The Great Debasement

Henry VIII in 1542

The Great Debasement (1544-1551) was a currency debasement policy introduced by in 1544 England under the order of Henry VIII which saw the amount of precious metal in gold and silver coins reduced and in some cases replaced entirely with cheaper base metals such as copper. Overspending by Henry VIII to pay for his lavish lifestyle and to fund foreign wars with France and Scotland are cited as reasons for the policy's introduction. The main aim of the policy was to increase revenue for the Crown at the cost of taxpayers through savings in currency production with less bullion being required to mint new coins. During debasement gold standards dropped from the previous standard of 23 carat to as low as 20 carat while silver was reduced from 92.5% sterling silver to just 25%. Revoked in 1551 by Edward VI the policy's economic effects continued for many years until 1560 when all debased currency was removed from circulation.

Background

In the 16th century after suffering from the effects of the Black Death, Europe was in the middle of a economic expansion due in part to increased trade and newly discovered deposits of precious metals from the new world, England however was suffering with financial difficulty. In the 1540s then king Henry VIII began a campaign of excessive overspending of government money on his lavish lifestyle and to pay for wars with France and Scotland.^[1] In order to fund these Henry had already raised great sums through the Dissolution of the Monasteries, selling off the Crown's land and by raising taxes however more money was still required. In May 1542 Henry VIII issued a secret indenture whereby he ordered that the amount of gold and silver within the country's coinage be secretly reduced and for the previous unsuccessful Testoon coin be reproduced. For the next two years the newly minted debased coins including the reintroduced Testoon were stockpiled in Jewel Tower in the Palace of Westminster while production of coins at the current standard continued.^[2] By May 1544 a lack of bullion arriving at the mint prompted the government to issue the secret indenture and allow the debased coins to enter into general circulation. Two months later in July 1544 merchants of the Low Countries discovered that newly minted silver groats had become debased and begun offering a lower price for them. The introduction of these debased coins caused coins at similar face value but with higher precious metal content to disappear from circulation in line with Gresham's law.

Debased Testoon 1544-1547

Further Debasement under Henry VIII

Gold and silver standards continued to drop under Henry VIII, in 1545 gold was reduced to 22 carat and again to 20 carat in 1546. Silver content also dropped numerous times from the previously fine silver (92.5%) to 50% in 1549 and again to 33% in 1546. Copper was used as a substitute to silver in the coins.^[3] Henry's stockpiled testoons were covered in a thin layer of silver which had a tendency to wear off, particularity over the protruding nose of his portrait, revealing the copper underneath, so much so that Henry was nicknamed Old Coppernose.^[4]

Debasement under Edward VI

After Henry VIII's death in 1547 his nine-year-old son Edward VI was crowned king. The young Edward continued his father's debasement however in 1548 made an attempt to improve fineness by increasing gold fineness to 22 carat at the cost of reducing coin size. After silver content reached a new of to just 25% in 1551 the debasement policy was officially revoked in October 1551 and silver fineness was returned to the before debasement standard of 92.5% fine silver.

Coins

Over the course of the seven years that the debasement occurred gold and silver content in coins fluctuated as well as the coins weights. During debasement the following coins circulated.

Penny

Henry VIII penny 1509-1547

During debasement the silver content of the penny dropped by more than 83%.^[5]

	1509-26	1526-44	1544-47	Ref.
Weight	12gr.	10	10gr.	[6]
Fineness	11 oz 2dwt	11 oz 2dwt	6-4 oz

Henry VIII Groat 1526-1532

Groat (Fourpence)

1544 the fineness of the silver was steadily debased from the normal .925 fine down to .333 fine.

	1509-26	1526-44	1544-47	Ref.
Weight	48gr.	42 gr.	40gr.	[6]
Fineness	11 oz 2dwt	11 oz 2dwt	6-4 oz

Henry VIII Angel 1508-1547

Half Sovereign

Henry VIII half sovereign 1544 - 1547

Half-sovereigns were produced in four different standards.

	Standard 1	Standard 2	Standard 3	Standard 4	Ref.
Issue Date	1544 – 45	1545 – 46	1546 – 51	1549 – 50	[7]
Weight	6.48g	6.22g	6.22g	5.49g
Fineness	23 carat (.958)	22 carat (.916)	20 carat (.833)	22 carat (.916)

Restoration

Elizabeth I (1558–1603)

1585-1587 Elizabeth I milled Sovereign

By the time Elizabeth I came to power in 1558 the quality of England's coinage had already greatly affected both confidence in the monarchy as well as the country's trading relations with foreign merchants refusing to accept the debased currency as payments. In concert with her advisers William Cecil and Thomas Gresham the queen became convinced that these problems could be solved by restoring England's coinage to its previously high standards by removing debased currency from circulation. Due to Gresham’s law coins with higher fineness were often hoarded while debased legal tender currency was used to pay debts. The preparation for the removal of debased coinage the government enacted a law which forbid 'good' coinage from entering foreign markets and ended the legal tender status of all debased currency.

In 1560 under the instructions of the queen Thomas Gresham withdrew all debased coinage from circulation having them melted down and replaced with newly minted coins with high fineness. An estimated £50,000 was gained by the crown in the process. In 1561 milled coinage was introduced into England by French moneyer Eloy Mestrelle replacing the often crude hammer struck coins.

References

External links

• The Great Debasement