There are a million and one books written on Henry’s wives, and a somewhat fewer number devoted to the religious schism in his reign. It is amazing to find that there are very few books that deal with the economics of the times.

One of the nicknames Henry VIII was given by his affectionate (and not so affectionate) subjects was Old Coppernose. This refers to the fact that with wear and tear, the silver varnish of his debased coins wore off in time, leaving the copper exposed. So how and why did the debasement happen?

Debasement refers to the practice of reducing the precious metal content (gold or silver) of coins. It affects trade and the economy because the value of the coins fall and they no longer are accepted in the international market, or sell at a huge loss. This leads to inflation, and economic destabilisation of the issuing country.

On ascension to the throne, Henry VIII inherited a large amount of money from his father. Coins were struck in his name on his ascension with no great change in the composition or value of the gold or silver. For the next seventeen years, there would be not much change in the money or monetary policies, in spite of the double war of 1515 with Scotland and France. At this stage, the gold coins followed a standard of 23 carats 3½ grains fine metal and ½ grain alloy. Silver coins were 12 grains of silver to a penny.

In 1522, Henry lifted the ban on foreign coins and allowed Venetian ducats, Florentine florins and French crowns as well as the Spanish Hapsburg coins to be circulated in England

In 1526, there was a second coining. The first shilling was introduced in England. Even though Henry VII had issued a limited edition of a shilling, it had never picked up until his son issued the coin in his reign. There was also the issue of a new coin, the George noble.

One coin struck by Henry VIII. was the George noble, so called from the effigy of St. George and the Dragon, well known to all lovers of their sovereign, stamped on the reverse.

During this coining, there was no change in the composition or weight of the metal. However, the gold coinage was debased by enhancing its value. The gold sovereign’s value was decreed to be increased from 20s to 22s.6d and that of the angel from 6s. 8d. to 7s. 6d.

The gold content of the Crown of the Double Rose was decreased to 22 carats, but the value of the coin remained the same. The silver coins were debased from 12 grams to 10 grams of silver to a penny.

A proclamation was issued “forbidding any person to raise the price of any goods or merchandise under the colour of the money being enhanced”, an attempt to control the inevitable inflation, which failed.

All this was done without much ado, and is seen by most economic historians as merely a way to make up for the wear and tear of the metal coins. Debasements of this kind were common among the rulers. The debasement of 1526 was undertaken to regulate the money supply and increase the economic viability of the mint. At this stage, all foreign currency was again banned and they were to be treated as bullion gold, i.e. a mere commodity, not a currency.

What really led to an economic downturn in the last days of the reign of Henry VIII was what is known today as the Great Debasement. Suspected by many economists to be the master-plan of Thomas Wriothesley, Earl of Southampton, and the King’s principal secretary, an act was passed to raise money for the French war. Since Parliament has always been loath to lend the King money for wars, this method was adopted. From 1542 to 1551, the silver coins that were struck were only 25% silver with about 1 to 2 grams of silver to a penny, a far cry from the earlier coins. The fifth and final issue of silver coins in Henry’s reign was copper with only a hint of silver. This changed the ratio of gold and silver coins to 1:10 whereas the Continent still followed the ratio of 1:12.

Proclamation that (whereas in Flanders and France the valuation of money is so enhanced that coin is daily carried out of the realm notwithstanding the King’s commands to the officers of the ports to enforce the statutes against this, so that the only remedy, seems to be the enhancing of the value of gold and silver in this realm) the King, by advice of his Council, fixes the value of the ounce of fine gold of 24 carats at 48s. and of the ounce of the finest sterling silver at 4s. … All groats, pence, half-pence and farthings not clipped nor fully broken shall be lawful tender even though cracked, and persons refusing them are to be imprisoned.

On an interesting side note, in the third issue of coins, the Roman numeral VIII was replaced by the Arabic numeral 8.

However, the gold coins fared much better and their purity was reduced to only 83 percent instead of the 25 percent for silver. Another thing that needs to be made clear here was that this did not affect the holder of the coins in absolute terms. The person having the debased coin would not be affected in any way because their spending power would remain the same.

All this is generally attributed to two reasons; Henry’s love of fighting wars to gain glory and his “extravagance” in building monumental palaces.

Wars are expensive. This is a fact that every monarch could testify to, but nevertheless, they were also deemed as necessary. The pre modern era, and indeed until the twentieth century, there were few takers among the ruling classes for peace and harmony. Henry VIII hankered after the glory of war like a moth to flame. But wars cost money, and destabilise the economy. The French wars resulted in a long economic recession.

Between 1541 and 1546, the King increased doubled the size of his navy and commissioned many new warships. In addition to this, the military campaign and the siege and fortification of Boulogne cost more than 1 million pounds.

All this sounds very horrible and all blame has been put squarely on the King’s shoulders, and correctly so. But was it solely his extravagance that led to this utter disaster?

… the great debasement which began in 1544 has no such justification. The financial situation of the time, the pressing need of money and Wriothesley’s calculations of the king’ gain and profit by the measure leave no doubt that it was adopted to supply sorely-needed ready money, and for no other purpose. – Frederick Dietz

The conditions when the debasement took place were already far from ideal. Prices were rising and it was not possible for the Government to accommodate this price rise by legally increasing the rent of the lands leased out on long term, one of the main sources of income for the Crown. Dietz calculates that the rent from monastic lands alone amounted to 44000 pounds between 1540-44, which fell to 32739 pounds by 1545. Exports from England were growing exponentially during this period and prices were rising as were standards of living. The debasement was merely another nail in the coffin, done to reinforce the Crown’s depleting funds.

This policy failed on two fronts: with increasing trade abroad, the purity of the coins was a major factor and led to English money becoming short-changed and in many cases, unacceptable. Any debasement to be successful and to prevent in destroying the economy, the market needs to be severely controlled by the Government after the issue of debased coins. Enforcement of the trade policies was sorely neglected in spite of many restrictions placed on merchants. Perhaps the economy would have been in a different shape for his heir if the market and trade had been more strictly controlled by the Government. But as it stood, Edward VI inherited an economy that was fast spiralling downwards. How he worsened the situation with his own debasement policies is a completely different story.

References:

British History Online: Old and New London: Volume 2

Christopher Challis: The Tudor Coinage

Derek Wilson: A Brief History of Henry VIII – Reformer and Tyrant

Frederick Burgess: Chats on Old Coins

John Chown: A History of Money from AD 800

John Munro: The Coinages and Monetary Policies of Henry VIII