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Discover the dirty origins of money with Philipp Robinson Rössner

Dirty Money, Capitalism and the Anthropocene

By Economic Historian & Professor of Early Modern History Philipp Robinson Rössner

Money – the heart and engine of the capitalist process – is dirty. It always was. When Saxon polymath engineer Georg Agricola published in 1556 his much-acclaimed handbook on mining (De re metallica; the first full translation from the original Latin into modern English made by no lesser man than Herbert Hoover, later President of the United States), he was crystal clear about money’s dangerous origins:

“The critics say further that mining is a perilous occupation to pursue, because the miners are sometimes killed by the pestilential air which they breathe; sometimes their lungs rot away; sometimes the men perish by being crushed in masses of rock; sometimes, falling from the ladders into the shafts, they break their arms, legs, or necks; and it is added there is no compensation which should be thought great enough to equalize the extreme dangers to safety and life.”

Silver mining was at the heart of the capitalist transitions (and subsequent decline) that swept the German lands during the age of the early Reformation. Martin Luther’s works on economics – especially his 1524 bestseller “On Commerce and Usury” (Rössner 2015) –addressed late capitalism’s perversions that came in the wake of the last medieval mining booms that had transformed the Central German lands into silver-fuelled engines of growth. But the turbulent twenties (1520s) had also seen increasing inequality and social unrest. Skyrocketing business profits were made by late medieval super companies such as Fugger and Welser who ran some of the largest mining and smelting enterprises in the empire and practically controlled global silver flows. In numerous popular revolts that swept the German-speaking lands since the 1460s culminating in the Great German Peasant War of 1524-5 – Germany’s first revolution before 1848 – peasants complained about unduly high business profits and capitalist market manipulations. They also lamented about bad money driving out the good. This was a consequence of the global silver trades, which often left the German-speaking lands without reliable small change. What the peasants had to make do with instead were coins of dubious provenience whose value could not be asserted. These gave rise to perennial conflicts about monetary values, particularly when it came to paying taxes, tolls and other dues. Small change coins were no use for saving, either. In fact, the money of the Common Man was considered of so little value that you’d rather get rid of it as soon as you could. Very often people would only accept it at considerably discounted values, or charge a premium if they were made to accept debased coinage (Rössner 2012). Accordingly, it quickly declined in purchasing power, giving rise to inflation.

The sixteenth century has made it into the history books as an age of inflation, of “price revolution.” Its main causes are often attributed to Spanish silver that reached continental shores in ever-growing quantities after the discoveries of the proverbially rich silver deposits at the Cerro Rico at Potosí (today Bolivia). The adverse environmental effects of large-scale mining (environmental pollution, deforestation) are well known. What is less well known is how inflation had commenced long before the age of Spanish silver. There were processes on the ground unrelated to this silver boon that still drove up prices. Hundreds of different local penny currencies circulated in the German speaking lands, at widely different values and silver content. At that time, it was understood that money should embody its purchasing power defined through the amount of precious metal it contained, usually silver. But when measured in pennies  –  the currency of the Common Man (and his wife) – prices for essentials such as foodstuffs rose up to three times as much as when quoted in better money such as florins, thalers and guldens – money which the common man seldom got hold of. So money was dirty in more than one respect. 

Inflation is, alongside war and climate change, the biggest fear of our age. Historically it often came to be depicted as the Fifth Rider of the Apocalypse. Especially when due to badly managed monetary policy, inflation gave rise to social unrest, even revolution. When asked to comment on the monetary situation of his native Royal Prussia, a country torn between the Order of the Teutonic Knights and the Kingdom of Poland, famous cleric, astronomer and mathematic Niklas Koppernigk – better known by his Latin name Copernicus (1473-1543) – produced a series of monetary reports hailed for their theoretical clarity and succinctness. Encapsulating the basic principles of contemporary monetary theory commensurate with the thoughts of a man responsible (amongst many things) for the invention of the heliocentric paradigm and the principles of modern science, one of Copernicus’s central tenets was: “keep the currency stable!” In his 1526 memorandum Copernicus argued that there were four plagues of mankind: war, plague, hunger, and…wait…coin debasement. From a modern perspective this seems somewhat far-fetched. Whilst war, disease and dea(r)th are indeed known as Riders of the Apocalypse, money and coins are not. Yet contemporaries obviously put them into that type of box. Contrary to the first three evils, Copernicus proposed, which were visible and easily discernible, coin debasement – the then main cause of inflation – was not: bad money led to a slow and almost invisible corrosion of the common weal. Debasement was so dangerous, especially because it happened literally invisibly, slowly but steadily corroding and corrupting the body politic from within – through inflation. Bad money would cause commerce to decay, prices to rise and economy to decline. Foreign merchants stopped vending their goods if all they got in return was debased coin. Bad coins would purchase nothing in foreign lands, either. In the end this would lead, Copernicus argued, to the utter ruin of the country.

Whilst the peculiar monetary theories and causes for inflation in Copernicus’ time have long vanished, inflation hasn’t. Neither have the dangers and risks posed by inflation to the common weal. Today inflation recurs – along environmental degradation and climate change – as one of the biggest dangers to humanity. Copernicus certainly didn’t foresee the Anthropocene. Yet through his new theories he certainly contributed to capitalism and man-made environmental change. And he foresaw the social dangers of inflation and the risk it posed to societal cohesion. Today the situation is not very different from half a millennium ago.

Philipp Robinson Rössner, Martin Luther on Commerce and Usury (London and New York: Anthem, 2015) 

Philipp Robinson Rössner, Deflation – Devaluation – Rebellion. Geld im Zeitalter der Reformation (Stuttgart: Franz Steiner, 2012) 

Dirty Money, Capitalism and the Anthropocene is the first in a series of blog posts inviting researchers, scholars, artists, and economists to explore the complex relationships between money and environment.
Philipp joined us for the very first Money and Environment online session in 2021. His provocation can be viewed HERE.

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