Articles Economic Alternatives, 2018, Issue 3, pp. 419-434 Byzantine Yperpyra And Venetian Ducats: Missing Pieces In The Puzzle Of Monetary Theory

Irene Sotiropoulou* 1 century, together with various other currencies circulating in the island. Summary The other case is the Venetian ducat The paper stems from a greater itself, a golden coin minted by Venice from late 13 th century onwards and well known for project on economic history concerning the its quality of gold and value in international monetary system and policies of medieval trade in both Mediterranean and Europe. Yet, and renaissance Venice, with a special focus it seems that the Venetians preferred to use on Venice’s colony of Crete. The Venetian other international currencies in domestic monetary system included various currencies, trade. There has been evidence that in some both minted and virtual, and it was intertwined cases the never-debased golden ducat was with the currencies that already existed or not accepted in local transactions. appeared in the Eastern Mediterranean during The paper attempts to set the grounds the Venetian imperial era. I examine actual for further investigation and discussion historical examples through the lenses of concerning monetary phenomena and the both mainstream and heterodox monetary issues those raise for monetary theory. theories in order to show the complexity of Keywords: Venice, Crete, monetary monetary practices under real conditions and history, yperpyron, ducat, monetary theory how the available monetary theories need JEL Codes: B50, E42, N13, N23, P4, P5. further sophistication in order to explain and systemize our understanding of monetary 1. Introduction phenomena. his paper emerged out of a larger To make the research inquiry clearer, Tresearch project concerning the I focus on two examples that seem to run monetary structures and policies of Medieval counter to what current assumptions about and Renaissance Venice. At this stage, the monetary structures: project has as a case study the island of One case is that of the Byzantine yperpyron, Crete which was a Venetian colony for more a golden coin of the Eastern Roman Empire than 400 years. However, this paper combines which seems to survive in Crete island, both information that goes beyond the coasts of the the Venetian rule (starting in early 13th century) island and even beyond the time period of the and the end of the Byzantine Empire itself (in Venetian rule in Crete. 1453) and remained in circulation, mostly as The main aim of the paper is to raise the questions that challenge monetary theory as it a virtual currency or accounting unit, until 17th is generally known today, based on historical * Independent researcher information that refers to the Venetian era. 419 Byzantine Yperpyra And Venetian Ducats: Articles Missing Pieces In The Puzzle Of Monetary Theory Answering those questions exceeds the scope found to have circulated together, even used of this paper. What is attempted is to refine at the very same time to calculate the value those questions through the use of specific of a transaction or the main payments of a examples of monetary phenomena. loan. The distinction between legal and non- The next section describes the features legal tender meant that authorities could also of the monetary system of the Venetian era. accept foreign currencies as means of tax Section three presents the case of Crete or fine payments and they could also, like in Island as a colonial economy under the rule the case of Crete, compromise to use in their of Venice. Section four presents the research accounts currencies of the previous empire framework and the two case studies I use in which ruled the island (Eastern Roman – this paper, i.e. the yperpyron used in Crete Byzantine yperpyron currency). The above under Venetian rule and the non-acceptance coincided with the existence of both minted of Venetian golden ducats in 15th century and virtual currencies in the same economy, Crete and in 18th century Peloponnese (South which means that accounts could be done of Greece), which has been a Venetian in a different currency that the one the territory for some time in the Middle Ages. payment was made at the first place, and that Section five explores the importance of linking currencies that were literally minted might be those phenomena to the monetary theories used as virtual units of account in a transaction of today and of identifying the limitations without ever being transferred from one party the theories have for our understanding of of the contract to the other (Antoniadi 1967; actual economies. The implications for future Bacharach 1994; Stahl XXXX, 1985, 2000, research are described in the last section six 2007, Travaini 2006, Tucci 2001, Drakakis & instead of conclusions. Sidiropoulos 2004, Liata 1996: 13-82, 119- 2. The variety of monies in Medieval 169, Mazarakis 2004, Mueller 1980, Papadaki 2000, Ploumidis 1972, 2006, Tsiknakis 2005, and Renaissance Mediterranean Spufford 2014). The multiplicity of monetary instruments As one may anticipate, this variety and that circulate and are used on the local multiplicity of monetary instruments coincided and international levels of the economy with a variety of fake, forged or illegally minted of the region is a typical characteristic of currencies. Apart from coins minted by legal medieval and renaissance monetary systems mints beyond the volume of coins set by in the Mediterranean coasts and in the authorities, various mints that were under the European continent in general. The variety control of local lords were minting currencies of currencies appearing in transactions following (copying) the matrices of the legal is such that impresses any historian or tender currencies. In some cases, currency economist. This variety existed without the wars among competitor trade cities meant that digital and communication technologies that each city used the metal or just the physical contemporary economies have at hand. coins of the other to (re)mint their own or minted Moreover, the variety of monetary coins of the other cities that were debased so instruments permitted various distinctions that trust in the currency of the competitor city among them and actually each categorization be undermined. Forgery of currency and fake led to different groupings of the currencies coins of all types were all over the place and that go beyond our contemporary criteria even