In the previous section, we described the birth of paper money. It turned out that in this accident the new invention (although remember that in fact it was not so new again – China used it much earlier than the West did) turned out to be the tool that led to new crises. Before we get to this, however, we’ll look at how the “metallic” currencies spoiled the ruler of the 18th century.
Prussian your enemy
Currency wars are not really new. However, while today Donald Trump wants the dollar to become cheaper, and thus would strengthen the US expert, so the rulers in the eighteenth century wanted to damage the internal markets of their neighbors.
Especially often Prussia performed experiments in this field. They gained experience in this evil practice during the Seven Years’ War. On the other hand, we Poles had one big problem in this respect – Prussia was one of our most troublesome neighbors.
And so, when the Prussian rulers conquered Saxony, they were given the matrix to mint coins. It seems like nothing terrible, but the problem was that the ruler of Saxony was August III Wettin, who at the same time sat on the throne of the Polish-Lithuanian Commonwealth. Thus, Prussia began to mint “Polish” coins with the aforementioned tool, but of very poor quality, and quickly flooded our market with them. The profit was obvious. Polish commodities could be bought for poor quality coins, and exchange transactions were often made in such a way as to remove good quality coins from the neighbor’s market. Thus, somehow, Polish silver was stolen, but it was done in a way – let’s call it – decentralized.
For King Saxon
While King August II the Strong may pass as a controversial ruler, his son, mentioned August III Wettyn, has a terrible opinion among historians. It must be admitted, however, that he tried to save the monetary situation in Poland through monetary reforms. The first introduced thaler into circulation, while the second devalued it by 4%. Unfortunately, each time new, good coins were quickly removed from the market by Prussia.
This process followed until as one of the factors led to the disappearance of Poland from maps for 123 years.
Russia and copper
Things were no better east on our borders. It is especially about Russia. In 1704, monetary reform was introduced there. Its author was Tsar Peter the Great. Although he became famous as a great warrior, he did not do well in the economic field. Why?
The reform introduced the silver ruble. Except that the same problem arose as in Sweden – no silver. So how to issue a silver coin does not have the main raw material that is needed for its production? It turned out that this is real in Russia. For … copper was used. Large coppers began to be beaten. The coins weighed as much as 1.6 kg. It was difficult to use them in trade … If you think this is the peak of madness that politicians are capable of, read our cycle further …
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