German Silver Coins Tell Medieval Economic Story

October 23rd, 2016 by

Today, Germany is recognized as Europe’s largest economy. This has generally been true since the German states became industrialized and unified at the end of the 19th century. However, prior to unification, the cultural region home to the German nation was a group of separate—and often competing—states of the former Holy Roman Empire.

One consequence of this arrangement was that the most powerful states minted their own silver coins for use in commerce. Yet this created many interacting money supplies, as the coins minted in one German state would be expected to be accepted in another.

Interestingly enough, in a trick as old as human civilization, the German states of the 16th and 17th centuries engaged in debasement of their silver coins in an effort to wage “economic warfare” and gain a competitive advantage on rival territories.

The tale of a German Kreuzer silver coin that is expected to auction for as much as €1,000 next month reveals much of this economic drama.

German Silver Coins

Kreuzer German silver coins. Source: WAJWAJ via Wikimedia Commons [CC SA-BY 30]

Kreuzer German silver coins. Source: WAJWAJ via Wikimedia Commons [CC SA-BY 30]

During the 17th century in particular, various German states were greatly debasing their currencies. This was done by re-issuing silver coins with the same face value but greatly decreased precious metal content. The coins would look mostly the same but be alloyed with much larger proportions of base metals like copper.

One of these prominent silver coin denominations that underwent debasement was the German silver coins known as kreuzers. Different kreuzers circulated in the neighboring Austro-Hungarian Empire’s territory than those in the fragmented southern German states. After about 1760, kreuzers were fully debased copper coins.

According to Coin World,

What made the era bizarre was that “it was the product not only of slipshod economic management, but also of deliberate attempts by a large number of German states to systematically defraud their neighbors.

German states engaged in “monetary terrorism,” issuing low-value imitations of coins from other territories and then spending them as far as possible from their own lands, hoping that resulting damage would occur to the economy of those other regions, rather than their own.

The coin heading to auction is a 24-kreuzer silver coin that was minted in Bavaria in 1622. Not many of these coins in good condition remain in existence in part because of Gresham’s Law: people hoard good currency and spend bad currency. Hence, these debased versions of kreuzers are not likely candidates to be well-preserved, having often seen greater circulation than their silver predecessors.

Some of the history of German society prior to unification, and the less structured nature of economies and world empires during the time period, is revealed by the composition of this intriguing coin.


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