Chapter

Paper Money and Absolute Monarchy

Guy Rowlands

in The Financial Decline of a Great Power

Published in print October 2012 | ISBN: 9780199585076
Published online January 2013 | e-ISBN: 9780191744600 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199585076.003.0007
Paper Money and Absolute Monarchy

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The coinage manipulations led the government to issue receipts for coin deposits at the mints, at first on a small scale and for limited durations. But after 1701 Mint bills circulated for longer and longer periods, acting in a hybrid way as both a substitute for coin in Paris and as interest-bearing debt instruments. Under pressure from the major bankers and military treasurers, the government increased the number of such bills to the point where they were crowding out coin. Consequently they came to trade for a fraction of their face value. Efforts to extend Mint bill legal circulation to the rest of the country produced uproar and had disastrous effects on economic transactions and the prices government contractors had to pay. Initial efforts to withdraw the glut of Mint bills failed, and their continued use until late 1712 inflated the costs of exchange and the war effort.

Keywords: paper money; financiers; monetary circulation; monetary policy; money markets

Chapter.  11297 words. 

Subjects: Modern History (1700 to 1945)

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