Silver and Gold in Medieval Europe

Trade decayed catastrophically in Western Europe after the fall of Rome.There was a catastrophic drop in urban populations, especially in regions that fell to illiterate successor states. Even in Italy, a large number of Roman towns disappeared after 300 AD, and many others went into deep crisis for several centuries. Rome probably lost 90% of its population in the 5th and 6th centuries. Hardly any new buildings were constructed anywhere in Italy, and even then the materials were recycled, not new. In the barbarian kingdoms that followed the Roman Empire, a poor copper-based coinage allowed small-scale transactions, but since the kingdoms had no civil service or bureaucracy, and no paid armies, any gold there was tended to accumulate in hoards (usually the king's) that were used for major gifts, bribes, and purchases, but did not circulate readily. Because the rate of central spending dropped, taxation also lapsed. For example, Chilperic, a Frankish king who ruled from Soissons, had a treasure-house full of gold that his father had collected more than twenty years before. When he tried to collect taxes in 579 AD, there was widespread trouble, and the citizens of Limoges burned the tax-collector's books. Chilperic ordered all his tax-books to be burned, and promised that he would never again try to collect any taxes!

Even with reduced expenditures, this system could not go on. The coins that were minted became poorer in quality, and smaller in denomination. There was increasing difficulty in paying soldiers and rewarding the services of powerful warlords. The kings first paid them with land, but when most of the royal lands had been distributed, Frankish kings like Pepin and Charles Martel began to confiscate land from the Church to give to their soldiers. This transaction, of land for service, became the basis of the feudal system that was used to run much of Western Europe for the next several centuries. On the other side of the bargain, rents were paid in crops rather than money, and Western Europe became a region that neither used money nor had any (except in hoards along with other precious objects). Transactions and barter might still be denominated in money, but often the payment was in commodities. As in the Roman Empire, there was still an imbalance of trace with the East, and this drew gold out of Western Europe that never returned.

The last of the barbarians to mint gold coins were the Lombards of Italy, who retained contact with the Byzantine Eastern Roman Empire during their struggle for strategic control of Italy. King Luitprand of Lombardy was still minting gold coins in the early 8th century, but afterwards there were no new gold coins. Only in Byzantine-controlled areas such as Sicily were gold coins still used for trade.

Silver in the Dark Ages: Charlemagne

Town life revived only in the 7th century, but only in certain regions that acted as nuclei of trading networks and had retained or regained literacy: France, the Rhineland, and northern Italy. Even then, the political situation in northwest Europe was precarious. By 700 AD the Arabs had conquered all of North Africa, in 712 they crossed into Spain, and by 721 had taken Narbonne, on the Mediterranean coast of modern-day France, and had reached the Rhône. Although Arab visions of conquering France were broken that year by a smashing defeat at the hands of Eudes, the Count of Toulouse, they remained firmly in control of northern Spain for 300 years.

(There's a sad substory here. Charles Martel of France managed to stop a later Arab raid deep into France at Tours in 732. Charles did not meet their entire army, as Eudes had. What Charles Martel did was have a grandson Charles, whom we know as Charlemagne, Holy Roman Emperor. The history books were rewritten, much as Tudors like Shakespeare distorted the story of Richard III.)

When the Arabs isolated northwest Europe, the Europeans had to become financially independent. From that point, trade in northwest Europe was based on a robust silver coinage, especially the denarius or penny, that was used for 500 years.

Trade routes along the English Channel and North Sea coasts led to the growth of ports that were best placed to channel that trade. Dorestad, on the Rhine 20 km up river from the coast, had been the major city of the dukes of Frisia, then became an important trading center by 680 AD. Its importance increased greatly as it became the major port of the new Carolingian Empire that Charlemagne carved out from his power base on the lower Rhine. The silver denarius of the Rhine delta was minted by the millions, but its value always followed that of the Islamic dirhem that it imitated in style, size, and name. Much of the minting was done in Dorestad, especially after Charlemagne's treaty with the Danes in 782, and his decision in 793 to increase the silver content of the denarius. At its peak from about 760 to 820 AD, the houses, wharves, and warehouses of Dorestad spread over 60 hectares stretching 3 km along the banks of the Rhine. Frisian traders shipped goods coming down the Meuse and the Rhine from Strasbourg, out of Dorestad all over the Rhine delta, westward along the French coast, eastward via coastal cities such as Emden and Hamburg (Hammaburg) to Denmark and into the Baltic, and northward along the coast of Britain as far as Northumbria. Dorestad exported pottery, glass, brooches, bronze goods, wine, and silver denarii in exchange for wool, furs, and slaves. Offa, the strongest of the Saxon kings in Britain, also minted high-quality silver coins at this time. Charlemagne and Offa entered into a formal trade treaty, then traded letters of complaint about it: Charlemagne complained about the length of the woollen cloaks shipped from England, and Offa complained about the poor quality of the lava grindstones he received.

Charlemagne did ship an export of lasting importance to the Saxons in Britain‹a currency that had 12 denarii to the solidus and 20 solidi to the pound, a currency that lasted over a thousand years as pounds, shilling, and pence, until it was abolished in 1971.

