Once there was a king who was only twelve inches tall. As the story goes, he was a lousy king but he made a great ruler.
You’re groaning, I know. Cut me some slack. I’m an economist and historian, not a comedian.
I am keenly interested, however, in the real-life differences between a lousy king and a great ruler in at least one important matter: how they handle money. I refer not to their spending habits but rather to their honesty (or lack thereof) in the production of money itself. A lousy king debases or cheapens a currency whereas a great ruler ensures its integrity and value. In the history of the English and British monarchies, two of the eight Henrys—the First and the Eighth—were 400 years and poles apart on this vital economic issue.
Monarchs and money usually do not mix well together. Most monarchs, especially the “absolute” ones, possess ravenous appetites for revenue. In that, it would seem they share a trait with most governments of any form, sooner or later. They never have enough money. The worst of them not only tax and borrow heavily, but they also monopolize the issuance of coinage or paper currency and then debauch the stuff by minting and printing like crazy. That’s one of the reasons why economists like me would love to separate money and state. A reliable, tongue-twisting rule of thumb is that markets are better money makers than monarchs or monopolies.
Think of Henry I as Hard Money Henry. Think of Henry VIII as Cheap Money Henry.
If Henry VIII knew his history, he might have learned from the earlier Henry and been a better money manager.
The former was great. The latter was lousy.
Henry I of England came to the throne in 1100, just 34 years after his Norman father William the Conqueror seized the throne by invasion in 1066. Henry ruled for more than 35 years until his death in 1135. He was a harsh authoritarian, but then, so were virtually all potentates of that day.
English mints, where the coin of the realm was struck, were supposed to issue coins that met royal requirements. Each denomination was expected to be of a certain size and weight of precious metal. When word reached Henry I in 1124 that coins from his mints were mostly tin instead of silver, and his own soldiers complained of being paid “worthless wages,” he decided to get serious about money. In December of that year, he called the minters to an assembly at Winchester known as the “Assize of Moneyers.” The ones found guilty of cheating on the coinage—literally dozens of them—had their right hands cut off and, for good measure, they were castrated. They were also dismissed from royal service, though unemployment was probably the least of their tribulations.
In his magisterial biography of Henry I, historian C. Warren Hollister writes, “These sanctions were in keeping with traditional English laws against false coining, and Henry received general praise and gratitude for enforcing them.”
The harsh methods worked. For the remaining decade of Henry’s reign, honest money and stable prices ruled the economy. All these centuries later, he is remembered by historians for his ingenious “currency reforms,” as cruel and painful though they were to some.
Henry VIII was another story. He is best known for his six wives and for sparking the English Reformation when the Pope refused to permit the annulment of his marriage to the first one, Catherine of Aragon. He sat on the throne (the royal one) for almost 38 years—from 1509 to 1547. Far from upholding the integrity of the money, he presided over what historians term “The Great Debasement.”
Two years after she became Queen in 1558, Elizabeth I and her financial advisor Thomas Gresham recalled all the junk coinage from circulation.
Beginning in 1544, Henry VIII ordered a series of massive reductions in the gold and silver content of English coinage. Some coins were stripped of their precious metal content entirely, and copper or tin was used in their place.
Henry needed more money for his lavish lifestyle—depicted in the popular Showtime TV series The Tudors—foreign adventures, and castle building (the medieval equivalent of “infrastructure”). Because he got to spend the debased stuff before the people did, he could use the junk coins to buy what he needed before prices soared throughout the economy.
Classic! The Roman emperors did the same thing, which in the 4th century had produced what historian Max Shapiro labeled “a cyclonic superinflation” (see his book, The Penniless Billionaires).
Henry died in 1547, so he did not live to see the full effects of his dishonest, inflationary stupidity. But his successor, Edward VI, formally abolished the debasement policy in 1551. Two years after she became Queen in 1558, Elizabeth I and her financial advisor Thomas Gresham recalled all the junk coinage from circulation. They replaced it with the sort of honest, precious metal money of which Henry I would have approved.
If Henry VIII knew his history, he might have learned from the earlier Henry and been a better money manager. He claimed to be a man of God but cheated his own subjects, in violation of numerous Biblical injunctions against false weights and measures. Fifteen centuries before Henry beheaded his second wife, Anne Boleyn, the prophet Isaiah admonished the Israelites for debasement when he declared, “Thy silver has become dross, thy wine mixed with water.”
Henry died in 1547, so he did not live to see the full effects of his dishonest, inflationary stupidity.
So in monetary affairs, as well as affairs of a more mundane variety, Henry VIII was a lousy king and Henry I was a great ruler.
Our politicians of today could learn a thing or two from these two Henrys.
This article was originally published on FEE.org