the assigned authorities proceeded with for understanding a monetary system. For debasement of their own currency adding to example, in the same economy, whether local the complexity and lack of confidence to the or regional, foreign and local currencies are monetary system (Stahl 2000, Liata 1996: 171- 420 Economic Alternatives, Issue 3, 2018 Articles 198, Drakakis & Sidiropoulos 2004, Mueller high value minted coins with high percentage 1980). of precious metal, or so we anticipate. Reality, A major distinction in this very complex however, has been much more complex. monetary situation has been the one between gold and silver and between precious (gold and 3. The case of Venetian Crete silver) and non-precious metals (copper and/ I picked the case of Venetian Crete to or other mixed alloys). In other words, there study the monetary system(s) of Eastern was a plurimetallic or multimetallic monetary Mediterranean for various reasons: system where on the one hand there existed One reason has been the advice by the two most precious metals, gold and silver, an anonymous referee in 2011 to look for as coin bases, and on the other, the lower- black money in the Middle Ages in order to priced metals like copper, mixed alloys and understand how parallel currencies today metal alloys which contained low quantity of are functioning or are expected to function. silver. Another reason is the need for a case study In this context, the currencies were that falls within the territory of contemporary distinguished in two major categories: low Greece. Although medieval economies are value currencies and high value currencies. quite different from contemporary economic The low value currencies could be virtual or structures, I consider historical sequences of physically minted and they could contain no major importance for both the contemporary silver or low percentage of silver, which ended socio-economic structures and the social/ up to their oxidation and their dark color – this historical experience that a certain community is why they were called under the generic term or society acquired through time. of black money. The high value currencies The third reason has been that Crete, given could also be virtual or physically minted its geographical, climatic and cultural position but they contained high percentage of high in the centre of the Mediterranean Sea, was an quality silver or gold – or, in case of the virtual ideal case to explore the phenomenon of low version, they were imagined to contain this and high value currencies circulating together. precious metal. The latter did not lose or were Crete has always been a trade connection point not perceived to lose their metallic brightness, for Europe, Middle East and North Africa and has connected to the value of the metal they been even more so during the Middle Ages and consisted of, and this is why they were called Renaissance. Crete being a colony of Venice white money (Stahl 1985, 2000, Drakakis & for more than four hundred years was also one Sidiropoulos 2004, Ploumidis 2006, Mueller more criterion to identify my case study: I wanted 1980, Spufford 2014, Cipolla 1956). to study the Venetian monetary system not from The practical aspect or feature of those the point of view of the metropolis but from the two broad currency categories has been that point of view of the colony. white money, as high valued money, was The Venetian monetary system is one of used in big transactions, like trade (especially the most complex ones historically. One could international trade) and wages of highly consider Venetian economy as a system skilled labour. Black money on the other which combines both feudal and capitalist hand, given that its value was low, was used features, having developed during the age in minor transactions and was the currency of a major economic transition, i.e. from type preferred for everyday life activities of late Middle Ages to the early capitalist era. the majority of the people (Stahl 2000, 2007, Concerning Crete Island though, the historical Mazarakis 2004, Liata 1996, Mueller 1980, framework is somewhat more limited: Crete Spufford 2014). Everyone though was after the became officially a Venetian colony in 1204 421 Byzantine Yperpyra And Venetian Ducats: Articles Missing Pieces In The Puzzle Of Monetary Theory during the 4th Crusade and Venice acquired examine how parallel currencies have practical control of the island in 1211 after functioned in a real, historical example of war with the Genoese. Effective Venetian rule an economy about which we have at least of Crete lasted till 1645, when Chania was adequate documentation, peripheral literature conquered by the Ottomans, while Venice and archives to do research with. We know retained control of Candia/Herakleion and its that Venice for several centuries had no “white suburbs till 1669 during the so-called Cretan money” as such and adopted the silver grosso war (Detorakis 1994: 143-244, Norwich 1989: in about 1194, i.e. about 10 years before 542-560). Of course, Venice and its monetary Venice became a Mediterranean Empire system continued existing in European affairs having colonies from the Italian mainland to for about one and half century after Crete Istanbul, Crete and Cyprus and various trade passed under the rule of the Ottoman Empire. points all over the Mediterranean Sea. About Venetians were very good in keeping 90 years after the adoption of the silver or archives and documentation and this is first white currency of Venice, the Venetian yet another reason that makes Venetian authorities issued the golden ducato or ducat, economic history and Crete as a more-than- a coin with high quality golden metal which 400-years Venetian colony a good case study was never debased and was issued/minted to research the monetary policies of Venice. until the end of Venice as an individual state. Part of the required documents is in Crete, Apart from the silver grosso and the but a major part of Venetian archives are kept golden ducat and their various issuance in Venice and this research project aspires series, the Venetian monetary system had to investigate the original documentation also other currencies, physically minted or concerning monetary policies. virtually circulating. They were all of lower Finally, I chose Crete because, considering value as they contained no or very small that it is a big island with really good quantities of precious metal (such as silver). conditions of climate and resources, one Most currencies were regularly debased or could not attribute easily economic or financial abandoned by the Venetian authorities. Their problems to lack of resources and limitations instability in terms of value and public trust was of environmental character. Thus, the human in contrast with the stability of fineness and or social factor is anticipated to keep its major value of the precious-metal-based currencies, role in economic prosperity or failure. particularly the ducat (Papadopoli 1871, 1893, The reasons of convenience like Stahl XXXX, 1985, 2000, 2007, Drakakis & knowledge of necessary languages (Greek, Sidiropoulos 2004, Mazarakis 2004, Mueller Italian, Latin) and access to literature and 1980, Spufford 2014). archives that exist in Crete although they are Within this historical framework, my query not yet digitised also played an important role takes the position that just like any other to choose this case study. In that sense, I am institution, the institution of money affects the grateful for the resources the island provides economy as such. In other words, if money is to researchers and I hope that this study will not a veil of economic activity but one among show the relevance of this unique material for many factors that interact with the activity and contemporary research. conditions that individuals and social groups 4. The research framework and the two face, then how would this complex monetary system work in reality? phenomena – case studies I examine such a complicated monetary As mentioned above, I chose this research system through a historical materialist lens, topic because my intention has been to using post/de-colonial theory, feminist, 422 Economic Alternatives, Issue 3, 2018 Articles ecological and other critical studies currency of the pre-Venetian era continues approaches, with the aim to see the monetary to circulate. “Circulation” here of course instruments in their articulation but also with has various aspects, one of which is that their coeval modes of production. Of major yperpyron in Crete seems to have become interest are phenomena or problems that virtual, i.e. an accounting unit that is used in seem to defy the already known monetary the contracts to denominate value, although theories, particularly the mainstream ones. in some of them it is stated explicitly that the The intention, therefore, of this paper is to amount is paid in another currency of lower set additional frameworks for research in value. The persistence of yperpyra in the monetary economics. Cretan economy of the Middle Ages and the To guarantee that my exploration is not Renaissance is even more striking if one takes lost within vast historical studies and archives, into account the fact that the Eastern Roman I chose two phenomena, used here as my Empire (Byzantium) ceases to exist in 1453. specific case studies, to start my investigation Yperpyron outlives the Empire for more than with. The two case studies are two different 200 years (Antoniadi 1967, Pallastri 2005, currencies both used within the colonial Crete Papadopoli 1871, Stahl 1985, Kalitsounakis and greater Venetian colonial Greece in 1928, Xanthoudidis 1912, Tsiknakis 2005). general. At the same time, one should also take The first case is the currency of yperpyron. into account the existence of the Venetian The yperpyron was first introduced in 1092 currencies, as well as other currencies issued within the framework of the monetary reforms by other medieval authorities, that circulated undertaken by the by Alexios I Komnenos, in Crete just like in the rest of Eastern Emperor of the Eastern Roman Empire. Mediterranean. That is, the yperpyron persists It was a golden coin widely used in the despite the fact that there are other currencies Eastern Mediterranean until the first demise of the Eastern Roman Empire in 1204 by the that are tangible and made of precious metal, Crusaders. The 4th Crusade took place under not only to use in their physical appearance the backstage leadership of Venice, which but also to account with. Why do the people in became an Empire by acquiring lands of the Crete insist on using yperpyron as a currency Eastern Roman Empire, plus one third of the and/or unit of account? Why do even Venetian city of Istanbul. authorities compromise to use this currency in In Crete, yperpyron seems to exist when their documents? the Venetians take the rule over the island We should note here the position of the and it continues appearing in contracts and golden ducat, which is the other case study documents until the end of the Venetian rule, of this paper. Venetian ducat has been one i.e. in the second half of 17th century. It also of the finest golden coins in terms of gold exists in at least two versions as money of purity and non-debasing minting. In other account or virtual currency, which means that words, the Venetian ducat has never been when we talk of yperpyron as virtual currency, debased and the Venetian authorities took we generalise the use of various virtual every possible measure to keep this currency currencies with the same name encountered intact from both internal debasement and in contracts and other documents (Lane external falsifications. One would anticipate & Mueller 1985: 268-275, Xanthoudides, that the currency would be very much sought 1912). In other words, despite of the Venetian in international trade – which happened in administration and the involvement of Crete reality after several decades only after its in the Venetian trade routes and policies, a introduction. 