The prosperity of Charlemagne's lands grew as they were integrated by safe trade routes across Western Europe. The Slavs were safely behind the River Elbe, the Arabs were behind the Pyrenees, and the worst threat, the savage Avars in what is now Hungary, were smashed by Charlemagne's army. He was crowned king in Aachen, his capital, but was crowned as the first Holy Roman Emperor in Rome, by the Pope, on Christmas Day 800. But even the most capable soldier and administrator could not have achieved all this without money‹and where did the silver come from? Carolingian prosperity was fuelled by it, yet there were no significant silver mines in Europe at this time.

A large one-time bonanza came from the accumulated treasure of the Avars, after Charlemagne's victory in 796. But most of it came in trade, from the east along the only routes not blocked by the Arabs or Byzantines along the Mediterranean. There were great profits to be made by trade with the Middle East and Central Asia through Russia to the Black Sea, bypassing Byzantium. Slaves and furs went eastward; silver dirhems flowed northward and westward, and were re-minted in Dorestad into Charlemagne's denarii.

Charlemagne's strategy was to try to ensure the safety of the trade routes. By 800 he controlled northern Germany and the North Sea coast as far as Hammaburg (Hamburg). He made a strategic alliance with the westernmost Slavs, the Obodrites who were established along the Baltic coast just east of Denmark, and used the alliance to push the Saxons southward out of the way, and to open a way to the east that was not controlled either by Saxons or by Danes. Instead, the route entered the Baltic Sea trade at the Slav port of Reric.

That was galling to the Danes, and when Charlemagne was old, King Gottfried of Denmark wrested the trade route back under Danish control. In 808 he attacked and destroyed Reric so thoroughly that it has been lost to history, and carried off its inhabitants to his own port of Haithabu (= Hedeby). By transplanting merchants, he ensured that Reric would not be rebuilt. Haithabu built its own mint in 825, striking coins that imitated Dorestad's denarius. (The Arab traveller Al-Tartushi visited it in about 950 AD, remarking on its large size and the insanitary nature of its inhabitants.)

Soon after the death of Charlemagne in 814 there was deep trouble at the eastern end of the trade route. The Abassid caliphate in Iraq spent itself into bankruptcy (its extravagance in building a new capital at Samarra was a contributory factor) and the Moslem silver supply from the east dried up around 820-830. This damaged the eastern trade route and the traders that depended on it, and the economic breakdown may have driven (or at least encouraged) the Scandinavians (Vikings) to take up raiding and piracy on a large scale, breaking down the prosperity of Carolingian Europe. Charlemagne's Empire broke apart after 830, as civil wars broke out between his successors. Viking raids increased dramatically around this time, causing or because of a breakdown in central authority, and that central authority must have been weakened by lack of silver as well as bickering princes.

The Viking attacks on northwest Europe drained money, and there was a general and catastrophic breakdown in trade. Every seaport between Hammaburg and Bordeaux was burned and looted, some several times over. The Frisian trade from Dorestad was completely destroyed. Dorestad itself was sacked in 834, and was raided three times in 3 years, and seven times in 30 years. Finally it simply disappeared from maps: Quentovic, further down the French coast, was sacked "with great slaughter" in 839. By the 840s, Vikings were establishing winter camps in France and Ireland, and then in England, to be nearer the looting grounds. In 845 the city of Paris bought off a fleet of Vikings raiding up the river with three and a half tons of silver, and the Vikings learned to extort protection money ("Danegeld," the English called it) as easier and more regular than looting. At least 18 tonnes of silver was paid out in "Danegeld" from France alone after 845, and if looted silver and unrecorded payments are added, the real amount may have been close to 50 tonnes. And the Vikings raided the smaller kingdoms and duchies of Flanders and Holland with equal ferocity, and Britain worst of all. Perhaps 400 tonnes of silver was taken from the Anglo-Saxon kingdoms by looting or extortion, and other rich pickings were raided from Scotland and Ireland.

The Russian Silver Trade

By about 880 AD, the Vikings had looted western Europe so effectively that they had killed the silver goose. Some entrepreneurial Vikings then began working eastward along the old trade route. Some decades before, companies of Scandinavians ("Varangians") penetrating along the rivers of what is now European Russia, had met and begun to trade with Khazar and Bulgarian middlemen who were connected with the caliphates of Muslim Central Asia and Baghdad.

A renewed trade in furs and slaves began in the 890s, supplied now with silver coins (dirhems) from even further east, minted from mines in the mountains of Central Asia. The main flow of coins passed through the Bulgarian city of Bulgar on the Kama/Volga, northwest along the Volga, and through Novgorod ("new city", founded in 862) into Scandinavia across the Baltic Sea. A lesser flow found its way through Kiev (now ruled by Scandinavian princes) to Cracow and a slave market in Prague. Spices were a lesser component in the trade.

Hundreds of discoveries of hoards of Islamic coins, totalling at least 200,000 dirhems, in Russia and the Baltic (obviously only a fraction of the total trade) show how rich this traffic was. About half of the silver ended up in Sweden, where more than 500 of the hoards have been found, but other Muslim coins have been discovered further west as England and Germany. A hoard from England included coins that had been minted in Samarkand. Samarkand dirhems were also being traded in markets in Mainz, Germany, at this time.

