You’re reading Age of Invention, my newsletter on the causes of the British Industrial Revolution and the history of innovation. This free edition went out to 7,400 people. You can sign up here: When England’s Parliament met in 1621, it was mainly supposed to vote king James I the funds to fight a war. His daughter’s domain, the Palatinate of the Rhine, had just been invaded, and the European Protestant cause was under grave threat. As I set out two weeks ago, however, the House of Commons had seized the chance to pursue a scandal. Jealous of the Crown’s challenge to their status as local power-brokers, and hoping to embarrass the king’s favourite, the Marquess of Buckingham, MPs opened an investigation into Sir Giles Mompesson’s
It was somewhat of an aside, but the statistic that jumped out at me was "At a time when bread and beer made up 75-85% of the typical person’s expenditure..." Is there some index/resource that lists what percentage of a person's income certain goods consume? I'm able to find indices for the twentieth century but I don't know where to look for data for the 19th century and earlier.
"bread and beer" may be a little exaggerated actually - a rhetorical flourish for alliteration while writing last night that I forgot to double-check before posting. But it's certainly about right for "food + beer", so I'll edit just in case. Where I may have fallen into error was that about 20% or so among those with a "respectable" basket of an artisan or some such was on meat and dairy, though even this was in turn often reliant on grain as well. And the bare-bones basket doesn't list beer at all, which I think can't be right, as it was the main drink for the poor. (I had written the figure from memory, but my thinking was also that the typical person would be somewhere between bare-bones and respectable really, so it's possible that despite my error in remembering the tables that I'm correct after all). Best source for summarised consumption baskets is Appendices 8.1-7 of "British Economic Growth 1270-1870", by Broadberry et al. Those have bare-bones and "respectability" baskets listed for various years at 100-or-so year intervals.
I suppose the point of swapping a chunk of bullion for coins was that coins are more liquid - you could settle a bill of any size for enough coins while trying to pay someone with a lump of bullion would be trouble. As such, the seignorage charge is something like a central bank overnight interest rate - the price of liquidity from the provider of last resort.
A very intriguing analogy - I'll have to research the central bank overnight interest rate to be able to say if it works! My understanding of the point of swapping bullion for coins it is that it stems from a preference for spending domestically, and from the ability of the Crown to enforce legal tender / people within a country simply accepting coins at face value for convenience's sake. So to the extent that that counts as liquidity, I think that's absolutely right.
My understanding is that so long as the mint priced it correctly, you'd receive more coins in terms of their nominal or face value, at least as accepted within the country, than the bullion's intrinsic worth. In much the same way that coins today circulate at a much higher value than the metal they're made of. (Which is why you also often get rulers trying to force foreign coinage to circulate only according to their metal content, not their face value - James I does this in 1613, to forbid Spanish currency to be used it if was clipped below a certain weight).
This all exploits the fact that the metal in the coinage essentially only matters for international transactions (or for goldsmiths). A merchant bringing bullion to England (say, after receiving silver in exchange for some cloth exports to the Baltic) would probably want to take that bullion to the mint if they wanted to spend the proceeds in England - especially given the extra face value they'll receive. It also explains why "bad money drives out the good", because money with low metal content will continue to circulate at legally-enforced face value in an economy, with the metal sent elsewhere in pursuit of arbitrage opportunities.
It was somewhat of an aside, but the statistic that jumped out at me was "At a time when bread and beer made up 75-85% of the typical person’s expenditure..." Is there some index/resource that lists what percentage of a person's income certain goods consume? I'm able to find indices for the twentieth century but I don't know where to look for data for the 19th century and earlier.
"bread and beer" may be a little exaggerated actually - a rhetorical flourish for alliteration while writing last night that I forgot to double-check before posting. But it's certainly about right for "food + beer", so I'll edit just in case. Where I may have fallen into error was that about 20% or so among those with a "respectable" basket of an artisan or some such was on meat and dairy, though even this was in turn often reliant on grain as well. And the bare-bones basket doesn't list beer at all, which I think can't be right, as it was the main drink for the poor. (I had written the figure from memory, but my thinking was also that the typical person would be somewhere between bare-bones and respectable really, so it's possible that despite my error in remembering the tables that I'm correct after all). Best source for summarised consumption baskets is Appendices 8.1-7 of "British Economic Growth 1270-1870", by Broadberry et al. Those have bare-bones and "respectability" baskets listed for various years at 100-or-so year intervals.
Thank you for the clarification!
I suppose the point of swapping a chunk of bullion for coins was that coins are more liquid - you could settle a bill of any size for enough coins while trying to pay someone with a lump of bullion would be trouble. As such, the seignorage charge is something like a central bank overnight interest rate - the price of liquidity from the provider of last resort.
A very intriguing analogy - I'll have to research the central bank overnight interest rate to be able to say if it works! My understanding of the point of swapping bullion for coins it is that it stems from a preference for spending domestically, and from the ability of the Crown to enforce legal tender / people within a country simply accepting coins at face value for convenience's sake. So to the extent that that counts as liquidity, I think that's absolutely right.
My understanding is that so long as the mint priced it correctly, you'd receive more coins in terms of their nominal or face value, at least as accepted within the country, than the bullion's intrinsic worth. In much the same way that coins today circulate at a much higher value than the metal they're made of. (Which is why you also often get rulers trying to force foreign coinage to circulate only according to their metal content, not their face value - James I does this in 1613, to forbid Spanish currency to be used it if was clipped below a certain weight).
This all exploits the fact that the metal in the coinage essentially only matters for international transactions (or for goldsmiths). A merchant bringing bullion to England (say, after receiving silver in exchange for some cloth exports to the Baltic) would probably want to take that bullion to the mint if they wanted to spend the proceeds in England - especially given the extra face value they'll receive. It also explains why "bad money drives out the good", because money with low metal content will continue to circulate at legally-enforced face value in an economy, with the metal sent elsewhere in pursuit of arbitrage opportunities.