reads his monetary pamphlets as an integral, if largely neglected, part of his political philosophy. Instead of taking Locke's insistence on “intrinsick value” itself at face value, I argue that it was precisely money's fragile conventionality that threatened its role as a societal bond of trust. In response to this fragility and corruptibility, Locke tied money by fiat to an initially arbitrary but unalterable quantity of metal. While Locke's argument contributed to the modern naturalization of money, it arose from a paradoxical political act of monetary depoliticization.

The Taiwan tea boom—a financial glut

AbstractIn the last half of the nineteenth century, northern Taiwan experienced a boom in tea exports. This led to a large trade surplus accompanied by large inflows of silver money. The increase in the money supply did not have much effect on rice prices or consumption, but did lower interest rates. The lower interest rates and higher real money balances caused a large increase in real estate prices. This local financial glut lasted more than 20 years. Along the China coast, the banking system allowed businesses to move funds easily in and out of areas, such as northern Taiwan, but once silver reached Taiwanese farmers in the village economy, it did not flow so easily. Studies of early finance that focus on commercial networks generally overlook such problems.

Financial management in food enterprises and globalization of electronic business in Serbia

Use of finance in a certain form has been present and operational since the emergence of the world’s first civilizations such as: Egypt, Greece, Babylon, Rome and others. At that time, however, the financial system was primarily based on archaic stores of value - gold or silver money. In its basic definition, finances were created with the concept of money and the development of its functions as a payment and transactional mechanisms. Where there is no money, there is no value. Money is the determinant, but also the function of finance. The development of finance as a science and its function relates to the emergence of the state, since it is the primary creator and backer of money. In this regard, public-state finances first began to be studied, followed by other financial disciplines. Whereby the equilibrium arises from the payment of debt, collection of claims between states, enterprises and individuals.

Moldavian coins on the Podillia market in the second half of the 14th - 15th centuries (based on treasure sources)

The author of the article analyzes the composition of Podillia coin treasures of the fourteenth - fifteenth centuries, in which Moldovan silver money is found, gives an analogy of the external design and and metrology of the coins of the Moldavian and Podolian principalities of the 80-90s of the fourteenth century, reveals the role of the role of Moldavian coins in the Podillya money market, their place in international transit trade in the studied period.

Pulling up the tarnished anchor: The end of silver as a global unit of account

We use the demise of silver-based standards in the 19th century to explore price dynamics when a commodity-based money ceases to function as a global unit of account. We develop a general equilibrium model of the global economy with gold and silver money. Calibration of the model shows that silver ceased functioning as a global price anchor in the mid-1890s—the price of silver is positively correlated with agricultural commodities through the mid-1890s, but not thereafter. In contrast to Fisher (1911) and Friedman (1990), both of whom predict greater price stability under bimetallism, our model suggests that a global bimetallic system, in which the gold price of silver fluctuates, has higher price volatility than a global monometallic system. We confirm this result using agricultural commodity price data for 1870–1913.

Pulling Up the Tarnished Anchor: The End of Silver As a Global Unit of Account

We use the demise of silver-based standards in the 19th century to explore price dynamics when a commodity-based money ceases to function as a global unit of account. We develop a general equilibrium model of the global economy with gold and silver money. Calibration of the model shows that silver ceased functioning as a global price anchor in the mid-1890s - the price of silver is positively correlated with agricultural commodities through the mid-1890s, but not thereafter. In contrast to Fisher (1911) and Friedman (1990), both of whom predict greater price stability under bimetallism, our model suggests that a global bimetallic system, in which the gold price of silver uctuates, has higher price volatility than a global mono-metallic system. We confirm this result using agricultural commodity price data for 1870-1913.

Where Will the ‘Silver Money’ Go?

AbstractUsing international country‐level data, this paper shows that demographic ageing is likely to significantly expand the insurance industry. This expansion is driven by the increased need to secure earnings for post‐retirement consumption, the desire to hedge against risks associated with increasing age, and the older generations risk aversion increasing the demand for safer assets such as insurance and pension products. Moreover, such an expansion of the insurance industry is particularly apparent in financially liberalised countries. This is because risk and asset management associated with insurance and pension products could be facilitated and more effective in liberalised financial markets.