423 Byzantine Yperpyra And Venetian Ducats: Articles Missing Pieces In The Puzzle Of Monetary Theory In general terms, what happened with the The other case of refusal to use golden ducat could fit the already known monetary ducats as a currency of payment takes place theories: first, its popularity in areas where in 18th century Greece, i.e. some decades Venetian trades bought goods from led to the before the demise of the Venetian Republic, concentration of Venetian gold outside Venice. when there were no longer Venetian colonies Liquidity problems emerged exactly because in the region. However, the second case takes people tried to acquire and then keep the certainly place in times when the precious golden Venetian coins. To that extent, what metal of a coin was its most important feature, we call today as Gresham’s law has been but the golden ducats are not acceptable in fulfilled, and other currencies of lower value some local markets. The information I have flooded the Venetian market although the found pertains to Nafplion city in Peloponnese currency that everyone wanted was the ducat in 1712. Venetian ducats, no matter how fine (Bacharach 1994, Stahl 2000, Papadopoli they can be, were no longer acceptable for 1893, Liata 1996: 119-169, Day 2002, Drakakis transactions, despite the fact that the Venetian & Sidiropoulos 2004, Mueller 1980). Republic still existed, albeit in decline. The However, apart from this general picture, case is referenced by Liata (1996: 68) based we have various discrepancies: one is the on a traders’ letter from the archive of G.Melos. above mentioned one in Crete, concerning The contrast is huge and it becomes even the yperpyron currency. Another has been greater if one takes into account that at those that traders did not always prefer to carry out times it was very easy to make profit out of transactions in ducats – not even the Venetians using the gold of a coin to mint new ones, always wanted to transact in ducats. At some whether genuine or legal tender (as many point in time, this coincided with the choice states of the era did), or fake and falsified of hoarding the coins or of having activity in (as mane falsifiers or local lords did to markets where it was more convenient or more enhance their personal finances). Moreover, profitable (and the question is why this was tax authorities (in this case, Ottoman tax so) to transact in other currencies, whether authorities) always welcomed and sometimes those were also golden or of equivalent imposed taxes in fine gold coins of any issue, value to the golden ducat or of lower value which meant that demand for gold coins never (Bacharach 1994, Antoniadi 1967, Stahl 2000, ceased to exist. 2007, Mueller 1980, Spufford 2014). Therefore, even if we take into However, we have cases during both the consideration the fluctuations in the availability peak of Venetian trading prevalence (1344, of precious metals that were prominent in the 14th century) and of the decades when Venice entire Medieval and Renaissance eras, and was in decline (1712, 18th century), where the the other reasons that affected the supply and golden ducat, that fine-gold never-debased demand of precious metals, minted or not, like currency was not accepted as a payment at political payments between sovereigns or wars all. The first case is mentioned in Stahl 2000 cutting off trading routes (Spufford 1988: 122- (51-55, 216-223) where a trader in Crete 264, 339-377, Cipolla 1956, Lane & Mueller prefers to be paid in soldini (coins with silver 1985: 134-159), the argument that supply and but not with the fineness and weight of the demand are enough to explain the rejection old silver grosso, also coins that were heavily of a gold coin is only partially valid. Even if forged from time to time) rather than ducats. it holds for the physical coins, this is not so The explanation given is that the ag(g)io obvious for the virtual currencies of the time. (exchange fee) for turning ducats to silver Theoretically, a virtual currency has unlimited coins was not profitable at the time. supply (unless it is limited by agreement, like 424 Economic Alternatives, Issue 3, 2018 Articles it happened with bitcoin, which is based on 5.A. Questions about the historical the logic of gold standard) or at least it has a monetary phenomena supply that can be satisfactory in comparison I have already presented above the question to the demand. Therefore, in case we like to of why and how yperpyron persisted so much use supply and demand theory, we need to in Crete. In reality, we cannot possibly find apply it to the monetary system as it is in those out the reasons without undertaking research cases, i.e. with a variety of coins, both legal that could investigate the monetary and trade tender and non-legal tender, circulating along flows of the island. The variety of currencies with virtual currencies in the same economy. that exist in the island cannot explain much, considering that the question pertains to the This does not mean that supply and choice of this currency and not of any other demand do not hold for currency circulation among a variety of monetary instruments and traders’ preferences during the Middle circulating together. Moreover, the economy of Ages and the Renaissance, although, as medieval and Renaissance Crete experienced Cipolla (1956: 9) points out, the supply and constant or persistent liquidity problems. demand of coins was distinct from the supply That meant that a virtual currency or unit and demand for money. The second case of of account might, supposedly, have facilitated the 18th century Nafplion traders is illustrative trade and transactions in general, given the of the limitations of relying only on supply- lack of physical coins. Yet from the contracts demand arguments for analysis. Even if we of the era it seems that low value coins exist or are (more) possible to be found, so the accept that there was no demand for ducats th contracts are drafted while bearing in mind nor for gold in 18 century Peloponnese, this that the payment will be probably made in lack of demand should be explained somehow low value coins. Why do Cretans account with evidence of its causes, given the in a currency that does not exist and not in preference of Ottoman authorities to receive a currency that exists in their hands? Even taxes in gold and silver coins that did not need the hypothesis of stability is not plausible to be legal tender (Liata 1996). Therefore, enough: it seems that yperpyron had its own there was demand in 18th century for gold fluctuations and exchange rates, therefore, it coins in Peloponnese, but this demand did might have been stable compared to the very not involve an almost-pure-gold coin like the low value coins but its stability was not eternal nor given for a specific economy. ducat. The issue at stake is why this demand The hypothesis of stability is even more superseded the ducat or why the demand called into question when one takes into was not enough for those specific gold coins account that there was no state authority to be accepted in the market as a means of issuing or supporting this currency (although payment at the first place. the Venetian authorities seem to be very positive in using it) as legal tender. There 5. Questioning