Old Coppernose – Quantitative easing, the medieval way
December 19, 2012 by James Owen
In 1526 and Henry VIII was King. He needed money to pay for the wars against Scotland and France.
His Chancellor, Cardinal Wolsey, decided to debase the coinage (mix the precious metals of silver and gold with cheaper ones) so that he could make more coins for the same amount of precious metal and therefore mint more money at less cost.
Face value currency
Before debasing began, the face value of coinage was practically the same as its bullion value. As Henry increased the copper content of his silver coins, they eventually contained more copper than silver. By the end of Henry VIII’s reign the bullion value of his coins was around 25% of their face value.
Henry VIII’s nickname – ‘Old Coppernose’
Debasing caused prices to go up to compensate for the fact that money was worth less. People began to hoard older coins for their higher precious metal content. Foreign bankers and merchants became reluctant to accept coins and requested payment in gold only. The thin layer of silver on coins often wore off where the King’s nose appeared, revealing the cheaper copper beneath. This prompted Henry’s subject to give him the less than complimentary nickname of ‘Old Coppernose’.
A Golden Age
It was not until the reign of Elizabeth I that debasing finally stopped. Within a year of her becoming Queen in 1560, the debased coins had been collected, melted down and new coins issued containing the correct amount of precious metals.
With trust restored for merchants at home and abroad, the economy began to recover and there was a massive expansion in trade and industry. This marked the beginning of a truly Golden Age.
Even the Royal Mint knows about it. So why is it that Richie doesn’t?