Temple of Juno Moneta

The temple of Juno Moneta acted as the mint and treasury for the Roman government. From the name of the temple can be traced the English words money, and mint. The Spanish word for “coin,” moneda, also stems from moneta. The month of June gets its name from Juno.
The most important of the Seven Hills of Rome was Capitoline Hill, a modest elevation even when compared to the other six hills, but at the crest of the hill stood the Capitol, the main temple of the empire. The center of the temple belonged to Jupiter Optimus Maximus, the king of the gods, but side chambers honored two other important deities, Minerva, the goddess of wisdom, and Juno, consort to Jupiter, and mother to Mars, the god of war.
Each of the Roman triad of gods came with different surnames reflecting different aspects of their heavenly responsibilities. Juno Regina reigned as the queen of heaven resembling Hera, wife of Zeus in
Greek mythology, and looked after the interests of women. Juno Pronuba oversaw marriage negotiations, and Juno Lucina guarded over expecting women. Labor and childbirth came within the province of Juno Sospia.
In the fourth century b.c., if we can believe Roman historians, the timely honking of sacred geese around Juno’s temple on Capitoline Hill tipped off the Roman people that the Gauls were scaling the walls of the Roman citadel, also on Capitoline Hill, and that an attack was imminent. Out of this episode was born another Juno: Juno Moneta, from Latin monere (to warn).
Juno Moneta, patroness of the Roman state, took on various government responsibilities, including the issuance of money. When the Romans issued a new silver coin, the denarius, in 269 b.c. the temple of Juno Moneta minted the coins with an image of the goddess and her surname, Moneta.
The temple of Juno Moneta worked as a full-time mint, either melting down existing coinage and issuing freshly minted coins, or minting new supplies of gold and silver bullion. A constant stream of coins flowed from the mint, and the Latin word currere, meaning “to run” or “to flow,” became associated with money, giving rise to the English word currency.
The temple of Juno Moneta furnishes another instance when ancient societies took advantage of the sacredness of temple grounds to protect treasures of precious metals. Temple coinage had a long history in Greece and Asia, but the mint in the temple of Juno Moneta owed its existence to the premeditated action of a powerful state government.
See also:
Burns, A. R. 1965. Money and Monetary Policy in Early Times.
Weatherford, Jack. 1997. The History of Money.

Temple Moneychangers

The moneychangers in the ancient world made a market in foreign exchange where merchants and traders bought currency of other countries to carry on trade. The New Testament tells a story of how Jesus entered the temple in Jerusalem, disdainfully overturned the tables of the moneychangers, and showed his indignation with the admonishment, “It is written, ‘My house shall be called a house of prayer’; but you make it a den of robbers” (Luke, 19:46). This confrontation between Jesus and the temple moneychangers is another reminder that money in ancient times, particularly precious metal coins, was not embraced with open arms as a means
of encouraging trade and securing prosperity. It was more often associated with the dark forces in society. Today, money is regarded as a necessary instrument of exchange in our complex economies, but the idea of moneychangers in the temple still leaves our moral sensibilities in a state of repugnance.
The multiplication of coins minted in various Greek cities, and in Lydia and Persia, created a demand for experienced specialists who were knowledgeable of the diverse weights, quality, and standards of foreign coins. They sat at tables in streets and marketplaces and fulfilled the role of bankers to their customers. In addition to trading foreign currency, they aided merchants in arranging foreign deals, and acted as the custodians of savings entrusted to them.
Temples became home to moneychangers for practical reasons. The temples had to build treasuries to keep safe the donations and offerings they received. The sacredness of the temple also gave an added sense of protection against would-be thieves. Businesses and wealthy individuals took to depositing their money and valuables in temples as a place of safety. Temples had an incentive to find ways to invest their own funds, and sometimes invested the funds of their patrons. Thus, some of the temples began to wear the aspect of banks, including paying interest on funds held in their custody. Temples issued their own money in the eastern parts of the Seleucid empire, which ruled most of Asia Minor, Syria, Persia, and Bactria from 312 to 64 b.c. In addition to coined money, gold, and silver, the temples also owned estates, cattle, and slaves.
The temples at Delos were known for their wealth. Cities deposited funds with temples, which in turn made loans to cities and private persons. The temples of Delos went so far as to hold deposits of clients while depositing their own funds in private banks. During the time of the Lydians and Persians the temple of Ephesus was the place of choice for kings, cities, and private individuals to keep money on deposit. A law of Ephesus of 85 b.c. makes a reference to loans of sacred funds and insolvent debtors of the temple. The temple at Jerusalem was wealthy when Seleucus IV, deep in financial difficulties, wanted to confiscate its treasury, exciting indignation because of its sacredness and the number of widows and orphans with deposits held by the temple.
Moneychangers resided in temples because the rights of private property had not been secured by law, and ancient societies were often embroiled in civil war, or ruled by arbitrary and capricious rulers. The sacredness of the temple helped secure the safety of precious metals in the midst of lawlessness.
Temple moneychangers may reflect a religious element in the origin of money that is often ignored. Commodities that developed as a medium of exchange often had religious significance. Livestock that served as money was also needed for sacrificial purposes and as payment to priests for religious services. Some societies regarded gold and silver as the metals of the gods, or special creations of the gods, making them especially appropriate as payment to priests or donations to temples. Charms that had magical powers were also struck from precious metals. The sperm whale teeth used as money on the Fiji Islands was called tambua, from which the word taboo is derived, meaning “sacred or forbidden for religious reasons.” Because an unlimited demand existed for commodities acceptable as sacrifices to the gods, these goods maintained their value, making them useful as money.
See also:
Rostovtzeff, M. 1941. The Social and Economic History of the Hellenistic World.
Williams, Jonathan. 1997. Money: A History.