reality and questioning is not even an organised community in the theory sense we understand it today to administer the currency, as is the case today with various In this section, I present the preliminary parallel currency schemes. Yperpyron’s questions that stem from analysing historical alternating with the ducat in some documents phenomena and discuss how the questions complicates the situation, given that in many bring us at the edge of the present-day contracts it is not so clear whether ducats are monetary theories. implied under yperpyron and whether those 425 Byzantine Yperpyra And Venetian Ducats: Articles Missing Pieces In The Puzzle Of Monetary Theory ducats, if so implied, are minted or virtual. local monetary measures instead of what is That is, it is possible that payments had taken used in other territories, or to use various place in any possible way, with any means of monetary systems all at once. payment. Yet for us today the payments seem Having systems of account to be used to have been accounted in yperpyra, according side by side in the same economy was typical to the trading records we have from that era. in Renaissance northern Italy as well, and The question is why and how all those people it seems that they were chosen by different managed to agree on value(s)? sectors of the economy or different classes The other major question is why Venetian (Cipolla 1956: 38-51, Lane & Mueller 1985: authorities use this currency or tolerate it, even 123-133, 257-285, 333-363, Spufford 1988: when the ducat is issued. The explanation 267-377). Therefore, this hypothesis has huge that the ducat had the Byzantine yperpyron implicationsboth for monetary theory and as a historical model would not explain the for our perceptions of who takes decisions persistence of the yperpyron as a virtual about money and how, especially in a colony, currency for so long. This explanation would or in an economy with various minted and be quite shaken if we accept the analysis by virtual currencies and methods of monetary Lane & Mueller (1985: 280-285) who state that accounting. Venice issued the ducat in order to gain some Therefore, the questions about Venetian control over the price of gold and to stop authorities in Crete remain: Why would being dependent on the otherwise popular they accept transactions being done in an golden coins of the era, one of which was antagonistic currency the power of which had the Byzantine yperpyron, which was in high tried initially to compete with? Or why would demand in the areas where the Venetians not they perceive yperpyron as antagonistic had trade interests. Another relevant question, to the Venetian currencies? What are the given that the exchange rates between virtual implications for both the yperpyron and ducat gold currencies and physical currencies for this co-existence? Why was a virtual diverge as time goes by, pertains to why currency of an empire that did not exist the Venetian authorities would accept those anymore, preferable to a minted currency divergences and the complexity they might (even virtual currency) by both the subjects have brought in trading and contracting, and the officers of an empire that exists and instead of trying to simplify the monetary rules? regime of the island by at least imposing Einaudi (1936) would comment at this point accounting units that are used in the rest of that the virtual yperpyron and other virtual the Venetian Empire. currencies used in Venetian Crete were useful In other words, if lira was the mostly used because they helped to stabilise the prices of accounting unit in the Venetian economic goods and services without the turbulences realm (in mainly two types, lira di piccolo of heavy segniorage or changes in official and lira di grossi), but Venetians have to use exchange rates of the circulating physical yperpyron in their Greek colonies, that means currencies or without heavy regulation of the first, that the weight and fineness measures monetary system: a change in the analogies of their empire were not so favoured in the between the virtual currency and the minted overseas territories. Second, it implies that ones would suffice to stabilise prices when the local people, both local elites and local necessary. And this could be done by either merchants, peasants and salaried workers, decree or by the market practice. contest and negotiate the base accounting Another explanation would be that the units and de facto force the Venetians to use virtual currency was used in order to facilitate 426 Economic Alternatives, Issue 3, 2018 Articles the transition from one monetary system to be in conflict with other sectors or social another (for example, from the Byzantine groups. system to the Venetian one) or from the Second, Einaudi explicitly defines existence of some minted currencies in the stabilisation as a deflation process undertaken market to the introduction of a new issue or through the use of virtual (imaginary) the disappearance of an issue that was no currencies. We now know that deflation is not longer available for any reason1. quite helpful or it can lead to disasters for Nevertheless, neither of the two entire economies, if not for the low-income explanations answers fully the question as to groups of a country. Einaudi has no problem why these moneys of account survive too long. with the outcries of waged labourers or/and If yperpyron survives for so long as a virtual poor people because of deflation through currency, then it facilitates more functions “imaginary money” changes. Nevertheless, than mediation between an old and a new in case this is the motive/reason for using a currency system. Moreover, the question is virtual currency, then one should explain why why one currency survives like this in virtual yperpyron persists in Venetian Crete if poor form, and another currency does not survive people are put at stake through its use or the within the same economy and the same time, economy suffers regular deflations because not even as virtual money. Amid a multitude of this currency (and other virtual ones in the of currencies, the choice of which will be same monetary system). preferred to be used as virtual currency (-ies) Similar questions but rather of different is fundamental and cannot be explained from focus arise concerning the ducat, if seen transitions or changes in the money market from the side of the Venetian authorities and only. Venetian