Monetary history is largely a repeated narrative of currency debasement. Yet historic Venice (1172–1797), ruled by elite patricians, stands out as an example of relative monetary stability. This paper provides a historical case of Venice’s Zecca Mint which provided the elite patricians of Venice with a stable currency, playing a role in fostering the economic success of the Republic of Venice. This paper identifies three factors that together formed a self-enforcing monetary constitution to inhibit public currency debasement in historic Venice: (i) the assignment of public debt to patricians, (ii) the nearly uniform trade-centric focus of the patricians and (iii) the use of turn-taking in office for mintmasters.
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The term Zecca comes from the Arabic word Sikka which means “coin die”.
Although warfare made debasement likely, it was less frequent in Italian city states compared to principalities. Princes debased in the absence of exceptional needs while mercantile influence on monetary policies favoured relative stability (Chilosi and Volckart 2010).
The Council of Forty approved the issue of the ducat on 31 October 1284 while its minting began in March 1285 (Stahl 2000a: 30–32).
By 1400, Venetian coinage circulated from London to Yemen (Robbert 1983).
According to Munro (2003: 516), “virtually everybody agreed that forced loans were a necessary obligation imposed on all citizens, in defending their state and because volition was at the very core of the usury doctrine, many theologians and jurists justified the payment and receipt of interest with some version of damnum emergens or interes.” Damnum emergens is “a compensation for damages or loss that the lender incurred after having made the loan: for example, from not having the money accessible in an emergency-a fire or storm that destroyed his barns or livestock” (Munro 2003: 511).
Jones (1997: 398) states that the first Italian evidence that he has found for a forced loan was at Pisa, in 1162.
The merchant class outside the Italian city states generally lacked political power and had little say in monetary policy.
Major institutional reforms strengthened the system of checks and balances under Doge Sebastiano Ziani, in 1172 and 1173. For instance, the number of ducal counsellors was increased from two to six. Also, to ensure that the doge would not be able to choose his own successor, the Great Council was charged with naming a committee of 11 whose task was to elect the new doge (Coggins and Perali 1998).
From the fourteenth century, aggressive debasement became increasingly common. Kohn (1999: 17) writes, “[u]sually, it was the exigencies of war that precipitated a sequence of major debasement. For example, from 1542 to 1551, England's Henry VIII ordered some ten debasements, each of 30–40%. In all, Henry's ‘Great Debasement’ reduced the silver content of the pound sterling from 6.4 troy ounces so less than one troy ounce. The seigniorage rate, 2% before the debasement, rose to 57% and, at its peak seigniorage accounted for 25% of crown revenue.” Similarly, “in 1349, Philip VI of France derived 70% of his total revenue from seigniorage” (Kohn 1999:17).
Table 8.5, Minting Profits and State Finances (Stahl 2000a: 200).
Venice was not a merchant-manufacturer city like most its Italian counterparts. Therefore, Venetians did not benefit from the effect of debasement on real wages. In Florence for instance, merchant-manufactures were not entirely averse to debasement of silver currency. A Florentine statute prohibited the fixing of wages in gold and therefore, the merchant oligarchy possibly supported debasement as a way of lowering real wages (Kohn 1999, 29).
According to Leeson (2011: 306), “constitutions are unlikely to be effective when the individuals charged with executing them have little incentive to do so.”.
While culling (systematic removal of heavier coins from circulation), clipping and counterfeiting were serious problems the Venetian mint faced, private currency debasement and the measures taken to inhibit them fall beyond the scope of this present paper.
See also Glassman and Redish (1988: 8) for more on the impact of competition on seigniorage fee.
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Al-Bawwab, R.A. The zecca mint: a self-enforcing monetary constitution in historic venice. Econ Gov (2021). https://doi.org/10.1007/s10101-021-00260-z
- Constitutional political economy
- Monetary constitution