Economic History Working Papers No: 223/2015 Power Politics and Princely Debts: Why Germany’s Common Currency Failed, 1549-1556 Oliver Volckart London School of Economics Economic History Department, London School of Economics and Political Science, Houghton Street, London, WC2A 2AE, London, UK. T: +44 (0) 20 7955 7084. F: +44 (0) 20 7955 7730 LONDON SCHOOL OF ECONOMICS AND POLITICAL SCIENCE DEPARTMENT OF ECONOMIC HISTORY WORKING PAPERS NO. 223- SEPTEMBER 2015 Power Politics and Princely Debts: Why Germany’s Common Currency Failed, 1549-1556 Oliver Volckart London School of Economics
[email protected] Abstract The article argues that in the first half of the sixteenth century the need to avoid rounds of competitive debasements was the primary motive for the creation of a common currency valid in the whole Holy Roman Empire. In the years 1549 to 1551, the estates came close to achieving this. In contrast to what is suggested in the literature, their attempt did not fail because the Empire was economically poorly integrated or the will to co-operate was lacking. Rather, it failed because during the talks, the estates lost sight of the original motive, the princes favouring a bimetallic system that they hoped would allow them deflating the real value of their debts, and Charles V undervaluing the taler in the hope that this would weaken political opponents. These decisions antagonised important actors; when it proved impossible to enforce them, the Empire’s common currency failed. Keywords: Monetary history, currency union, early modern Germany JEL codes: E42, E52, N13, N23, N43 I.