economic policies in general. The As for Einaudi’s “theory of imaginary “hard currency” of the Mediterranean trade money” (1936) and its stabilising role in the empire does not seem so strong, in terms economy, first, the evidence from Venetian of popularity and everyday use. Even for Crete defies the theory. For example, grain international trade, it is used only in certain prices moved upwards and have never circumstances, and many Venetian traders returned to their medieval levels since the end avoid to use it. Why would that happen? If the of 14th century (Tsougarakis 1990). If there is ducat has been introduced to facilitate trade truly some stabilising effect in having virtual (this is a hypothesis though) and imperial currencies in the economy, the conditions for political economics (that is also a hypothesis), this effect to materialize were not fulfilled. why would not the imperial subjects nor even Unfortunately, Einaudi constructs his theory the Venetian authorities and Venetian trades without mentioning specific conditions for the prefer it for their transactions? stabilisation to be effective. He also forgets The hoarding hypothesis is not enough to that “imaginary moneys” were numerous explain this situation. One could accept that in each of the Renaissance or Medieval hoarding or culling could be a practice that is economies. Therefore, this theory does not understandable of the part of the payer, the answer the question whether all or only some person who has already the golden coins at of the virtual currencies which circulate in hand. However, the denial to accept the golden an economy support stability of prices and ducats as payment by the receiver, i.e. the one what happens if each virtual currency is used who does not have golden coins at hand, is within sectors or by social groups who might something that is not easily explained. Even the explanation that Stahl gives based on his 1 Based on the comment by an anonymous reviewer. findings, i.e. that the market prices for turning 427 Byzantine Yperpyra And Venetian Ducats: Articles Missing Pieces In The Puzzle Of Monetary Theory golden ducats to silver coins for everyday use a good coin is not accepted for payment? are not very favourable, raises the question What drives this presumably good money out why the ducats cannot be hoarded for some of the market? Is it that Peloponnese has been time till the price of gold improves or till a trade an old colony of Venice (and the local traders opportunity emerges with a region where the hated the coin just for being a symbol of the gold exchange rates are more favourable. old imperial ruler of their place) or else, are Similarly, the question arises of why there other reasons that research needs to the receiver of payments does not agree probe into, given that traders in medieval and to a compromise, for example, to be paid early modern Greece have not been reported partially in silver coins (so that he does not to have any problem to transact with any need to transact in the money market under imperial currency, provided the currency is unfavourable exchange rates) and partially in reliable? And why did they refuse to accept golden coins, that are definitely not debased the coin with which they could pay their taxes and could be used later when the exchange to Ottoman authorities who craved for gold rate becomes more favourable for the golden coins irrespective of the issuing authority? coin holders. At least, according to what we 5.B. Questioning the monetary theories know today about the golden coins in the and beyond economy, the total refusal of traders to be paid in golden ducats is not explainable. The above-listed questions expose The lack of liquidity or adequate circulation the limitations of our knowledge about velocity does not explain much about ducat the function of the monetary instruments either. Why does not the ducat become a and monetary systems. Actually, monetary popular virtual currency or accounting unit as theories seem on the one hand very partial in yperpyron in Venetian Crete? Why do people their explanatory power, i.e. they can explain a prefer to hoard it even in accounting terms? certain phenomenon only if this is taking place What are the conditions that keep the ducat under certain conditions. On the other hand, to be less popular in use but more popular in even when monetary theories seem to be demand than yperpyron? In reality, the ducat robust enough to be used in most cases, their had also became a virtual currency (ducato detailed application to a specific case shows corrente) but it seems that this did not happen that it would be better to refine our theoretical in Crete, or it happened to a very limited and analytical tools. Otherwise, even a theory extend. The Cretans preferred their yperpyron that has explanatory power in principle, loses as a virtual currency, which was not backed or its potential to become a research tool in real supported not even symbolically by the empire life. that had issued it at the first place. Because I referred in the previous sub-section to that [Easten Roman] empire did not exist the Law of Gresham which is an empirical anymore and had lost power in the region description of the monetary phenomenon quite earlier than its final demise. whereby in the case of co-existence of various Finally, my last questions concern the case currencies/monies, those that are widely seen of Nafplion traders. Why should people refuse as better will be pushed out of circulation to be paid in golden ducats while the Venetian while those that are considered to be the Empire, i.e. its issuer still exists and the coin worst monies will prevail in the economy. Well, has not been debased? Why should they this is only one possible interpretation of this prefer even to avoid bothering about reminting “law” and reality shows that we might have the golden coins into another currency or into various ways of interpreting Gresham’s Law. bullion and create the unusual situation where There are two major questions that define the 428 Economic Alternatives, Issue 3, 2018 Articles application of this “theory”: first, what is really with it as a base accounting unit, even though the bad money and whether only low-value payments are not expected to be effected currencies are bad money; second, how and in yperpyra/perpera but in physical coin of with which criteria we judge the “goodness” other denomination and metal? If