> the Spanish dollar, from the sixteenth to the nineteenth century, was relatively the most stable and least debased coin in the Western world.
And yet during that period Spain went from being The World Power to a decidedly second rate player. Also the Spanish government had to declare bankruptcy several times.
And contrariwise, England that relied on its central bank to finance its wars essentially via inflation became the World's leading power. The two are loosely connected: currency debasement allows you to insidiously rob the population to finance a strong centralized government and wars.
Well the Spanish government tried financing wars with American gold and silver, it lost its wars and ended up with inflation anyway.
Meanwhile England (or properly Britain since Scots played an important role in this) ended up not only the world's leading power, but the richest nation in world history up to that point. All without significant inflation, that would only happen in the 20th century.
> it lost its wars and ended up with inflation anyway
Are you talking about Spanish Price Revolution or something else (e.g. the results of Spain losing its wars)? As far as the former is concerned the inflation was not confined just to Spain, but was Europe-wide. (And Spain enjoyed the Cantillon effect benefits in that arrangement.)
>or properly Britain
Yes, for sure. (I went with "England" because "Bank of England".)
>that would only happen in the 20th century.
Not exactly. The Napoleonic wars caused huge inflation in Britain and forced it to suspend specie redemption. Here is a piece I stumbled upon couple of years ago when I realized that I had no idea how Napoleon financed his wars: https://www.nber.org/papers/w3517
It can be argued that pre-Napoleon European wars had been relatively limited (see Clausewitz, for example; also McConkey mentions it in his latest book, I think he references Nisbet who quotes Tocqueville.) [Even in the Thirty Years' War it was the cumulative effect of societal destabilization that mostly caused the horrors and death, not directly the military action itself.]
----
I absolutely agree, though, that sound money is not the only ingredient that makes a polity successful.
As a related aside, when reading The Wealth of Nations I skipped "Digression concerning the Variations in the Value of Silver..." I am thinking of reading it now.
> the Spanish dollar, from the sixteenth to the nineteenth century, was relatively the most stable and least debased coin in the Western world.
And yet during that period Spain went from being The World Power to a decidedly second rate player. Also the Spanish government had to declare bankruptcy several times.
And contrariwise, England that relied on its central bank to finance its wars essentially via inflation became the World's leading power. The two are loosely connected: currency debasement allows you to insidiously rob the population to finance a strong centralized government and wars.
Well the Spanish government tried financing wars with American gold and silver, it lost its wars and ended up with inflation anyway.
Meanwhile England (or properly Britain since Scots played an important role in this) ended up not only the world's leading power, but the richest nation in world history up to that point. All without significant inflation, that would only happen in the 20th century.
> it lost its wars and ended up with inflation anyway
Are you talking about Spanish Price Revolution or something else (e.g. the results of Spain losing its wars)? As far as the former is concerned the inflation was not confined just to Spain, but was Europe-wide. (And Spain enjoyed the Cantillon effect benefits in that arrangement.)
>or properly Britain
Yes, for sure. (I went with "England" because "Bank of England".)
>that would only happen in the 20th century.
Not exactly. The Napoleonic wars caused huge inflation in Britain and forced it to suspend specie redemption. Here is a piece I stumbled upon couple of years ago when I realized that I had no idea how Napoleon financed his wars: https://www.nber.org/papers/w3517
It can be argued that pre-Napoleon European wars had been relatively limited (see Clausewitz, for example; also McConkey mentions it in his latest book, I think he references Nisbet who quotes Tocqueville.) [Even in the Thirty Years' War it was the cumulative effect of societal destabilization that mostly caused the horrors and death, not directly the military action itself.]
----
I absolutely agree, though, that sound money is not the only ingredient that makes a polity successful.
As a related aside, when reading The Wealth of Nations I skipped "Digression concerning the Variations in the Value of Silver..." I am thinking of reading it now.