Temple Coinage in Ancient Greece

Before coinage became a monopoly prerogative of governments, religious temples minted coins in Greece, playing an important role in spreading the practice of coinage to the Greeks. The coinage of money on sacred temple grounds, under the direction of priests, brought to bear the full weight of
religion and custom to protect the funds of the mint and assure the quality of the coins.
The famous religious shrines of ancient Greece and Rome acted as treasuries, including the temple of Athena at Athens, the temple of Apollo at Delphi, and that of Juno Moneta at Rome. Even the later Roman Republic, famous for clever statecraft, used shrines as repositories of public funds. The gold statutes in the Parthenon and the bullion in the temple treasury were part of Athens’ monetary reserve. Thucydides, in his famous Peloponnesian War, puts these words into the mouth of Pericles regarding the resources of Athens:
Apart from other sources of income, an average revenue of six hundred talents of silver was drawn from the tribute of the allies, and there were still six thousand talents of coined silver in the Acropolis…. This did not include the uncoined gold and silver in public and private offerings, the sacred vessels for the processions and games, the Median spoils, and similar resources to the amount of five hundred talents. To this he added the treasury of the other temples. These were by no means inconsiderable, and might fairly be used. Nay, if they were ever absolutely driven to it, they might take even the gold ornaments of Athene herself, for the statute contained forty talents of pure gold and it was all removable. (Thucydides, 1952)
The temple priests handled large amounts of precious metals, flowing in from gift offerings, and revenue from investments in land, mines, and other ventures. In addition to providing religious services, temple shrines became centers of trade, affording safe conduct to travelers to the temple and occasionally constructing sacred roads that led to the temple. Temples were dedicated to a particular deity that protected pilgrims. Temple coins may have begun as souvenirs for pilgrimages held at the time of sacred festivals. In time, temple districts during religious festivals began to wear the aspect of trade fairs, attracting merchants who saw the concentration of people as an opportunity to market their wares. Temples supplied the need for local coins to transact the burst of commercial activity. Pilgrims also needed coins to pay priests.
The influence of temple coinage accounts for the religious influence that is evident in Greek coinage. Coins minted in temples, under the auspices of temple priests, usually bore a sacred symbol associated with the patron deity that protected the temple, or perhaps an effigy of the deity. Coins struck in the temple of Zeus bore a thunderbolt, or an eagle, and coins struck in the temple of Apollo a tripod or lyre. The temple of Artemis stamped its coins with a stag or a wild boar, and that of Aphrodite with a dove or tortoise.
Religious themes remained a trait of Greek coins after civil authorities had assumed responsibility for coinage, perhaps reflecting the high esteem that temple coins enjoyed. Athenian coins bore the stamp of an owl, the sacred bird of Athene.
Some scholars have attached deep significance to the religious symbols stamped on temple coins, suggesting that the stamped symbols indicated the coins belonged to a specific deity, and were sacred to him or her. The symbols also assured the temple priests that the precious metal they received was of the same quality and quantity as the metal they paid out. The sacred symbols may also have helped establish the coins in the confidence of people, adding to the credit that the coins commanded.
Early in the sixth century b.c. minting coinage became the sole privilege of government authorities throughout the Aegean world.
See also:
Burns, A. R. 1927. Money and Monetary Policy in Early Times.
Thucydides. 1952. The Peloponnesian War. Trans. Richard Crawley.
Williams, Jonathan, ed. 1997. Money: A History.


The eminent Zen scholar, Daisetz T. Suzuki, in his book Zen and Japanese Culture, observes that “If tea symbolizes Buddhism, can we not say that wine stands for Christianity?” Commodities having religious significance have a propensity to take on the characteristics of money. Gold was often considered the metal of the gods and a favored gift to religious temples. Therefore it should be no surprise that tea surfaced as money in geographical areas where Buddhist culture exerted a potent influence.
In nineteenth- and early twentieth-century Tibet, which was a virtual citadel of Buddhism, sheep served as a measure of value, but Tibetans used tea as a medium of exchange. Tea bricks and sheep also acted the role of money in Sinkiang.
In the nineteenth and twentieth centuries tea bricks displaced sheep as currency in inner Asia, and particularly Mongolia. During the nineteenth century the Chinese paid Mongolian troops in tea bricks. Consumers went to the market with a sackful or cartload of tea bricks. A sheep cost between 12 and 15 bricks, and a camel between 120 and 150 bricks. Between 2 and 5 bricks could purchase a Chinese pipe. Credit transactions were negotiated in tea bricks, and reports were heard of houses purchased with tea bricks. In Burma a tea brick was the monetary equivalent of a rupee and circulated as such.
The weight and size of tea bricks were not always consistent, but two main sizes predominated, one weighing two and one-half pounds and a larger one weighing close to five pounds. The bricks consisted of leaf stalks of the tea plant mixed with other herbs and glued with the blood of a steer or young bull. The inferior quality tea went into the production of tea bricks intended for monetary purposes, as if additional evidence was needed to validate Gresham’s law. This unappetizing concoction was shaped into bricks and dried in an oven. Value per unit of weight was not a selling point for tea brick money. The transportation of $100 worth of tea required the sturdy back of a camel.
Asiatic Russia also furnished examples of tea brick money, particularly in areas near the Mongolian border. Goods were purchased and wages were paid in tea bricks. Sugar, iron goods, tools, and arms also circulated among various tribes, and in the 1930s jam became a favorite and circulated as a medium of exchange in these areas.
Evidence of tea money outside Asia is scanty. In medieval Russia tea became a form of payment for government officials. Paraguay under Jesuit rule was a barter economy, but there is evidence of tea currency, including for the payment of taxes.
Stimulants and depressants, concomitants of most if not all civilizations, show up frequently as money. Tobacco, cocoa beans, and various varieties of alcohol come to mind as obvious examples. Tea shares some of the characteristics of these commodities and carries a religious significance, rendering it a likely candidate to fill a monetary role.
See also:
Einzig, Paul. 1966. Primitive Money.
Quiggin, A. Hingston. 1949. A Survey of Primitive Money.

