Silver standard

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A silver standard is a currency standard that defines the unit of currency by a certain amount of silver . Usually, a silver standard is associated with the minting and circulation of silver coins as currency coins . Silver bars were also - in addition to coins - at times, such as For example, the Chinese Tael bar coins are used as official currency units or as a monetary cover for banknotes (see cash instructions ) and tokens .

History and function of the silver standard

From the Carolingian coin reform of Charlemagne until 1871 , the money in circulation in Central European-German-speaking countries consisted largely of silver coins. In addition, coins made of gold alloys, some as trade coins , and copper were minted. The prevailing idea was that money received its value from its precious metal content (see commodity money ). The minting of the precious metal on coins officially issued by minters ideally only guarantees the quantity and fineness of the coin metal. In 1871 the silver standard was replaced by the gold standard of the mark of German currency after the Vienna Mint Treaty of 1857 .

If a silver standard applies, the value of each commodity - via its exchange value in silver coins - is related to the amount of fine silver contained in the coins. However, silver itself is a tradable commodity, the price of which depends on supply and demand. In the long term, the procurement costs for coin metal have a clear influence on the price structure below a precious metal standard. If, for example, newly discovered silver deposits or imports from abroad lead to a noticeable increase in the amount of silver that can be obtained cheaply in an economic area without more other goods being produced, general price increases can occur. This has actually happened in the past, for example due to the strong influx of precious metal from Latin America in the early modern period (see Conquista ). In addition, crop failures, wars and the population and productivity developments in trade and industry from the Middle Ages to modern times led to diverse shifts between the amount of coin metal on the one hand and the amount of tradable goods and services on the other.

Dividing coins and paper money are differentiated from the “full-value” Kurant coins under a precious metal standard . Only the Kurant coins directly embody the precious metal standard. Dividing coins contain less precious metal than actually prescribed; they were therefore regularly only allowed as “small change”. Naturally, paper money has almost no material value. Under a precious metal standard, paper money alone corresponds to a transferable payment claim for precious metal vis-à-vis the issuer of the paper money. If more small coins coined when necessary as loose change or decreases public confidence in the convertibility of paper money, these kinds of money are often compared to the Kurantmünzen only at a discount ( discount accepted). It was also widespread on the part of the minters or coin tenants to violate the officially valid silver standard and to mint the same coins with ever lower precious metal content. See the classic example of the " Kipper and Wipper period " around 1621/23 ( Thirty Years' War ).

Bimetalism

It often happened in German-speaking countries that there was no single silver standard. Instead, gold and silver coins were often accepted as means of payment in equal measure and at the same time. An officially established exchange rate then often applied between the gold and silver coins. This situation is known as bimetalism . The supply and demand relationships in the gold and silver markets did not always run parallel even in the Middle Ages. The exchange rates once set then no longer reflected the actual scarcity or relative market prices of gold and silver. Either the exchange rate can then be reset or fixed exchange rates are abandoned entirely. If no corresponding adjustment is made, the officially undervalued types of coins will disappear from circulation: they are hardly ever re-minted, are melted down or exported abroad ( Gresham's law ).

Gold coins in circulation at the same time as the silver standard had a price for silver currency, which could be read on the price slips of the stock exchanges. The gold coins that were circulating parallel to the silver money had the function of "special money" for certain transactions. For example, gold was used to pay for expensive goods and trade with foreign countries ( trading coins ). In commercial contracts for larger amounts of goods and money or in the case of promissory notes, a precise distinction was made between the agreed "type of money", e.g. B. "Prussian Courant" or " Friedrich d'or ". In 18th century Prussia, for example, For example, in addition to the official silver curant money, a relatively large amount of golden "Friedrich d'or" can also be used for higher value payments. Since the range of fluctuation in the price of gold coins was usually restricted by law, the system at that time had certain features of bimetallism.

Transition to the gold standard

The replacement of the silver standard in Europe by the gold standard began in England, which at the time was by far the world's leading industrial and trading nation. The immediate cause was that the English government, under a bimetallic system, set a price for English gold coins that was too high compared to the market price. In England, therefore, a lot of gold coins could be exchanged - again in comparison to the market price - for "too much" silver in the form of silver coins. This silver could then be sold for profit abroad. Silver coins then disappeared from circulation in England (see Gresham's law ). In fact, a gold standard had emerged from a bimetalism.

As a result of the worldwide silver inflation after the abandonment of the silver standard by the German Empire, there was a creeping devaluation of the rupee against the gold-backed pound in British India in 1873 . The rupee was still based on the silver standard. This was particularly important for paying home charges . The Home Charges were expenses billed in pounds, which India had to pay to the "mother country".

literature

  • Hans Schwenke: German money marks 1871-1914. German Verlag der Wissenschaften, Berlin 1980, license 206 435/149/80, p. 14ff.
  • Heinz Fengler u. a .: Lexicon Numismatics. transpress publishing house for traffic, Berlin 1989, p. 454, ISBN 3-344-00220-1 .

See also

Individual evidence

  1. Sarkar (1983), S 17: 1873: 1 R. = 2 '; 1893: 1 row = 1 '2d, d. H. -42%
  2. ^ Sarkar, Sumit: Modern India 1885-1947; New Delhi 1983; ISBN 0-333-90425-7 ; Cape. II: Political and Economic Structure