Forced coin exchange at unfavourable rates in Europe from the Middle Ages to the 18th century

The right to issue currency has in every age been a source of colossal revenue for those who held it and of incredible injustice for everyone else.

In medieval Europe there existed the practice of withdrawing coins from circulation. It happened constantly, sometimes twice a year. People were obliged to hand in their old coins and receive new ones in exchange, only the exchange was made not at what would seem a normal rate, 1 to 1, but, say, 12 to 9. For 12 old coins you were given 9 new ones, absolutely identical, of the same weight, denomination and fineness, merely bearing a new inscription or image. The remaining 3 coins were kept by the lord who held the right of coinage.

By the twelfth century in Germany the right to mint coins belonged not only to monasteries and to great ecclesiastical and secular magnates, but also to middling and comparatively petty seigneurs. And each of them had the right to recall the coins struck at his mint at any time and to fix, at his own discretion, the rate at which old coin was to be exchanged for new.

In all the public spaces of towns and villages notices were put up containing those very coinage edicts, announcing that from a certain date a coin of such and such a kind was declared void, or valid only to a limited degree, for example for use in particular territories and at a newly proclaimed value. The edict might also forbid outright the exchange of a given coin for goods or its use in paying taxes, forcing people to carry their pennies to the lord, who exchanged them for new ones.

This monstrous practice of debasement persisted as late as the end of the eighteenth century, and coins were sometimes devalued by half, while the withdrawals affected not only silver and gold money but even paper. Every time various explanations were offered, citing the circulation of foreign coin or the introduction of a new national currency, yet the result was always the same: the poor became poorer still, and those who held the right of issue grew richer, without any effort whatever.