Tallies (England)

In England tallies were wooden sticks that functioned as instruments of credit and exchange in public finance. The Exchequer (treasury) began using tallies in the Middle Ages, and by the humor of history the use of tallies survived into the early nineteenth century.
A tally was a wooden stick with notches denoting various sums of money. A notch the length of a man’s hand denoted 1,000 pounds, while a notch the width of a man’s thumb denoted 100 pounds. A simple V-shaped notch represented 20 pounds. The handle of the tally remained notchless. In a credit transaction, the notched segment of the wooden tally was split lengthwise down the middle and the handle remained with one half of the tally. The creditor kept the larger half with the handle, and the debtor kept the smaller half, called the foil. The two halves would match or “tally.” The tallies were assignable, meaning creditors could transfer ownership of tally debts to third parties. In this connection tallies circulated as money.
Tallies entered into the British public finance system in two ways. First, a citizen owing taxes to the government might hand the Exchequer a tally, signifying a debt of taxes. The government would use the tally to pay for goods and services. The recipient of the tally presented it to the taxpayer who had the other half (the foil) and demanded payment. A second use of tallies in public finance occurred when the government issued tallies in payment for goods and services. In this instance the government was the debtor, and tallies originating from the government could be used in payment of taxes. Originally the government pledged future tax revenue from specific sources earmarked for redemption of these tallies. Later the government issued tallies to be redeemed from the general revenue. Tallies used as an instrument of government debt paid interest.
It was this second use of tallies that contributed to the growth of a primitive money market in London. Purveyors of goods to the government received
tallies, and discounted them—that is they sold them at less than face value—to goldsmith bankers rather than using them in exchange, a practice that reached its zenith in the seventeenth century. The goldsmith bankers, in turn, expected the government to redeem at face value at some date in the future the tallies that they had purchased. Later, the Bank of England also discounted tallies, creating an even more ready market in tallies and adding to their acceptability in exchange.
By the seventeenth century tallies were already an anachronism, but they were not officially discontinued until 1834. In addition to assisting the emergence of the London money market, tallies reduced the need for money minted from precious metals and eased pressure on the English government to debase the coinage to finance excess government expenditures.
See also:
Davies, Glyn. 1994. A History of Money.
Dickson, P. G. M. 1967. Financial Revolution in England.
Feavearyear, Sir Albert. 1963. The Pound Sterling: A History of English Money.


The taler was originally a German coin equal to three German marks, but the word taler became a common name for currency that, in various guises, appeared in other languages and countries. The English word dollar evolved from taler, as did the Italian tallero, the Dutch daalder, and the Swedish and Danish dalers.
The first talers came from Jachymov, now a small village in the Ore Mountains in the western part of the Czech Republic. At the opening of the sixteenth century Jachymov fell within the Holy Roman Empire and was administered under German authority. In 1516 the local ruler, Count Hieronymus Schlick, found a silver deposit close to his home. As early as 1519 Count Schlick, without official sanction, began minting silver coins in his castle, and on 1 January 1520 he received official approval to operate a mint. Minting silver into coins was probably more profitable than merely selling silver. Between 1534 and 1536 King Ferdinand I ordered the construction of an imperial mint in Jachymov. The building housing the imperial mint served as a museum as late as 1976.
The coins were first called Joachimstalergulden or Joachimstalergroschen after the German name for the valley, Joachimsthal, where they were minted. The names were shortened to talergroschen, and later to thalers, or talers.
With the stimulus of silver mining, Jachymov blossomed into a bustling community of 18,000 inhabitants. In 1568 a plague left its mark on this mining community, but the most severe devastation was wrought by religious intolerance. Jachymov became strongly Protestant, but the Bohemian monarchy was Catholic. Religious persecution killed the community, which could only boast of 529 inhabitants in 1613, and in 1651 the government moved the official mint to Prague.
In the first year of operation Count Schlick’s mint
struck about 250,000 talers. During the years of peak production, between 1529 and 1545, the mines produced enough silver to mint 5 million talers. By the end of the century, Count Schlick’s mint had sent about 12 million talers into circulation.
The coinage of talers spread throughout the German-speaking world. During the sixteenth century alone as many as 1,500 different types of talers found their way into circulation from various German states and municipalities. By 1900 as many as 10,000 different types of talers had been minted for metal currency and commemoration medals.
Maria Theresa, a famous Austrian empress of the eighteenth century, gave her name to the best known, longest circulating of all talers. In 1773 the Gunzburg mint first struck a taler bearing the image of Maria Theresa. After her death in 1780 subsequent talers were always dated 1780. After the dissolution of the Holy Roman Empire early in the nineteenth century the Austro-Hungarian Empire continued to mint the Maria Theresa talers with the 1780 date. Following the break up of the Austro-Hungarian Empire after World War I the Austrian Republic minted talers until Hitler invaded in 1937. Mussolini found Maria Theresa talers the favored coin in Ethiopia, causing Italy to mint its own talers between 1935 and 1937 in order to facilitate trade with Ethiopia. After World War II the Republic of Austria resumed the coinage of talers, still bearing the date of 1780. Austria continued to mint talers until 1975.
See also:
Nussbaum, Arthur. 1957. A History of the Dollar.
Weatherford, Jack. 1997. The History of Money.