조선시대 銀 유통과 소비문화

The influx of Japanese silver had increased since around 1538, reached its height in the late 17th century, then decreased from the turn of the century, and ceased in around 1753. Most of silver in Joseon[朝鮮] Korea including domestically produced silver as well as that from Japan was used for the import from China, mostly silk products. The massive influx of Japanese silver made silver function as a currency since the 17th century. However, their function as a currency withered as the inflow of silver from Japan fell sharply during the early 18th century. Before port-opening to Western countries[開港], Korea’s silver trade has not encountered with any other countries except Japan and China. Therefore, world system approach is not necessary to understand the silver circulation in Korea. Locked in the Malthus trap, ordinary people in the Joseon dynasty barely managed their life by consuming some necessity goods at most. Only the rich enjoyed their luxury consumption. During the Joseon dynasty the custom of luxury consumption diffused, but part of those newly entered into the middle class went bankrupt due to indulgence and high consumption. The increasing silver influx enriched consumption pattern in Korea by stimulating market and economic growth, and providing the means of trade with China for luxury goods. Leaded by some elites[士大夫], high and refined consumption behaviors became diffused. The sharp reduction of silver influx in the 18th century did not shrink the luxury consumption, because the growth of market and production partly driven by silver trade had a solid foundation. However, the circulation of silver money did not last owing to the efflux of silver, and Korea could not foster the import substitution industry of high quality silk. This is a reason why the economy could not advance in the 19th century before the port-opening. The main discourse about consumption in the Joseon dynasty was respect for frugality and worry about extravagance. Luxury culture in Korea was modest compared with previous dynasties or its neighboring countries. But their attitude toward luxury culture was very negative due to Confucianism. This can explain why Yeonsangun[燕山君], who was not bounded by Confucian teaching, was the only king pushing ahead with an effective substitution policy of high quality Chinese silk. The banning of Chinese silk of high quality[紗羅綾緞] and precious metals[金銀珠玉] that has been frequently practiced until the reign of Jungjong[中宗] became infrequent after the middle 16th century when luxury consumption diffused, because such consumption behaviors were already rooted in the society. A scholar group to study how to increase wealth and welfare [利用厚生學派], emerged in the late 18th century, discussed how to elevate the standard of living and defended high and refined consumption culture beyond the discourse making a sharp distinction between frugality and extravagance.

Inflated: how money and debt built the American dream

Preface. Acknowledgments. Introduction. Chapter 1 Free Banking and Private Money. The Bank of the United States. State Debt Defaults. The Age of Andrew Jackson. The Panic of 1837. The Gold Rush. The Rise of Bank Clearinghouses. Chapter 2 Lincoln Saves a Nation by Printing Money. The Lincoln Legacy. Financing the War. Salmon Chase and Jay Cooke. Fisk and Gould Profi t by Infl ation. The Panic of 1873. Gold Convertibility Restored. The Battle Over Silver Money. A Changing American Dream. The Silver Compromise. Chapter 3 Robber Barons and the Gilded Age. The Age of Speculation. Republicans Embrace Inflation. The Panic of 1893. The Cross of Silver. The Evangelical Silverites. The Turning Point: 1896. Chapter 4 The Rise of the Central Bank. The Progressive: Theodore Roosevelt. A Flexible Currency. The Crisis of 1907. The National Monetary Commission. The Passage of the Federal Reserve Act. Roosevelt, Wilson, and the Politics of Reform. Chapter 5 War, Boom, and Bust. The Fed During WWI. A Return to Republican Normalcy. The Roaring Twenties. A New Era of Debt and Investing. The Rise of Consumer Finance. America Transformed. Prelude to the Depression. Bust: Stocks Fall and Tariffs Rise. Inflation versus Defl ation. Ford, Couzens, and the Detroit Banks. Chapter 6 New Deal to Cold War. FDR and the Era of Broken Precedent. The Seizure of Gold and Dollar Devaluation. Dollar Devaluation Hurt World Trade. The Rise of the Corporate State. The Reconstruction Finance Corporation. Central Planning Arrives in Washington. FDR Embraces Federal Deposit Insurance. The Legacy of FDR. The Fed and the RFC. Corporativist Reform at the Fed. America Goes to War. Wartime Inflation and Debt Finance. Bretton Woods and Global Infl ation. Chapter 7 Debt and Infl ation: A Rising Tide Lifts All Boats. Federal Revenues Grow. The Fed Regains Independence. The Post-War Economy Soars. The Legacy of War. Cold War, Free Trade. The Dollar's Golden Age. Global Imbalances Return. Richard Nixon's Betrayal. The End of the Dollar Peg. The Return of Sovereign Borrowing. Chapter 8 Leveraging the American Dream. The New Uncertainty. Humphrey-Hawkins and Full Employment. Balanced Budgets and Inflation. Volcker's Shock Treatment. The Crisis Managers. The Latin Debt Crisis. Reagan Reappoints Volcker. The Neverending Crisis. Volcker Exits, Volatility Returns. From Excess to Delusion. The Greenspan Legacy. Chapter 9 A New Monetary Order. The Growth Challenge. Jobs versus Infl ation. Changing Places. Triffin's Dilemma and the Dollar. Notes. Selected References. About the Author. Index.