The Scandinavian trade also enriched the intermediate regions, Russia and the Ukraine, strengthening them to the point that beginning about 965, much of the trade was taken over by the Russianized princes of Kiev and other cities. The Scandinavians once again looked increasingly westward for trade (and loot).

Russian princes traded also with Byzantium, being paid in gold. The wealth of the 11th century Prince Svyatoslav Iaroslavich of Kiev was legendary. The trade finally declined in the mid-eleventh century, as political turmoil overtook Central Asia, and the silver mines were exhausted.

Rammelsberg and Otto the Great

After the Vikings had looted the remnants of civilised Western Europe to exhaustion, power centers shifted toward inland Germany, away from their zone of destruction. The German king from 918 was Henry, Duke of Saxony, called Henry the Fowler. As Duke of Saxony, a province on the Slav frontier of Germany, he was an experienced warlord. He forged his Saxon frontier soldiers into an army that was the equal of any other in Europe. He was able to expand German influence westward by taking over Lorraine from the weakened French kingdom, and more important, he beat the Hungarians in the battle of Merseburg. At his death in 936, his son Otto was crowned King at the age of 23.

Otto was certainly an able general, and cemented his power by defeating an early rebellion in 939. He knew how to make the grand gesture that appealed to his medieval contemporaries: for example, he arranged to hold his coronation in Charlemagne's old capital, Aachen. Most important, he was lucky: a new supply of money came from a completely unexpected source, and brought economic recovery with it. In 938, an enormous ore body of silver, lead, and copper was discovered at Rammelsberg, near Goslar in the Harz Mountains of eastern Germany. The mine yielded ore into modern times: it reached its 1050th anniversary in 1988, when it was closed as a producing mine and converted into a UNESCO World Heritage Site.

Rammelsberg was the most important single source of silver, lead, and copper in central Europe. Safe, far upriver from Viking raiders, its wealth provided the basis for a much increased trade within Europe, and silver coins minted in central Europe now become much more common. And, perhaps most important, the Rammelsberg strike was in the territory of the Duke of Saxony: Otto himself. Otto moved quickly to establish the mine and the several mints that were needed to make silver coins. The great good luck of the silver strike probably played an important role in his success, which culminated in his coronation in Rome by the Pope as "Holy Roman Emperor", and his lasting epithet as Otto the Great.

It is clear that Otto understood the significance of the Rammelsberg silver. He appointed his son and son-in-law Conrad as dukes, and financed their appointment with grants of silver. There are documents showing his fury when both men used some of it to pay off Hungarian raiders rather than fight them. In one of the great set-piece sagas of medieval times, Conrad redeemed himself for his earlier weakness by leading the charge that broke the Hungarians at the Battle of the Lechfeld in 955, dying in the moment of victory. That battle ended Hungarian raids into Germany for ever. After Otto, a succession of Saxon princes ruled from their capital in the fortress of Goslar, close to Rammelsberg, and their palaces in Magdeburg and Dresden. Otto's son and grandson, Emperors Otto II and Otto III were still building new mints in their reigns. The family lost power because they failed to produce male heirs, but even after Saxony passed to other families, the silver riches of the province played a huge role in Saxon influence.

As the surface deposits were depleted at Rammelsberg, the miners drove deeper shafts and longer galleries. After about 200 years, the miners were halted by water seepage, and had to cut a drainage tunnel through from the bottom of the main shaft out to the open mountain side. Cut with hammers and chisels by specialist tunnelers, the first drainage tunnel was 900 m long and took 30 years to complete.

As the mine workings went deeper, water had to be lifted out of the new shafts and galleries to the drainage tunnel, by men carrying leather buckets. This could only work for limited depths, and the mine had to be abandoned to rising water in the middle of the 13th century.

Nearly 100 years later, a large human-powered treadmill pulled an endless rope carrying inflated leather bags through a vertical pipe made of hollow tree trunks. Each bag pushed water upward in front of it, pumping the water into a drainage channel. Once again, this method had its limits, and eventually the mine lost production. The experience at Rammelsberg was repeated throughout Central Europe, some of the mines being on the same scale. The resulting shortage of money was felt throughout western Europe, and was accentuated as the expenses of the Crusades drained money to the Middle East to support the campaigns and the new Christian outposts.

The situation was resolved in 1168, when a new strike near Freiberg added dramatically to the supply of silver. This time there was a "silver rush" not unlike the frenzy of the Western United States after 1849, and (mostly German) prospectors invaded the mountains of Central Europe. Freiberg itself was a silver-rush settlement, which was neither organized nor even named until 1185‹even then its name is evocative. The silver-bearing mountain, the Silberberg, happened to lie in the territory of Markgraf Otto of Meissen. The German title Markgraf denotes a count whose ancestor had originally been assigned lands outside settled German territory, provided he could seize and control them.