Tabular Standard in Massachusetts Bay Colony

During two separate periods of rapid inflation, the Massachusetts Bay Colony put in practice a tabular standard in which debts payable in shillings were adjusted for changes in the purchasing power of the paper currency. Under the tabular standard, a 100 percent rise in the price level meant debtors owed twice as many shillings as they had borrowed. Without the protection of a tabular standard, the money that came back to creditors in repayment for loans had less purchasing power than the money they first loaned out.
The first experiment with a tabular standard occurred in 1742, when the legislature authorized a new issue of paper currency. At the same time the legislature enacted a so-called equity law, requiring the repayment of all debts of five years duration and contracted after March 1742 at a rate of 6 2/3 paper shillings to an ounce of silver. The most innovative portion of the law, however, empowered justices of the Massachusetts courts, in adjudicating disputes involving debts paid in paper currency, to “make Amends for the depreciating of said Bills from their present stated Value,” which was 6 2/3 shillings to an ounce of silver. That is, the justices could force debtors to pay more than 6 2/3 shillings to an ounce of silver to compensate creditors for the erosion in purchasing power of their money while it was loaned out. (Creditors often do not fully anticipate inflation and do not charge enough interest to compensate for inflation.) Every six months the purchasing power of the new bills was adjusted according to “the Rates that said Bills then commonly pass at in Proportion to Silver and Bills of Exchange payable in London.”
Debtors complained that the equity law only considered the exchange ratio between paper shillings and silver, which might only reflect speculative activity, and ignored the cost of living in paper shillings, which was more pertinent to their lives. In 1747 the legislature amended the equity law to provide that “when any valuation shall be made of the bills … in pursuance of said act [1742] … regard shall be had not only to silver and bills of exchange, but to the prices of provisions and other necessaries of life” (Lester, 1939). This law did not remove all disagreement about the rate of depreciation of the bills, but it diffused the issue until 1749 when Massachusetts received from England a large reimbursement for war expenditures and began redeeming its paper money.
The colonial legislature faced similar problems during the American Revolution when Massachusetts soldiers complained that their pay, set at the time of enlistment, had lost all but a tiny fraction of its purchasing power. To encourage reenlistment, the legislature computed the original pay in terms of what it would buy in Indian corn, beef, sheep wool, and sole leather, and compensated the soldiers accordingly for the balance owed them in four bond issues, bearing 6 percent interest. The bond issues matured in 1781, 1782, 1783, and 1784, successively. 
Soldiers refusing to enlist received similar bonds maturing in 1785, 1786, 1787, and 1788. The legislature indexed the principal and interest on these bonds to the prices of four staple commodities. A statement on the face of these bonds read:
both principal and interest to be paid in the then current money of said state [Massachusetts], in a greater or less sum, according as five bushels of corn, sixty-eight pounds and four-sevenths parts of a pound of beef, ten pounds of sole leather shall then cost, more or less, than one hundred and thirty pounds current money, at the then current prices of the said articles.
(Lester, 1939)
The advent of fiat paper currency opened the possibility of episodes of rapid inflation that was unheard-of in monetary systems based upon precious metal standards, such as gold and silver. Rapid bouts of inflation wiped out the claims of creditors against debtors, setting the creditors against the debtors, and making the hidden seam separating debtors and creditors a major point of social division and political discontent. Massachusetts Bay Colony demonstrated Yankee ingenuity in developing a scheme for balancing the interest of creditors and debtors at a time when inflationary finance was inevitable.
See also:
Fisher, W. C. 1913. The Tabular Standard in Massachusetts History. Quarterly Journal of Economics, 27 (May): 417–454.
Lester, Richard A. 1939. Monetary Experiments.


Symmetallism is a type of monetary system in which a standard monetary unit is equivalent to a fixed number of ounces of gold, coupled with a fixed number of ounces of silver. The standard monetary unit becomes equivalent to a bundle of two precious metals, combined in a fixed, unchanging proportion. As an illustration, the dollar might be set equivalent to 0.0242 ounces of gold, plus 0.3878 ounces of silver. The term symmetallism seems to have been coined by Alfred Marshall, a prominent economist around the turn of the century who proposed a symmetallic system as an answer to world monetary woes. Symmetallic systems were not without precedent, however, because the ancient kingdom of Lydia
is credited with striking the first coins from a metal called electrum, which was a mixture of gold and silver found in a natural state.
During the last half of the nineteenth century, the world’s major trading partners engaged in a monetary tug of war between a bimetallic system, based upon gold and silver, and a monometallic system relying strictly upon gold. England favored a gold standard, which eventually displaced a bimetallic standard that France and the United States had championed without success. The bimetallic system, like the symmetallic system, made use of two metals, but it set a fixed value for each metal in terms of the other metal. Under a bimetallic system a government might officially set the value of 15 ounces of silver as equal to 1 ounce of gold, and would stand ready to exchange gold for silver at this ratio. Because officially fixed values often varied from freely fluctuating market values, the bimetallic system worked less successfully in practice than in theory. In contrast to the bimetallic system, the symmetallic system does not fix a ratio of value between two metals, but fixes the value of a composite unit composed of a fixed quantity of each of two metals. A monometallic system circumvents the complications of two metals and fixes the value of a monetary unit in terms of a fixed weight of a single metal. Under the post–World War II monometallic gold standard, the United States officially fixed the price of an ounce of gold at $35.
The last quarter of the nineteenth century saw a spreading wave of mild deflation in the face of the strict discipline of a worldwide gold standard, in which the world gold supply did not keep pace with the monetary needs of an expanding world economy. Alfred Marshall held out the symmetallic system as a means of avoiding the awkwardness of the bimetallic standard, while adding to the world’s stock of monetary metals, and venting deflationary pressures. He also argued that the value of a composite quantity of gold and silver would fluctuate less than the values of gold and silver separately. He advanced his proposal to the Gold and Silver Commission in the United Kingdom in 1888.
Marshall’s proposal apparently made little impression on policy makers at the time, but academic economists found it a fruitful idea that could be expanded. They saw no reason why the number of commodities in the composite standard had to be limited to two, or why the commodities had to be precious metals. They extrapolated Marshall’s concept into schemes that included all the commodities in the wholesale price index as part of the composite monetary commodity. These kinds of extensions of Marshall’s idea surfaced in the 1980s as anti-inflation policies stood at the top of research agendas in economics.
See also:
Friedman, Milton. 1992. Monetary Mischief.
Marshall, Alfred. 1987. Remedies for Fluctuations of General Prices. Contemporary Review, 51 (March): 355–375.
McCallum, Bennet, T. 1989. Monetary Economics.

