On the Problem of the Monetary Crisis in Danzig in the First Half of the 17th Century

Abstract

The monetary crisis of the first half of the 17th century and its effects on Baltic trade have been attributed in Polish historiography mainly to currency debasement (reduction of silver content in the grosz). The essential content of the disturbances in the money-commodity economy of the period, however, rested not on currency debasement but on the shortage of good money, the rising price of large denominations (thalers, ducats), and deteriorating terms of trade between export and import prices – phenomena that produced an economic crisis of which currency debasement was a symptom rather than a cause.
This article investigates the causes, course, and consequences of the monetary crisis of 1619-1621 for Danzig and Polish foreign trade, analyzes the mechanisms of monetary speculation and drainage by Dutch merchants, the price relations between grain and western industrial goods, and the failed project to establish an exchange bank in Danzig in the 1630s.
The study draws on Danzig council archives (WAP Gd.), on the project by the Dutch financier Anton Kuiper (Library of the Polish Academy of Sciences in Danzig, MS 540), on grain price series and trade statistics, and on the author's earlier monograph Handel zagraniczny Gdańska (1970).
The analysis shows that the purchase and export of Polish silver coins by Dutch merchants drained good money from circulation and facilitated the influx of debased coins. The rise in thaler and ducat prices preceded rather than resulted from formal currency debasement. Despite nominal price increases, real grain prices in the first half of the 17th century were often below 16th-century levels. Danzig's active trade balance with Amsterdam was partly neutralized by monetary drainage. The proposed Danzig exchange bank project (1630s) was never realized, apparently due to resistance from influential private bankers. Monetary drainage was a pan-European phenomenon that accelerated Dutch economic development while weakening Baltic trading partners.