Markgraf Otto used the same technique the United States used to assure the rapid exploitation of its western mine lands in the nineteenth century. Any mineral deposit found on public (unclaimed) land could be staked at little or no cost to the finder, and exploited for a small royalty. In medieval Meissen, the Markgraf took 10%; the modern American royalty is pitifully small. Hence the Silberberg became Freiberg, the "free mountain," and Markgraf Otto became "Otto the Rich." When the Bohemians used some pretext to raid his treasury in 1189, it contained 30,000 marks of silver, even after years of spending money on city walls and monasteries. Markgraf Otto's descendants eventually became the Dukes, Electors and Kings of Saxony and most of the monarchs of Europe, in fact.

The silver rush spread over Europe in the late 12th and early 13th centuries, with strikes in the Black Forest; in Bohemia, especially at Kutná Hora; on the border of Moravia and Bohemia; in Hungary; in the eastern Alps; and at Iglesias in Sardinia. The Kutná Hora discovery in 1298 was lucky for King Wenceslas II of Bohemia, who promptly took the mine as royal property. He centered his royal mint at Kutná Hora, and made silver a royal monopoly. The quantities of silver were enormous‹possibly more than 20 tonnes of silver a year from 1300 to 1340.

Usually, experienced Saxon miners were brought in to develop the mines, bringing their customs with them, including a tradition of personal liberty. The great old Central European legends of dwarves delving in mountain caves glistening with ores and jewels stem from this period in European history.

Although Kutná Hora was the last of the great medieval silver strikes, the production of silver from Freiberg and its successors dominated the economic history of Europe in these times. The amounts of silver were much greater than those produced from Rammelsberg in the 10th century, and had a much greater effect.

The ready availability of money allowed society to replace the feudal system, and the potential for profit in terms of money encouraged entrepreneurial activity at all social levels, all over Western Europe. In the 1170s, Count Henry the Liberal of Champagne began to cut forests for cash and cultivate new ones, and to clear scrub land for agriculture, charging rent in cash rather than in kind. He also built mills, ovens, and wine-presses, charging money for their use. His neighbors did much the same sort of thing: Count Philip of Flanders drained swamp country to provide him with income from the rent of the land for farming, and the sale of peat for fuel, while Count Matthew of Boulogne founded new trading ports (Calais, Dunkirk, Damme, Nieuwpoort, and Gravelines) as commercial investments. At the other end of the social scale, successful peasants could buy land, and become as rich as impoverished knights.

In military campaigns, the widened availability of money meant that the size of one's forces no longer depended on one's feudal levies, but could be expanded by as many mercenaries as the available money would buy. Even one's own army needed some cash payment. Governments could raise taxes in money, and attempts to do so led to an increase in salaried civil servants, and an increasing centralization of records and administration in specific centers, whether it was in the chief city of a region, or a specific palace in a city state. The spectacular growth of Paris, London, Venice, and Florence dates from this time.

New and growing centrally directed administrations gave Western Europeans the opportunity to make the same kinds of political, economic, and financial mistakes that had plagued the Roman Empire, and have recurred in incompetently governed nations ever since: such mistakes are not possible in societies where administrative units are tiny, and states are aggregates of individual units rather than organized entities. On the other side, greater availability of money also meant that larger capital and public expenditures could be envisaged: not only castles and cathedrals but ports, canals, town residences and palaces could be built, and there was more money to support artists and craftsmen. The consumption of luxury goods of all sorts became widespread.

Governments everywhere in the region took the opportunity to issue large new currencies: in the 1220s, for example, English mints at London and Canterbury struck 15 tonnes of silver into 10 million silver pennies in a little over two years. The English minted an average of 4 million silver pennies a year in the 1220s, rising to 10 million a year in the 1240s, 15 million in the 1250s, and 40 million a year in 1279-1281. As the coins were high-quality, English silver pennies were widely used in Europe as well.

The rate of minting slowed after 1300, and was not reached again until 1800. But the English experience was not unusual: French mints may have been striking as many coins, even if they were designed to serve a larger population over a greater area.

Central European silver found its way over the Alps to Venice, where "German silver" became the dominant coinage in everyday commerce. By 1270 Venice had built a trading center, the Fondaco dei Tedeschi, in the heart of the city to help the trading activities of the "Germans," charging them 2.5% duty on all the goods they traded. Westward, central European silver was used to buy woollen cloth from the Low Countries, and increasingly from England. Great trading cities rose on the routes between supply and demand, either on land routes or along the Rhine and Danube. On the other hand, luxury goods from the Mediterranean usually more than counterbalanced this trade, and as before there was a net flow out of western and central Europe, through the great Italian trading ports to the eastern Mediterranean.

The Italians founded industries to increase their profits from this trade. Venice began making glass instead of importing it from the Middle East. Italian towns began weaving linen, cotton, and silk from Middle Eastern materials, and wool from England, instead of importing the finished cloth, and Italian farmers began trying to grow cotton and sugar themselves. Italy prospered, and began to need a higher-value coinage. In 1252 Genoa and Florence issued the first important gold coins minted in Europe for centuries, and Venice followed in 1284. The gold coins were all the same weight (3.54 grams, for those who care), and they have become famous in history as the florin (of Florence) and the ducat (of Venice, minted for over 500 years, from 1284 to 1797). All these steps made Italy rich, but could not correct the overall unfavorable balance of trade with the East.