Swiss Franc

Over the years Switzerland developed a legendary reputation for financial probity, helping to lift the Swiss franc above the crowd of national currencies and become a symbol of strength and monetary soundness. Internationally, it is a favored currency for hoarding money, partly because Swiss banking secrecy laws protect the anonymity of depositors in Swiss banks. International pressure has steadily eroded away some of the protection of anonymity afforded to depositors in Swiss banks, particularly for depositors engaged in criminal conduct.
In 1848 Switzerland adopted the French monetary system, preferring a coherent application of the decimal system. Switzerland had first tasted the French system during the Napoleonic era when France conquered Switzerland and turned it into the Helvetian Republic.
In 1860 Switzerland debased its subsidiary silver coins to prevent the exportation of its silver coinage. In 1865 Switzerland was one of the countries attending a conference in Paris that led to the formation of the Latin Monetary Union. Switzerland argued for the adoption of the gold standard and conversion of silver coinage into subsidiary coinage. The union agreement, however, provided for a bimetallic standard based on gold and silver. Switzerland, along with France, Italy, and Belgium, agreed to mint gold pieces only of 100, 50, 20, 10, and 5 francs. The union members agreed to mint a fully weighted 5-franc silver piece, but lower denomination silver coins became subsidiary coinage with reduced weight. Under the union agreement, coins from each country circulated freely in other union countries. After Germany adopted the gold standard in 1871 the Latin Monetary Union broke down, and the member countries adopted the gold standard.
During World War I the Swiss suspended the gold standard and the Swiss franc appreciated relative to the currencies of the belligerents, and even relative to the U.S. dollar. Following World War I Switzerland returned to the gold standard at its prewar parity and maintained parity through the 1920s and well into the 1930s.
During the Great Depression period Switzerland, along with France, Belgium, Holland, Italy, and Poland, organized a “gold bloc” that sought to withstand the pressures for devaluation. Switzerland devalued the Swiss franc long after the United States and Britain had devalued their currencies, and only after France had devalued the French franc in September 1936. The French franc and the Swiss franc were devalued by 30 percent.
During World War II the Swiss franc remained firm, but not as firm as during World War I. In July 1945 the Swiss franc traded at a 3 percent premium over the U.S. dollar. During the post–World War II era the Swiss franc remained strong relative to the dollar and Swiss authorities had to take steps to discourage demand for Swiss francs. Under the Bretton Woods System of fixed exchange rates, slightly over four Swiss francs were needed to purchase a U.S. dollar. After a system of floating exchange rates replaced the fixed exchange rate system in the 1970s the value of the Swiss franc rose relative to the dollar. In the late 1990s about 1.5 Swiss francs were needed to purchase a U.S. dollar.
Switzerland is home to the world’s largest gold market, and Swiss residents have always enjoyed unfettered freedom to hold gold, unlike citizens in the United States where the government outlawed the domestic ownership of gold in the decades immediately preceding and following World War II. Bank notes in Switzerland are backed by a minimum of 40 percent gold reserves, suggesting that gold is still important in Switzerland, even though none of the world’s major trading partners—including Switzerland—is now on a gold standard.
See also:
Chown, John F. 1994. A History of Money.
Cowitt, Philip P. 1989. World Currency Yearbook.
Einzig, Paul. 1970. The History of Foreign Exchange. 2d ed.

Swiss Banks

Swiss banks enjoy a worldwide reputation for protecting the identity of depositors. This important characteristic helped Switzerland grow to one of the world’s major banking centers in the twentieth century. Another factor contributing to the growth of Swiss banking is Switzerland’s position of neutrality. On 20 May 1815 the Vienna Congress established the permanent neutrality of Switzerland among the European powers—a position the superpowers of the world honored through two great wars in the twentieth century.
Switzerland was not a pioneer in early European banking. Geneva was the first of the Swiss cities to become a banking center. By 1709 Geneva boasted of a dozen bankers who left a name in Swiss financial history, and Louis XIV floated loans in Geneva to finance his wars. Geneva bankers kept close ties with France and remained involved in financing French public debt until the end of the nineteenth century.
Basel developed a significant banking industry only in the nineteenth century. In 1862 the Basel Register listed 20 banks, 9 of which were exclusively devoted to banking.
Financial activity of various sorts appeared in Zurich during the sixteenth century. In 1679 an injunction from the city council prohibited a reduction of interest rates from 5 percent to 4 percent. Merchant bankers, who accepted deposits for investment in securities, appeared in the middle of the eighteenth century. Zurich waited until 1786 to see the formation of a bank in the broad sense. In 1805 the official register of Zurich reported two banks devoted exclusively to banking.
By the eve of World War I Switzerland ranked as one of the international financial centers. Six large banks, Swiss Credit Bank, Swiss Bank Corporation, Union Bank of Switzerland, Trade Bank of Basel, Federal Bank, and Swiss People’s Bank, controlled a system of branches throughout Switzerland. These banks floated international loans for European governments and railroad and other industrial concerns in the United States. After World War I, inflation in the currencies of the former belligerents made Switzerland more attractive as a safe haven.
In the post–World War II era three of the big banking houses remained in business, the Swiss Credit Bank, the Swiss Bank Corporation, and the Union Bank of Switzerland. There was also a large network of smaller banks, rural loan associations, and branches of foreign banks. In 1968 Switzerland had a population of 6 million people and 4,337 banking offices, which added up to one banking office for every 1,400 individuals.
In the 1930s Switzerland enacted laws that strengthened the anonymity protection of depositors in Swiss banks. During that time some countries prohibited citizens from holding assets abroad on pain of criminal penalties, and even sent agents into Switzerland to track down assets owed by their own citizens. On the other hand, some people wanted to keep deposits in Switzerland in case they had to make a hasty departure from their homeland for political or racial reasons. Swiss banks began opening the so-called numbered accounts, which substantially reduced the number of bank employees who knew the name of a depositor. Also, the Swiss government claimed no right to pry into bank accounts either to collect information on its own citizens or the citizens of foreign countries. Governments around the world have lodged complaints against Swiss banks for holding deposits of foreigners evading taxes. Switzerland recently has yielded to pressure to open up information on deposits when criminal activity and tax evasion are involved.
In 1997 it came to light that Switzerland, thought to have been a neutral country in World War II, acted as a banking center for Nazi Germany, and that Swiss commercial banks had accepted three times as much gold in deposits from Nazi Germany’s central bank as was originally thought. Jewish groups launched a class-action lawsuit in an effort to force Swiss banks to compensate Holocaust victims, emphasizing that Swiss banks held on to dormant accounts of Holocaust victims and laundered millions of dollars in gold stolen from Jews. On 12 August 1998 representatives of Holocaust survivors and Swiss banks announced a $1.25 billion reparation settlement to compensate Holocaust survivors and their heirs.