Gresham’s of a currency. Social inequalities, particularly Law is a law indeed, it should hold for virtual class divisions, are important to understand currencies. Consequently, one would need that what is “good” currency for a rich to understand or interpret Gresham’s Law in Venetian noble trader might not be equally ways that include the entire monetary system “good” currency for a Cretan peasant. in the manner that this system is structured When Gresham’s Law is understood not under the historical conditions of the economy with reference to the metal of the coin as such in order to make any explanations based on but to the relative values of multiple (at least that Law. two) coins circulating in the same economy Chilosi and Volckart (2010) address this similar issues arise. For example, when two question too, in particular with regard to whether currencies have an exchange rate that cannot low-value money is the bad money indeed. adjust to the change of their value and one I do not share many of their arguments and currency is overestimated (appreciated) causality constructions to explain who gained with respect to the other currency which is benefit from which type of currency. Still, their underestimated (depreciated) in the market, work shows that any use of Gresham’s law people tend to prefer to hoard the latter and as an analytical tool of monetary phenomena dispose/put into circulation the former2. should be done in a very cautious way in terms Both interpretations of Gresham’s Law of both assumptions and data. For instance, do not have satisfactory explanatory power when discussing Gresham’s Law, Lane & with regard to the two case studies of this Mueller (1985: 31) argue that high-value paper or to the monetary system that existed money in Middle Ages and Renaissance was in Venetian Crete. In reality, Gresham’s Law “bad” because it was foreign and unreliable, has not been sufficiently elaborated or refined which renders it a plausible explanation for to apply to virtual currencies. That is quite 18th century Peloponnese but not sufficiently problematic, given that virtual currencies satisfactory to explain the same behaviour in existed in the times of Lord Gresham. It means Venetian territories when the Venetian Empire that our interpretations of the Law need to was at its height (14th century). include virtual currencies. This is to say that The quantity theory of money in the case of understandings of Gresham’s Law so far lack the Venetian monetary system is perhaps the a basic feature of the monetary system to one that is mostly challenged. First, because which Lord Gresham was referring. the variety of currencies and monetary Moreover, in Crete, where yperpyron instruments is such that one would expect that exists along with other virtual moneys of every one of them would lose value or lead the Venetian empire, the situation is far to inflation. However, from the few indications more complicated, because the exchange one could find at such preliminary stage of rates of the virtual currencies are not stable research, it seems that if there is inflation, either. If bad money is a coin which is this is not linked to the quantity of monetary overestimated, then what is the yperpyron? instruments in a linear way – maybe not at Is it an overestimated impossibly-bad virtual all then, because quantity theory is defined currency? And if it is, why are contracts signed exactly by linking inflation in a linear manner to the quantity of the monetary instruments in 2 Based on the comment by an anonymous reviewer. the economy. 429 Byzantine Yperpyra And Venetian Ducats: Articles Missing Pieces In The Puzzle Of Monetary Theory Second, the co-existence of minted and tender par excellence at the time. Neither virtual currencies shakes the perception of can it explain the existence and persistence money quantity in the market. How much of yperpyron after so many centuries that the quantity of money exists in Cretan economy empire that issued it ceased to exist. It seems of 15th century, for example? If there is no that the premise of Modern Monetary Theory, central authority neither any other community that all money is credit money (Nersisyan & arrangement that monitors the quantity of Wray 2016), does not always hold. If it did, the money in an economy (like it happens actually, the Zecca of Venice (just like its for example in a grassroots parallel currency contemporary minters in the entire European system or in a blockchain currency), how many and Mediterranean world, including the Arab virtual yperpyra exist in the Cretan economy and Ottoman minters) would not allow their let’s say by the end of 16th century? Finally, minters to print as much as they can, provided the fact that especially Crete island faces there is enough bullion for the minters to work repeated if not constant liquidity problems, with. The minters (and the state authorities who shows that even if the quantity of monetary control them) of the medieval and renaissance instruments is extended or could be extended economies seem not only to defy the quantity through the use of virtual currencies like theory of money but also to dismiss the idea yperpyron, this does not mean liquidity in the of the credit theory of money. sense quantity theory of money understands In respect of credit theory of money, and it and links it directly to the circulation of its post-Keynesian associate of endogenous monetary instruments. theory of money, it could be assumed that the The Chartalist theory of money is shaken needs of the traders and of everyday life may in both our case studies: if it was the state possibly induce a demand for money supply only that makes sure that money circulates that needs to be met, but this money does in the economy and used by its economic not come by entrepreneurs or commercial agents, then the yperpyron should not have banks only (Lavoie 1984). Quite the opposite, survived the colonial rule of Venice, much it seems that on the one hand, various actors, lessthe demise of the Eastern Roman Empire including the state, have to participate in the (Byzantium) by the Ottomans. Yet, it seems production of monetary instruments. On the that it did, especially as a virtual currency, other, various types of money are used that i.e. without even the physical existence of a have not been produced by credit at the first state’s currency as one would expect. The place. Yperpyron, especially the