Although Italy (and in fact the entire European Mediterranean rim from Aragon to Sicily) shipped grain, textiles, timber, and iron to the Moslems in general and Egypt in particular, the counterflow was dominated by spices (pepper, ginger, cinnamon, cloves, and other drugs, scents such as frankincense, and dyes such as indigo), with significant amounts of raw cotton and flax, and sugar. The city of Genoa made a speciality of shipping slaves to Egypt from the Black Sea, but once again the major return cargo was spices. All this led to a large net outflow of silver. The Egyptians in particular were willing trade partners, since they profited so much from the exchange: in 1327 the Mamluk Sultan agreed to send King Jaime of Aragon the bones of St Barbara if the King would promise to send trading ships with plenty of merchandise to Egypt. (Check whether this deal went through!- RC)

The only sizeable gold strike in medieval Europe took place in 1320 at Kremnitz (now Kremnica), in Slovakia, then under the King of Hungary. Around 1325 the Kings of Hungary and Bohemia, rich in gold and silver respectively, agreed on an identical money system for their two countries, based on the silver groat (groschen) and the golden florin. This was a political and strategic move as well as a financial one. Vienna was a natural trading center for the east-west trade between Hungary and the states of Germany, and between Bohemia and Italy, and both the Hungarians and the Bohemians were anxious to keep clear of the growing influence of the Hapsburg Dukes of Austria, whose power was centered on Vienna. The kings agreed to by-pass Vienna, using trade routes through their two countries. Venice became the geographically obvious Italian end-point for the gold trade southward from Hungary, while silver remained dominant on the northern routes that ran westward from Bohemia to the English Channel. All the Italian city states prospered, especially Venice: the mint at Florence regularly struck 350,000 gold florins a year to finance its trade in the 1330s. The increased flow of gold into Italy took place at the right time: the volume of trade justified the use of higher-value gold coins, which could now be minted in relative abundance, while silver supplies into Italy were diminishing.

Major international transactions were often recorded in units of gold, while the actual coins that changed hands were silver. It's unlikely that the commercial development of Europe was handicapped by a lack of gold until Constantinople fell to the Crusaders in 1204, as some historians have claimed: there was plenty of money.


New commercial methods were developed during these times, probably copied from Muslims: the concept of partners with shares in a company was explored in Italy in particular, and the system whereby investors lent money to an adventure even if they did not take a personal part in the management was introduced in the 13th century.

The 13th and early 14th centuries saw a major development in supplying money for trade, rather than just silver or gold. Trade often meant the transfer of money from place to place. Instead of transferring gold and silver coins with each transactions, merchants came to depend on letters of credit from bankers to finance their business. The concept is found in European documents around 1220, and was in full swing in southern France and Italy by the mid-13th century. The idea of a letter of credit was probably copied from Muslim trading companies across the Mediterranean: the Arabic word saqq could be the origin of our word cheque or check.

At settlement time, the bankers financing the trading would add up the credits and debits, and then transfer not the entire amounts for the trades, but only the net amounts owed. Accumulated bills were often settled in cash transfers of money at regular intervals, usually at international "fairs."

These new practices meant that a lot of trade could be financed with a little bullion: that is, the supply of money was much greater than the supply of the coins to support it. The system depended on the willingness of all parties to accept the stability of the bankers, but it reduced the expense (and danger) of transferring large amounts of coin, and therefore made trade less costly. It made large profits for bankers, but they took a good deal of risk to earn that profit, and overall the system stimulated trade a great deal. This major advance in trading technique took place in a Europe in which all the gold in circulation could have been melted into a cube measuring only 2 m on an edge.

The concept of credit to augment cash sales meant that the volume of trade could expand far beyond the amount of currency in circulation. It allowed the evolution of banks, particularly in Genoa and Florence, that could finance credit and supervise settlements. It meant in turn that hoarded bullion was potentially less valuable than bullion invested in promoting business, so that more of the bullion in existence was available for fostering manufacture and trade.

Successful banks had to guarantee money in an age of uncertainty. They could normally expect to gain handsomely for successfully organizing commercial adventures, and to lose heavily for failure. Francesh Castello was beheaded in front of his bank in Barcelona in 1360 for failing to settle his debts!

The earliest banks in western Europe were in the great centers of Italy, especially Florence and Genoa. But the largest accounts were settled at the fairs in the great trading duchy of Champagne, which lay on trade routes between the Rhineland and the Low Countries on the north, and the routes to the Mediterranean west of the Alps (to the Rhone cities, to Genoa and Pisa, and through the passes of Savoy to Milan and Pavia) on the other.

In the early days of banking, early in the 13th century, interest rates were usually at about 20%, but commercial rates dropped to 8-10% as the entire system gained credibility‹a very low figure, comparable to modern terms, and one that shows the stability that the system had achieved. (Princes and noblemen and other bad risks had to pay higher rates, of course.)