Bauer, Hans. 1998. Swiss Banking: An Analytical History.
Cowitt, Philip P. 1989. World Currency Yearbook.
Fehrenbach, T. R. 1966. The Swiss Banks.
Ikle, Max. 1972. Switzerland: an International Banking and Finance Center.
New York Times. 1998. Settling Switzerland’s Debts. 16 August, at 1.

Sweden’s Paper Standard of World War I

During World War I Sweden sought to weaken the link between gold and domestic currency in an effort to tame inflationary forces. Sweden’s policy was unprecedented, considering that the gold standard usually receives strongest support from those quarters where inflation is most feared. The nineteenth century had seen several countries abandon a silver standard to avoid currency depreciation, reacting to the depreciation of silver relative to gold, which was a stronger metal monetarily and clearly the preferred bulwark against inflation.
Sweden had adopted the gold standard in 1873. A gold standard country must stand ready to buy and sell gold at an official price in its own currency. A country’s commitment to sell gold at an official price in its own currency puts a strict limit on the volume of paper money issued, acting as a guard against the issuance of inflationary levels of paper money. When a country suspends gold payments, as often happens during times of fiscal stress, such as wars, the country expects to see its currency depreciate, and domestic prices go up.
The other side of the gold standard is the commitment to buy gold at an official price, a commitment that Sweden suspended in February 1916. During World War I Sweden supplied war materials and supplies to the belligerents and often received gold in payment. Foreign currencies sold at a discount relative to the Swedish krone, and gold would have sunk in value relative to the krone if the Swedish central bank had not been committed to buy gold at the official price. The influx of gold and foreign currencies would not have created difficulties if Sweden’s opportunities for importing foreign goods had increased proportionately with its accelerating opportunities for export. Wartime conditions, however, favored exports over imports.
Sweden found itself faced with a swelling domestic money supply, fueled by gold inflows, and a shrinking supply of goods for domestic consumption as exports rose relative to imports. The Swedish central bank saw itself having to buy large quantities of gold that paid no interest. Also gold was sinking in price worldwide, which acted to drag down the values of gold-standard currencies, such as the Swedish krone. These difficulties converged to push Sweden into unhinging itself from the gold standard.
Freed from an obligation to buy gold at an official price and to mint all gold brought to the mint, Sweden continued to import gold, but at reduced prices, and to augment the domestic money supply. Between the first quarter of 1916 and the last quarter of 1917 the circulation of paper money increased 62 percent and prices climbed 65 percent.
Although nullifying the gold standard did not spare Sweden from a bout of inflation, it restrained the levels that inflation reached. In the Stockholm foreign exchange market, the Swedish krone rose in value relative to the U.S. dollar, the Swiss franc, and the British pound. The krone rose about 10 to 25 percent above the value it commanded when it was on a strict gold standard, and Swedish coins were worth 10 to 25 percent more than the value of their gold content.
The Swedish experience of World War I was a reminder that precious metals do not offer fail-safe protection against inflation, as Europe discovered after the influx of gold and silver from the New World.
See also:
Cassel, Gustav. 1922. Money and Foreign Exchange after 1914.
Lester, Richard A. 1939. Monetary Experiments.

