Restoring England's currency
By the 1560s, newly minted Elizabethan coins had helped to renew people's trust in England’s currency at home and abroad.
In the 16th century, the expense of running the country was borne by the monarch. Regular taxation was not commonplace and taxes were only enacted by Parliament when needed for a specific purpose, such as war. The 'national treasury' comprised the Crown's personal fortune, plus revenue raised from Crown lands and customs duties.
With no concept of 'national debt', monarchs often used 'creative' methods to raise cash. Henry VIII raised money by minting new coins that were made of base metals mixed with a little silver or gold, circulating them at the same face value as solid silver and gold coins. This debasing of England’s coinage raised an enormous amount of money for Henry VIII's military ventures, but had adverse long-term effects.
As people caught on to the 'scam' at home, they started to hoard older coins with a higher content of precious metal, leaving the 'bad' money in circulation. Abroad, foreign bankers and vendors refused to accept English coinage and insisted on payment in gold. Both practices created a gold shortage at home, making it harder to source gold for minting new coins and for making foreign transactions.
When Queen Elizabeth I came to power, she inherited one of the most debased coinages in history, which damaged trade relations and the reputation of the monarchy. The Queen analysed the problem and formulated a solution in concert with her trusted advisers William Cecil and Thomas Gresham.
Gresham was put in charge of the programme and acted swiftly and efficiently. Within a year (1560-61) the debased money had been withdrawn, melted down and replaced with newly minted Elizabethan coins of precious metal. The Crown even made a healthy profit from the exercise, estimated at £50,000.
The restoration of the nation’s coinage improved the dealings of English merchants abroad and secured trust and respect from the City for Queen Elizabeth I and her government. The success of the initiative and the maintenance of the integrity of England’s coinage throughout Queen Elizabeth’s reign, led to economic recovery. The confidence that it bred also allowed for the expansion in trade and industry that followed.
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