The Church Takes a Cut

For many years, the Catholic Church had been complaining about trade with the "enemy," the Moslems who had resisted the Crusaders so fiercely in the Holy Land, and had finally thrown them back into the sea. There is no doubt that the Christian traders of the Mediterranean had supplied the Moslems with war materials (iron, slaves as army recruits, timber for building ships), and profited handsomely from the trade. For most of the 13th and early 14th centuries, however, the Church itself had been making a good profit on the trade, by selling absolutions to the guilty merchants, charging them large fines as "penance."

So, for example, in 1297 the Bishops of Tortosa and Barcelona routinely charged 20%-25% of the profits of the Aragonese/Catalan merchants trading with the Moslems, with the explicit permission of Pope Boniface VIII to do so. (King Jaime II of Aragon quickly said that he would take the responsibility of enforcing the Papal decrees, and levied the fines himself‹essentially, becoming a shareholder in the trade which he was actively promoting through his ambassadors in Egypt!) Venice typically ignored the Pope, and Genoa reimbursed its merchants for the fines levied on them.

In 1326 Pope John XXII issued much stronger demands to stop trading with Egypt: this time, the penalty was to be excommunication. But greed and hypocrisy soon won out. The Vatican quickly began selling trading licences! Sometimes these were issued to cities for a year; others were issued to individual captains for one or two voyages. But most of all, the spice trade was funnelled to the north. Instead of the Basra-Baghdad-Alexandria routes, spices moved instead through Tartar territory to Christian but non-Catholic outlets, via Tabriz through Anatolia to Trebizond (Trabzon) on the Black Sea, or to the Mediterranean to ports on the island of Cyprus or the kingdom of Little Armenia. The Genoese, who had long had a strong presence in the Black Sea, profited most from this new trade axis. The Tabriz trade did not last long, because the region fell into anarchy with the death of the last Ilkhan Abu Said in 1335, but the episode showed the resilience of the spice trade. By 1345 trade with Egypt was back in full swing, but the Black Death interrupted the trade.

The Black Death

A major acceleration of trade and prosperity was brought to a halt in and after 1346, when the Black Death, the plague epidemic that ravaged Eurasia for over three years, killed at least 25% of the population, and broke up the economies of large regions. Worse still for the Europeans, the spice trade in Egypt, now the most viable route since the Mamluks cut off the route through Little Armenia in 1347, was dominated by a cartel of merchants, the Karimi, who were able to put the price of spices up to about double the previous values. At the same time the Karimi had great political power, being bankers to the Mamluks, and they were appointed as sole buyers of European goods, so that they were able to bring those prices down.

Then the two major commercial powers in Italy, Genoa and Venice, fought a 6-year war between 1350 and 1355 for control of trading privileges in the Aegean, and then the Venetians got into a war with the King of Hungary over control of the Dalmatian coast. Venice imposed such savage taxation for the war effort that it depleted the money in the city severely.

Later in the 14th century, Venice recovered to become the largest player in the Egyptian trade, with spices as the dominant north-bound cargo. Venice imported large quantities of cotton from Syria also. Genoa dominated the Black Sea and Aegean trade, and also shipped goods to and from Northwest Europe through Gibraltar. No matter which shipper, the major return cargo was textiles: cotton, wool, linen, and silk. Apparently the Europeans, with water-powered machinery, had far better technology for making quality cloth than did the Moslems. Venice was the largest cotton market in Europe by 1400, supplying the raw material to most of Italy, Germany, and northwest Europe.

The Venetians shipped copper from their hinterland in central Europe (Saxony and Bohemia, with Nürnberg as the great entrepot in central Germany; Slovakia, with transport through Vienna to the Adriatic), which served as ballast as well as valuable cargo for their ships.

By 1422 the major stable currencies for international trade were the Venetian ducat, and to a lesser extent the Florentine florin, and as newer gold coins were struck, they were designed to be the equivalent of the ducat, and were meant to carry its prestige. Thus the cruzado of Portugal was directly equivalent to the Venetian ducat in weight and quality, and when the French issued a new écu in 1435, it too weighed the same as a ducat. Even so, everyday transactions were carried on in silver, and sometimes for the smallest transactions there were tokens of copper or lead.

Bosnia in the News: The Silver Crisis of 1465

Silver mines declined throughout central Europe in the middle of the 14th century. The cause was not the Black Death, but a very simple geological and engineering fact: the mines had all reached depths at which the shafts could no longer be pumped dry with the available technology. Much the same thing happened in copper mines, which in some districts was a by-product of silver mining.

The shortage of bullion apparently had rather dramatic effects on the European economy. When Edward I of England issued new coins in 1278-1280, he had 100 tonnes of silver to work with. When Henry IV did the same thing in 1412-1414, he had only two tonnes. By 1450 almost all of the mints of northwest Europe had closed down for lack of silver. The last money-changer in the major French port of Dieppe went out of business in 1446. Gold was available, as we have seen, but the medium-sized transactions that make up a lot of everyday commerce were too small for gold, and required silver. The problem was that silver had been drained out of Europe to pay for the gold that circulated at higher levels.