Sweden’s First Paper Standard

Between 1745 and 1776 Europe had its first experience with an inconvertible paper standard. Sweden had been the first European country to introduce bank notes early in the seventeenth century, but by the mid-eighteenth century England and France had both made use of bank notes, and France had furnished Europe with its first example of a paper money debacle. Neither England nor France had officially adopted a paper standard when the Swedish government put Sweden on an inconvertible paper standard.
In the eighteenth century Sweden had a parliamentary government, in which two parties vied for power. One party, the “Hats,” identified with the exporting industries, the military, the nobility, and the monarchy, and generally favored policies of foreign expansion and increased influence abroad. By 1720 Sweden had lost its Baltic empire, much to the chagrin of the Hats, who wanted to maintain Sweden as a player in European politics. The other party, the “Caps,” represented agricultural interests, and what might be called the commoners. The Caps’ preference for policies of pacifism earned them the nickname Nightcaps, shortened to Caps, because they supposedly wanted to sleep while the great powers of Europe passed Sweden by.
Before the adoption of a paper standard, Sweden, home to vast copper reserves, had functioned on a copper standard. Copper, worth less than gold and silver per unit of weight, was bulky and awkward to transport in large monetary values, and Sweden turned to bank notes as a convenience. In the mid-seventeenth century Sweden saw its first suspension of bank note convertibility and bank panic. Bank notes fell into disfavor at first, but the Swedish public found bank notes much more convenient than copper coinage, and bank notes returned to circulation by popular demand rather than government policy.
The Hats held the upper hand in Parliament from 1739 until 1765 and pursued a policy of inflationary war finance, a policy opposed by the Caps. Between 1741 and 1743 the financial strain of war with Russia prompted the Swedish government to look for salvation in the printing press. Because copper was bulky, the sheer cost of transporting copper enabled the government to vastly increase bank notes without triggering an export of copper coins. With copper reserves held intact, the convertibility of bank notes into copper was not immediately threatened.
The issuance of bank notes continued, partly for subsidies to manufacturers, and by 1745 the Swedish authorities imposed an inconvertible paper standard. Unlike the suspensions of payments in the seventeenth century, the public did not panic, but inflation rose to the forefront of economic problems. The Swedish currency depreciated on foreign exchange markets, making foreign goods much more expensive in Sweden and Swedish exports cheaper in foreign markets.
The inflationary policy irritated the Caps, who wasted no time kicking the monetary rudder in the opposite direction when they returned to power in 1765. The Caps imposed a deflationary policy. As Swedish currency appreciated in foreign exchange markets, foreign imports became cheaper in Sweden, but Sweden’s export industries had to slash prices to remain competitive in foreign markets. Prices in export industries fell faster than wages and raw material prices, plunging the export industries into a depression.
Political opposition to the Caps’ monetary policy mounted as economic distress defused throughout Sweden and the Caps fell from power in 1769. The Caps’ experience with disinflation policies inspired a political drama that history would see replayed again whenever democratic governments imposed deflationary policies. Unemployment, bankruptcies, and virtually every other form of economic discomfort invariably accompanies disinflation and deflationary policies, and often democratic governments find it difficult to pursue these policies for extended time periods.
The Hats regained power and reverted to inflationary policies before the Caps returned briefly to power in 1771 through 1772. The political sphere began to mirror the turbulence in the economic sphere, and in March 1772 a bloodless coup d’etat engineered by the Hats displaced Sweden’s parliamentary government with a constitutional monarchy. Sweden’s parliament survived, shorn of much of its power, and the parties of the Hats and Caps disappeared. In 1776 Sweden established a silver standard, completely breaking with the copper standard and putting an end to inconvertible bank notes.
Sweden’s eighteenth-century episode of monetary disorder demonstrates how a society, exhausted with war, may find inflationary policies attractive, and how these policies are associated historically with political instability.
See also:
Chown, John F. 1994. A History of Money.
Heckscher, Eli F. 1954. An Economic History of Sweden.
Samuelsson, Kurt. 1968. From Great Power to Welfare State.

Sweden’s Copper Standard

Like most European countries, Sweden emerged from the medieval period on a silver standard. In 1625, however, Sweden monetized copper and switched to a
bimetallic standard based on copper and silver. As often happened under bimetallic systems, one metal currency drove out the other metal currency, and in Sweden’s case copper currency displaced the silver currency in domestic circulation, putting Sweden on a copper standard. Sweden’s copper standard remained technically in effect until 1776, but its operational importance ended in 1745 when Sweden introduced an inconvertible paper standard.
Sweden turned to a copper standard not because of any perceived commercial advantage, but because copper mining was an important industry in Sweden, and the Swedish government sought to increase the demand for copper. Gustavus Adolphus, king of Sweden from 1611 to 1632, felt that drawing copper into use as circulating money would reduce the supply of copper in world markets and lead to an increase in copper prices. Spain, then the foremost power in Europe, had furnished a recent precedent for the monetization of copper when it debased its own silver coinage with a copper alloy. Vellon was the name given to Spain’s debased silver coinage, which in the first half of the seventeenth century became virtually all copper in content. Spain’s de facto copper standard supplied the first stimulus to the copper industry, causing the Swedish government to look to the copper industry, which it controlled, as its main source of revenue.
Because the purpose of the copper standard was to create a domestic demand for copper, it would have served no purpose to reduce the copper weight of the copper coinage relative to face value. Therefore, the copper coins were full-valued coins, with the face value of the coins close in value to the bullion value of the copper. Because copper per unit of weight was equal to about one-one-hundredth the value of silver, copper coins on average had to be about 100 times the size of silver coins, and the sheer size of the copper coins seems to have been the major drawback of Sweden’s copper standard. In 1644 the Swedish government issued probably the heaviest coins in history, 10-daler copper plates weighing over 43 pounds each. In 1720 a Danish diplomat wrote home somewhat humorously about Sweden’s copper coinage:
A daler is the size of a quarto page … many carry their money around on their backs, others on their heads, and larger sums are pulled on a horsecart. Four riksdaler would be a terrible punishment for me if I had to carry them a hundred steps; may none here become a thief. I shall take one of these dalers back to you unless it is too heavy for me; I am now hiding it under my bed.
(Heckscher, 1954)
The transportation of any sizable sum of copper coins required the use of wagons, and problems associated with the transportation of the tax revenue came to the attention of the highest councils in Sweden’s government.
The copper standard failed to increase world prices of copper, apparently because Sweden increased domestic copper production to meet the increased demand for copper as coinage. Nevertheless, Sweden’s copper standard did lead to Europe’s first peacetime flirtation with paper money. Copper mines discovered that it was easier to pay miners in copper bills, representing ownership of copper, rather that the bulky copper itself. In 1661 Sweden saw its first bank notes based upon the copper coinage. These bank notes, the first in Europe, were an immediate success, being much more convenient than the bulky copper coinage. In 1656 Johan Palmstruch had received royal permission to form a bank and five years later his bank started issuing bank notes. Paper money experiments, however, seem to be especially vulnerable to the pitfalls of success. Palmstruch’s bank overissued bank notes, the public staged a run on the bank, and the bank failed. The failed bank,
however, was purchased and reorganized as the Riksbank, now the oldest central bank in Europe.
Despite the fear inspired by the collapse of Sweden’s first note-issuing bank, in 1745 Sweden suspended its copper standard and issued irredeemable bank notes. Monetary disorder marked Sweden’s paper-money experiment until 1776 when Sweden returned to a pure silver standard.
See also:
Heckscher, Eli F. 1954. An Economic History of Sweden.
Samuelsson, Kurt. 1969. From Great Power to Welfare State.
Weatherford, Jack. 1997. The History of Money.