Familiarity, Convenience, and Commodity Money: Spanish and Mexican Silver Dollars in Qing and Republican China

Using the available monthly and annual data from 1866 to 1928, we study the premiums at which foreign silver coins and silver-backed currency circulating in China sold relative to melt value, at both Shanghai and San Francisco. Silver-backed Chinese currency typically sold at a slight premium to its melt value, while Mexican and particularly Spanish silver dollars often sold at substantial premiums above melt value, averaging 2.25% and 16.09% respectively. Silver money premiums appear related to several measures of Chinese and global trade, competitiveness, and prosperity, including the extent of opium imports. We also offer potential psychological and cultural explanations for the observed premiums.

How Important was Silver? Some Evidence on Exchange Rate Fluctuations and Stock Returns in Colonial-Era Asia

We study the impact of silver price changes on stock returns from seven small open economies that switched between silver, gold, and paper money standards at different times between 1873 and 1939. Silver exposure is a priced factor in monthly equity returns. Silver price changes forecast realized monthly equity risk premiums, suggesting that expected risk premiums varied with the price of silver. Silver price changes forecast annual indicators of trade flows, global business cycles, and inflation. The evidence suggests how corporate profits and stock market risk premiums are linked to exchange rates, trade, economic activity, and inflation.

The Murman Coast and the Northern Dvina Delta as English and Dutch Commercial Destinations in the 16th and 17th Centuries

In the sixteenth and seventeenth centuries, the Murman coast trade and the Northern Dvina trade were two clearly distinct branches of Western European commerce. The Murman coast trade involved the commerce with the regional economy of the Kola Peninsula, and the Northern Dvina trade coincided with the transit trade with the Russian interior. In the 1550s, the English established commercial relations with interior Russia via the mouth of the Northern Dvina, mainly exchanging woolen cloth and metals for north and central Russian forestry and agriculture products. In the 1570s, the Dutch followed suit, and by the second decade of the seventeenth century, they had squeezed the English almost completely out of the Russian market. The Northern Dvina trade became a major line of Dutch business, involving the transit trade with interior Russia, the exchange of the products of the north and central Russian forestry and agriculture for gold and silver money and a wide range of military stores and luxury goods. In the 1560s, the Dutch developed commercial relations with the Murman coast, exchanging locally produced exports like cod, salmon, furs and train oil for locally used imports like woolen cloth, tinware, salt, pepper, and wine. In addition, from the early 1570s, the Dutch used Kola as an alternative to the Northern Dvina mouth as a port for the transit trade with interior Russia; but they did so only until about 1585, when the tsar directed all foreign trade of interior Russia to proceed via the newly founded port of Archangel on the Northern Dvina. After that, Kola only remained an international commercial port for the local economy of the Murman coast. The Dutch continued to trade with the Murman coast on a very small scale throughout the seventeenth century, but Archangel was by far their main commercial destination in the Barents Sea area. Key words: Northern Dvina, Archangel, Murman coast, Kola, Russian trade, Dutch trade, English trade, commercial relations