Europe's problem since Roman times had been a chronic imbalance of trade. Bullion drained out of northern Europe into Italy and thence through the Middle East to the Far East, to pay for imports of alum, grain, oil, and wine, and luxury goods like silk and pepper. In exceptional times and places this problem did not apply. For example, the fur and slave trade through Russia that was run by the Vikings and then by the Russians themselves resulted in a flow of silver north of the Black Sea into northern Europe. But this did not last for very long, and did not affect southern Europe very much. Venetian merchants were always reminding their agents in the east to use barter wherever they could, but they were usually required to pay in silver and gold; failing that, in copper, tin, or lead.

(data from Ashtor 1971)


Exports Imports
300,000 ducats in coin 20,000 ducats in coins
200,000 ducats in goods 400,000 ducats in spices
80,000 ducats in other goods

Exports Imports
100,000 ducats in coin 10,000 ducats in coin
60,000 ducats in goods 130,000 ducats in spices
20,000 ducats in other goods

For Europe, then, the total trade imbalance in coin was at least 370,000 ducats in a trade worth 660,000 ducats, and was completely dominated by the demand for spices. There may have been peak years late in the 14th century when spice prices were high, when the trade was worth over a million ducats. Pepper was regarded as "the very milk and nourishment" of Venice: in 1400 pepper made up 60% of the Venetian spice trade, and spices were handled at a profit margin of about 40%.

The spice trade developed and flourished as long as the Central European mines had indirectly supplied the silver (and then gold) to pay for it. But in the fifteenth century, things went wrong at both ends of the trade routes. Mamluk misrule finally wore down the industries and agriculture of Egypt and Syria. In textiles, soap, paper, glass, ship-building, fire-arms, one after another, the Europeans became technologically much superior.

In 1426 the new Mamluk Sultan Barsbay decided to make pepper a royal monopoly, and he proceeded to make it a reality by 1430. All pepper from the Orient was unloaded at Jiddah, which the Mamluks now controlled. From here it was shipped to Egypt, and offered for sale to the Venetians, who dominated the spice trade from Egypt by this time. There were no other viable spice routes to Europe: the Mamluks conquered Cyprus in 1426.

The Sultan broke the power of the Karimis, and many others in the Egyptian merchant class, but he was a much more dangerous opponent for the Venetian traders. By bad luck, the Venetians were fighting the Duke of Milan for control of the northern Italian plain after 1424, and their resources were stretched to the limit. The Sultan increased the price of pepper in 1426 and again in 1428 and 1430. The Venetians had a choice of paying up, or giving up the centerpiece of their trade. They paid. The Sultan's demands went up and up in the 1430s, and his successor continued the extortion. By the end of the 1430s the Venetians put up the supreme threat: they would no longer trade with Egypt. A treaty was patched together, but the Sultan's extortion quickly began again: no trade in any other goods, unless the Venetians bought a certain amount of pepper at high price. The Venetians were unwilling to give up trade altogether; they paid the pepper price and tried to make it up elsewhere. The only thing that saved the Venetians was that open-market prices of pepper dropped in the 1840s; they could still afford to pay the Sultan's prices and make a profit. Once they weathered Sultan Barsbays' reign in the 1430s, they did well.

The drain of silver was felt first in northern Europe, since the trade routes led southeast through Italy. By the 1390s silver was short all over Europe, except in Venice. The silver mines at Kutná Hora had begun to decline in the 1370s, and finally closed down after being sacked by King Sigismund in 1422. The only significant new sources of silver left operating in Europe were mines at Srebrenica in Bosnia and Novo Brdo in soutern Serbia, and they shipped most of their production through the Venetian ports and fortresses that controlled the coast of Dalmatia. Since Venetian trade with the East in the 1420s was worth around 600,000 ducats a year. it may have resulted in an outflow of about 20 tonnes of silver a year. It's clear that only Bosnian silver kept Europe from a silver famine until the 1450s. In the 15th century, every great Venetian ship that went to Alexandria to trade took with it gold and silver coins and bullion to the value of 100,000 ducats. As the Bosnian mines declined in the 1430s, the stage was set for a financial disaster, completed when the Turks overrran the major mines in the 1450s.

Venetian trade now depended largely on any supplies of gold that remained. In 1423 Venice was taking in about 400,000 ducats a year paid by Florentine bankers, presumably in settlement of accounts by traders over a wide area of Europe, and over a million ducats from the burgeoning Duchy of Milan: in other words, there were still bullion reserves in Europe that could maintain its crippling trade imbalance a little longer. In 1433 there were half a million ducats' worth of coins leaving Venice on the galleys leaving for Beirut and Alexandria. However, Hungarian gold production diminished markedly in the 1440s.

In 1451 a French and a Florentine galley reaching Valencia were unable to sell any goods because there was no money in the city to pay for them. In 1455 the Turks overran the Serbian silver mines, and in 1460 captured the last Bosnian mine. The last Venetian silver grosso was minted in 1462. On 17th March 1464 Venice sent all the city's spare cash with the galleys to trade with Syria, leaving nothing in the city treasury but small and debased coins. The bullion crisis reached a point where trade was strangled. Compounding the problem, a genuine fear that creditors would be unable to find money to pay bills led to a restriction of credit. Such fears were real: several Venetian banks failed, and so did the Strozzi bank of Florence, the second largest in the city. Even the smallest of small change became scarce.