Suspension of Payments in War of 1812 (United States)

The British attack on Washington in 1814 unnerved the public’s confidence in a banking system that had overextended itself in the issuance of bank notes. Banks in the Washington area suspended payments on their obligations to redeem bank notes, touching off a round of payment suspensions that spread to every region except New England.
In the early banking system individual banks issued their own bank notes, which they were obliged to redeem in gold and silver coin (specie). Bank customers received bank notes instead of a checking account and checkbook, and each bank held reserves of coin to redeem bank notes, just as a modern bank holds vault cash and other reserves to redeem checking accounts. A suspension of payments meant that banks no longer redeemed their bank notes with specie, putting the United States on an inconvertible paper standard. An inconvertible paper standard is a monetary system based on paper money that cannot be converted into precious metal at an official rate.
The War of 1812 contributed only part of the pressure on the banking system that preceded the crisis. From 1799 until 1811 the First Bank of the United States oversaw the banking system and made sure that individual banks could redeem their bank notes in coin. In 1811 the First Bank lost its charter from the United States government, substantially removing what regulation there was of state-chartered banks. From 1811 to 1815 the number of banks increased from 88 to 208, and the value of bank notes in circulation rose from $23 million to $110 million. The capitalization of the banking system only doubled during the same time, and most states allowed banks to issue bank notes without regard to capital or reserves. The circulation of bank notes had outgrown the supply of gold and silver, leaving the banking system floating on a thin film of public confidence. After the suspension of payments these bank notes circulated at discounted values, usually between 10 and 20 percent, but some notes from Kentucky banks were discounted 75 percent.
The United States government encountered difficulty financing the war because its bonds not only sold at a discount, but it received payment in depreciated bank notes. In addition to interest-bearing bonds, the Treasury issued $5 noninterest-bearing notes that were not legal tender but were acceptable as payment of taxes.
Congress soon regretted its decision not to renew the First Bank’s charter, and in 1816 granted a charter for the Second Bank of the United States. The bank opened for business on 17 January 1817 and by February had negotiated agreements with state banks in major cities to resume redemption of bank notes in of gold and silver coins.
The suspension of payments put the United States on an inconvertible paper standard for over two years, a rather short time considering that England from 1797 until 1821 was on an inconvertible paper standard. Just as England avoided the excesses of the paper money of French Revolution, the United States during the War of 1812 avoided the excesses of paper money that arose during the American Revolution. Today, virtually all countries are on an inconvertible paper standard.
See also:
Chown, John F. 1994. A History of Money.
Hepburn, A. Barton. 1924. A History of the Currency of the United States.
Meyers, Margaret, G. 1970. A Financial History of the United States.
Timberlake, Richard H. 1978. The Origins of Central Banking in the United States.

Sugar Standard of the West Indies

From the mid-seventeenth century sugar became the reigning monetary standard on the Leeward Islands, and to a lessor extent on Barbados and Jamaica. Jamaica, because of its importance as a naval base as well as a favorite of the buccaneers, was always furnished with a plentiful supply of coins, but nevertheless made use of sugar money. Barbados and the Leeward Islands perennially wrestled with coinage shortages, forcing the expedient of commodity money. Before sugar rose to the forefront, tobacco met the need for a medium of exchange and unit of account in the West Indies.
A Barbados law of 1645 concerning family prayers provided that “whomsoever shall swear or curse, if a master or freeman he shall forfeit for every offense 4 pounds of sugar; if a servant, 2 pounds of sugar” (Einzig, 1966). Fees and wages were also measured and sometime paid in Muscovado or brown sugar at rates established by an act of the legislature. A rate of 10 shillings per 100 pounds of sugar prevailed for a while as the monetary standard of Barbados.
Sugar displaced tobacco a bit later on the Leeward Islands. Laws enacted in 1644 and 1688 declared that a fine of a 1,000 pounds of good tobacco in a roll awaited anyone found guilty of commerce with the heathen or Sabbath breaking by “unlawful gaming, immoderate and uncivil drinking—or any other prophane and illicious Labours of the Week-days, as digging, hoeing, baking, crabbing, shooting and such like indecent actions” (Einzig, 1966).
The Leeward Islands turned to sugar as the monetary commodity after midcentury. In 1668 Montserrat paid an “able preaching Orthodox Minister” a salary of “fourteen thousand pounds of sugar or the value thereof in Tobacco, Cotton Wool, or indigo.” The going rate for sanctifying a marriage was 100 pounds of sugar or “the value thereof in Tobacco, Cotton Wool or Indigo.” For about 30 years the sugar standard on the islands maintained a stable parity for sugar, equating “five score pound of good dry merchantable Muscavado Sugar” to 12 shillings and 6 pence.
By the beginning of the eighteenth century metallic currency had made inroads into the Leeward Islands’ monetary system. An act of 1700 provided that coinage could be substituted for commodities in payment of debts at a rate of:
  • 12 shillings and 6 pence for 100 pounds of muscavado sugar
  • 2 shillings for one pound of indigo
  • 9 pence for one pound of cotton wool
  • 1 1/2 pence for one pound of tobacco or ginger
  • (Einzig, 1966)
Sugar played a modest monetary role in the eighteenth century. On 24 August 1753 the assembly of Nevis considered, but failed to enact, legislation making sugar and other commodities legal tender for debts in an attempt to ease a shortage of metallic currency. In 1751 Jamaica, which did not have a coin shortage, enacted legislation making sugar legal tender “where both parties agree for payment in sugar and other produce of this kind.” In 1756 up to two-thirds of a tax obligation in Antigua could be paid in
sugar. In 1784 St. Christopher enacted revenue legislation stating that, “And whereas it may be burdensome and oppressive to the inhabitants of this Island to pay the amount in specie, be it enacted that the payment of the taxes aforesaid may be in cash, sugar, or rum at the option of the person or persons liable to pay the same” (Einzig, 1966).
By the end of the eighteenth century coins had edged out commodity money in the West Indies.
See also:
Einzig, Paul. 1966. Primitive Money.
Nettels, Curtis P. 1934. The Money Supply of the American Colonies before 1720.
Quiggin, A. Hingston. 1949. A Survey of Primitive Money.