virtual version same happens with the denial of traders in of it, is a monetary instrument that is used to 14th century Crete and in 18th century Nafplion express credit but it is not created through to accept Venetian ducats: the state is there, it credit, at least not as the endogenous theory exists and makes sure that the ducats are the of money would like it be. best golden coins in the market, yet traders do Very close to the Chartalist theory is its not want them as means of payment. refined version, as described by Christopher Modern Monetary Theory is also Gregory (1997): the quality theory of money. challenged, despite of the fact that it is a Gregory holds the view that money is related very refined version of the Chartalist theory to power relations and that it circulates as long of money. For example, Modern Monetary as its issuer or payer has enough political- Theory states that taxes create demand for economic power so that people seek its currency – but this cannot explain why a means of payment. Gregory’s approach has trader in 14th century Crete does not want to many things to teach in the sense that power be paid in golden ducats, which is the legal relations can exist beyond, without, or despite 430 Economic Alternatives, Issue 3, 2018 Articles of the State and can become monetary coin (were they really?) and the coins were guarantors in ways that the Chartalist theory directly commodified in the market, is the (or Modern Monetary Theory) does not analysis of money as a commodity. Even if recognise. However, if one were to use the money is a commodity or even if it emerges quality theory of money in economics (Gregory from a commodity, this does not explain, the writes from an anthropological perspective) in persistence of yperpyron in Crete island, at those two cases, one would need a lot of work least not in the way it seems to work in the local and sophistication to reach any conclusions or economy. Because, a virtual currency can be to construct sound arguments concerning the a commodity under certain circumstances power relations in medieval and Renaissance that do not seem to be fulfilled in the medieval Crete and in early modern Ottoman southern Cretan economy. Nor does commodity theory Greece. of money explain the rejection of ducats in Likewise the historical cases have called Nafplion or in Crete, because if not for other into question the approaches that see reasons, the fine gold of the ducats which are money either as debt or as a measure of denied as a means of payment, is already a account. I mentioned above that if all money commodity in those economies. What was is credit, then the mints of Middle Ages and more important than the commodity nature of Renaissance should not work the way they did. those two currencies in those two contexts in I should also add the assumption that money order that people behaved in an unexpected is a social agreement because everything in a [by the academics] way? human society is a social agreement. How can 6. Missing pieces in the monetary people in medieval Crete denominate debt in a currency that does not exist physically nor puzzle: now what? can be assured of its issuance after 1453? The paper attempted to present some What is the content of the social agreement in discrepancies between historical monetary those specific cases and how do people use phenomena and theory but also between the currencies that abide by a social agreement historical phenomena among themselves. The that we fail to grasp? Is the denial of the main aim has not been to give ready-made traders to receive ducats even as a measure answers, but to point out directions for further of account in 14th and 18th centuries a sign of research and open the discussion on historical a broken social agreement or signs of other precedents in parallel currencies, concerning social agreements that are largely ignored in their real economic function in the economies modern times? After all, if money and currency they existed. are social agreements, then the circulation of a I have shown the complexity of the variety of monetary instruments pre-supposes monetary world of Eastern Mediterranean a variety of social agreements that can be in later medieval and renaissance times complementary or competitive among each and I gave some examples, which picture in other. What is the position of credit and debit rough manner certain monetary phenomena in such a multiplicity of social agreements on that need to be researched in the future. I currencies? In that sense, the question turns explained in brief the research questions to challenge whether every money is credit that stem from the encounter with historical and, even if it is or could be in theoretical incidents of this type. In addition, I showed terms, whether all credit is the same. how the monetary theories we have at hand at Finally, what is definitely destabilised, the moment need to be revisited and refined especially because it happens in times when (or maybe renewed) if we want to rely on their precious metals were the essence of a explanatory potential. 431 Byzantine Yperpyra And Venetian Ducats: Articles Missing Pieces In The Puzzle Of Monetary Theory The least thing that this paper could do commented and advised on the improvement was to develop a new monetary theory. First of a previous version of this paper, as well because it seems that a lot about monetary as to Dr Kalina Bratanova (Senior Lecturer, phenomena has been ignored and this does University of National and World Economy, not yet allow us to construct a theory that language editor of the EAJ) for her detailed explains their main features. Second, because editing advice and to Prof. Pencho Penchev a monetary theory with some explanatory (Assoc. Professor, University of National and power requires the joint effort and collective World Economy, Editor of the EAJ) for his work by various theorists and practitioners support and advice during the entire process working in different disciplines and various of review and improvement of this paper. sectors of the economy. And third, because However, all deficiencies of this paper remain what we need at this stage is not one more a sole responsibility of the author. hasty theory that will be easily refuted by everyday economic activity and/or historical References evidence. What is needed is well-grounded Antoniadi, S.A., 1967. 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