What was the "Brakteaten" medieval monetary system?

Question

I am reading "Interest and inflation free money" by Margrit Kennedy. I have only found this book online (here). It is not in my local libraries or bookshops. The author states (page 39 of pdf):

“Between the 12th and the 15th century in Europe a money system was used called "Brakteaten." Issued by the respective towns, bishops and sovereigns, it not only helped the exchange of goods and services but also provided the means of collecting taxes. Every year the thin coins made from gold and silver were "recalled," one to three times re-minted and devalued on an average about 25 % in the process.

Since nobody wanted to keep this money, people instead invested in furniture, solidly built houses, artwork and anything else that promised to keep or increase its value. During that time, some of the most beautiful sacred and profane works of art and architecture came into existence. "For while monied wealth could not accumulate, real wealth was created."

We still think of this time as one of the cultural culmination points in European history. Craftsmen worked a five-day week, the "blue" Monday was introduced and the standard of living was high. In addition, there were hardly any feuds and wars between the various realms of power. (27)

However, people obviously disliked the money which lost so much at regular intervals. Finally, towards the end of the 15th century, the "eternal" penny was introduced and with it came interest and accumulation of wealth in the hands of increasingly fewer people, as well as the accompanying social and economic problems. The lesson here is that taxes should be levied separately and not connected with the circulation fee on money."

I am looking to read more about such monetary system, but I can get no meaningful hits. The book seems to have a reference to this system (reference 27), but as I do not have the book I cannot check which is. Wikipedia has little mention on this monetary system, similar to what it is in the book. Google Scholar has no relevant result in English (mainly in German).

Are you aware of any study on this monetary system? Could I get some references on this?

Answer 1

It appears that the author, Margrit Kennedy, has either misunderstood or is deliberately misrepresenting the situation with Medieval bracteates.

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Medieval bracteates (a form of pennies) are pieces of thin silver sheet embossed on one side. They typically have a diameter of between 22 and 45 mm. Because it is struck on only one side, the coin image appears in a high relief, while the obverse remains hollow.

From the middle of the 12th century to the 14th century, bracteates were the predominant regional coin type in almost the entire German-speaking area (with the exception of the Rhineland , Westphalia and the Middle Rhine area). From a currency perspective, bracteates are typical of the regional penny currencies of the time.

In some regions, it is true that bracteates were periodically devalued and had to be exchanged for new money. In Magdeburg this happened twice a year in the 12th century. When the devalued coins were exchanged, the rate was three new coins for four old coins.

The withheld 4th coin was called strike money, and this was often the only tax revenue of the minting authority (Renovatio Monetae). Obviously, the periodic devaluation caused huge disruption for businesses and traders. The city guilds began to issue a so-called "eternal penny" ("Ewiger Pfennig") from about the mid 13th century.

The rise of the Ewiger Pfennig marked the end of the bracteate period, although they remained in use as "pilgrim coins" until the 17th century.

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There is a very useful study (in German) available to download as a pdf: Versuch über die Brakteaten, insbesondere über die Böhmischen

Answer 2

Brakeaten money was a form of seigneurage in the late Middle Ages. The term is German because it was practiced in most parts of Germany. What it means is that the sovereign, from time to time, issued new coins, forcing people to exchange their old metal coins for new ones, with the sovereign "taxing" this process by keeping say, one new coin out of four. What distinguished brakeaten money from other coins was a relatively simple design that made it possible to "recyle" them more frequently.

As onerous as it was, it was an "honest" form of taxation that was mildly deflationary (because it temporarily took money out of circulation). Wages stagnated as a result (in nominal terms), but peasants were relatively prosperous because (mild) deflation meant that their wages were rising slowly in real terms; deflation meant that their (same) money bought "more."

What changed the equation beginning with the end of the 15th century was the import of gold and silver from the New World. This initially affected Spain and Portugal but soon affected other parts of Europe. (For instance, the Holy Roman Empire was connected to Spain through King Charles V.) Now, governments could operate through deficit financing. That is, they would borrow money (when silver and gold supplies were relatively low) and pay later, when the supplies were higher, devaluing them in real terms, pocketing the difference. Lenders typically lost money on these transactions because the resulting inflation eroded the value of their loan repayments. (A similar thing happened to American bankers during the inflationary 1970s.)

Ordinary people lost out as a result. In Spain, during the 16th century for instance (the hardest hit area), their wages doubled in nominal terms (e.g. in gold coins), but prices went up four times, so their standard of living was cut in half over a century.

Source for New World: "Mexico" by Ralph Hancock

Answer 3

REFERENCE No. 27. Hans R. L. Cohrssen, »Fragile Money« v The New Outlook, sept. 1933, str. 40

http://www.unz.org/Pub/Outlook-1933sep-00039