In the Middle East, the entire region sank into impoverishment and depopulation, after centuries of neglect of agriculture and irrigation, military disasters, rapacious taxation, and misgovernment.

The New Silver Mines of Central Europe

It's amazing how a crisis will apparently generate its own solution. In the late 1450s, Martin Claus of Gotha solved the problem of the flooded silver mines of Saxony, just as Europe ran out of currency. The old mines quickly re-opened, and new discoveries were made in the Harz Mountains (the Erzgebirge). A new lead amalgamation process introduced in 1451 made it easy to separate copper from silver. Thereafter, Saxon and Bohemian mining resumed at full scale from mines such as Kutná Hora, Freiberg, and Rammelsberg, and new mines were opened in other regions: at Schneeberg in Saxony and at Schwats in the Tirol, which was discovered in 1448. New supplies of bullion reached European economies, beginning in the 1460s, but especially in the 1470s and 1480s.

The unequal trade with the Middle East was re-established very quickly. By 1496 at the latest, 300,000 ducats' worth of silver per year were reaching the Middle East. New silver was again plentiful in Italy in 1471, and now the chief bullion-exchange cities were Milan, in northern Italy, for the Italian route, and Frankfurt, the trading post for wool from Flanders and England. The financial world was re-established with even better procedures, with sound banks and extensive credit facilities. Banks learned that if their reputation was sound, they could lend out something approaching ten or twelve times the amount of money they held in coin or bullion, vastly increasing the volume of trade that they could finance (and profit from). Silver was increasingly bought and sold as a commodity, instead of being regarded as money. Often, silver that was needed for coinage was bought with gold coins.

Having learned from the coin crisis of 1465, the Venetians began minting pure copper coins for everyday use in 1473. The coins were good coinage, that is, they were worth almost exactly what the copper in them was worth. The Venetians were able to do this because new copper mines had opened in the Alps and Carpathians, and Venice was well placed to trade in the metal. Eventually copper or copper-based coinage became general, but it took a long time.

One of the greatest silver mines of all time was discovered at Joachimsthal in Bohemia in 1516; it alone produced 3 million ounces of silver a year at its peak in the 1530s. Much of that silver was made into coins called Joachimsthaler, or thaler for short, the name that is the basis for the many modern currencies called dollars.

Important advances were made in mining technology in Saxony, where the miners were free men rather than slaves. At Rammelsberg, the Saxons built a new drainage adit much longer than the old 12th-century one. The new one was 45 m below the old, but, of course, had to be much longer (2600 m), and it took 99 years to complete. Meanwhile, a dam was built in a high valley nearby, with sluices that flowed through tunnels into the mine. There the water drove water wheels that powered large pumps, discharging both the sluice water and the water pumped from the galleries out of the new drainage adit. The water wheels operated until 1910.

Saxon mining methods and mining practices were the envy of Europe by the 16th century, when Agricola wrote his treatise De Re Metallica. Saxon miners were regarded, and regarded themselves, as craftsmen rather than virtual slaves. Even the iron hand tools they used have not been improved upon, 500 years later. They worked 7-hour shifts, with two shifts a day being usual. Fire-cracking of the working face was abandoned wherever possible, because the smoke and fumes were worse to deal with than the hardness of the rock. If fire-cracking was necessary, it was only done late on Saturday, just as the last shift of the week was leaving the mine. The fire cracked the next few feet of rock, and had died down by Monday morning, when the miners returned. The ore was broken out in the next six days, when the process would be repeated.

By the 16th century, sleds and wheelbarrows were being used rather than baskets to take the ore out of the galleries. Ore was no longer carried to the surface, but lifted in baskets, and in later centuries by windlasses, powered by hand at first, then by horses. The Saxons also designed forced ventilation for underground galleries. Equivalent advances in metallurgy led to more efficient smelting, and access to lower-grade ores. With these technical advances, Rammelsberg again produced huge amounts of silver until the ore body ran out 300 m below the entrance.

The position of the Saxon mines in the economy of central Europe decayed with the arrival of vast amounts of silver from the New World. In the Counter-Reformation and the upheavals in Central Europe that followed it, the older but more humane and sophisticated mining practices were eroded, and the history of mining in the next several hundred years in Europe saw the miners reduced once again to virtual slavery: in the case of prisoners and prisoners of war, actual slaves.

The new production of the silver mines of Central Europe after 1470, and Spanish silver from the New World, could take care of the basic imbalance of European trade with the East only by financing it until the bullion ran out. In the 16th and 17th centuries the Portuguese, followed by the Dutch and the English, circumnavigated Africa and redirected the trade past the Middle East. Even then, a net flow of bullion from Europe to Asia continued. The Portuguese, Dutch, and English exported bullion to Asia and brought back spices, tea, silks, and porcelain. The bullion was not produced by, but was only funnelled through, the European exporters: the trade was supported by the massive influx of bullion from the Americas, mostly into Spain. As in medieval times, the great profits were made by the traders rather than the bullion producers. Gold and silver began to accumulate in European coffers only when Asians gladly traded their produce for manufactured goods rather than bullion.

Page last updated April 1999.

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