Specie Flows: Mines & Precious Metal Trade

specie flows and medieval trade

Islamic Silver

The large quantities of silver dirhems — some 228 million in all may have been imported — that still turn up in coin hoards throughout the Baltic area throw valuable light on east-west patterns of trade in the Viking period. There were three main trade routes. One was via such cities as Samarkand, Bukhara and al-Shash to Urgench to the east of the Caspian Sea. Here merchants from Khurasan and central Iran met the Vikings, Khazars and Rus merchants, enabling them to acquire slaves, furs, honey, leather, ivory, fish and other goods for silver and Islamic manufactures. Another trade route ran from Iraq, through Mesopotamia and Armenia to Darband and then through the northern Caucasus up to the Volga. A third route lay through the Byzantine Empire, and may well have supplied the Empire itself with silver for small transactions: the Byzantines themselves largely struck copper and gold denominations. The hoards with coins originating from the eastern part of the Abbasid Caliphate are 50-80% Samanid or 45-80% Abbasid. Hoards with coins originating from the western part are 40-95% Abbasid. {1-2} A few coins from Muslim India also turn up as single finds, as far away as England. {3}

The Islamic dynasties were not unaffected by their neighbours. The influx of New World silver into western Europe caused inflation in the Ottoman Empire, for example, {4} and the Safavid shahs were always trying to stem species outflows, either by taxation or outright bans. {5}

The Silver Famine of 950-1125 AD

Silver mintages dwindled throughout the Islamic world as the central Asian (Talas) mines became exhausted and mining at Rammelsberg suffered dewatering problems and then a prolonged miner's strike. To meet the shortage, lead-tin-silver mines were reopened in England (Devon and Derbyshire), Spain, Italy and north Africa, but these were high-cost producers: their contribution was always marginal, insufficient to meet Asian and European needs, and usually sputtered out when the Rammelsberg operation intermittently came back to life. Some silver from the Talas mines enabled the Ghaznavid and Ghorid coinages to continue, but even the Kharakhanids of Transoxania, who directly controlled the mines, could strike dirhems only to 1075, and then at steadily decreasing finess.

Silver coinages otherwise disappeared, their place being taken by gold for large transactions and billon, copper, brass, iron and even glass denominations for small. The great streams of Islamic coins that had flooded across Russia to serve as European coinage (as silver for reminting and by silver weight de facto coinage) gradually petered out. Quantities and silver content decreased, and in time dried up altogether, leaving small transactions to be made by barter and coin substitutes (which included cloth and clothing). The use of coin substitutes spread even to England, threatening its fiscal system. Throughout Europe and Asia the larger transactions had to be by gold, which became the single money base, and as supplies of this metal came under pressure new sources had to be found in Spain and Italy and (latterly and most particularly) in sub-Sahara Africa. {6}

The areas surrounding the central Asian mines, which had grown prosperous under the mining boom, then faced uncertain times. Their rice, millet and wheat lands depended on complex irrigation schemes, but increasing taxation led to flight from the land, and irrigation schemes fell into disuse. The climate too became more arid, unsettling the nomadic peoples who increasingly turned to plunder, endangering or cutting vital trade routes. Samarkhand and Bukhara were surrounded by a rich complex of orchards and vineyards, and these too began to suffer, as did the local industries: textiles and the manufactures of weapons and metal implements. Some 100,000 starved to death in the great famine of Nishapur in 1011. {7}

Some Chinese gold entered central Asia to pay for local purchases, and this Chinese gold was supplied or supplemented by sources in Java, Sumatra, Borneo and the Malay peninsular. Some Chinese gold also found its way to India, though more Indian gold came from Tibet and Deccan sources. But if China paid for its luxury goods with gold, silver and copper cash, the country also balanced those trades with large textile and porcelain exports.

southern han one cash

A metal shortage nonetheless affected China, and there had to be lead coinages in the States of Min, Southern Han and Ch'u. When these seemed impractical supplements to copper cash, the emperor T'ai Tsu (960-75) of the new Song Dynasty adopted the 'flying money' of the previous T'ang and 5 Dynasties and 10 Kingdoms periods, where deposit shops would store gold, silver and cash, and honour cheques drawn on those deposits.

Southern Han Dynasty (917-42)
 Emperor: Liu Yen ( 917-942) Reign title : Chein Heng ( 917-942) Pb One cash
(Hartill 1570)

The government itself issued cheques in 1024 — i.e. bank notes — and though a small charge was levied, the notes were fully convertible.

By 1161, the Southern Song empire had 10 million notes in circulation, about twice the value of copper cash issues. Supplies were carefully controlled however, and the government never defaulted. Denominations were as low as 5 or 2 cash. Thus the silver famine, which caused such dislocations in Europe and the Islamic world, encouraged the expanding Chinese economies to free themselves from the deflationary constraints of a metal currency. {8}


Islamic silver supplies gradually dried up, but, happily for Europe, the late ninth century also saw the find of Rammelsberg in the Hartz mountains of Germany, and this enormous deposit of copper, lead and zinc yielded silver as an important by-product. Mining was rather primitive. The ore lay in steep-dipping layers of sandstone and slate, quite hard to work with picks, hammers and the usual practice of cracking the rock by fires, and subject always to flooding when the water table was generally within 30 m of the surface. The miners dug drainage tunnels, and lifted water in strings of leather buckets. Later they devised ingenious water extraction systems in which leather bags inflated with air were pulled through pipes made of hollowed tree trunks, but such improvements came slowly, indeed over centuries. Metal extraction was also rudimentary, being largely cupellation, a method essentially unchanged from Roman days, which left up of 30% of metal behind in the slag. {2}


In 1168 came the rich find of Freiberg, which created a lawless 'silver rush' settlement, and the next twenty years saw thriving mining operations on the Silberberg, where the Markgraf Otto of Meissen was content to award concessions and tax the proceeds. Even at a mere 10% royalty, the Markgraf became 'Otto the Rich', and when the Bohemians raided his treasury in 1189 they found 30,000 marks of silver, even after years of spending money on city walls and monasteries. Otto's descendants indeed became the Dukes, Electors and Kings of Saxony, and in time allied themselves to most of the European monarchy. The silver fever spread across Europe in the late 12th and early 13th centuries, unearthing new deposits in the Black Forest, in Bohemia, Hungary, the eastern Alps and at Iglesias in Sardinia. The Bohemian Kutná Hora discovery of 1298 generated enormous quantities of silver. Some 20 tonnes of silver were extracted every year from 1300 to 1340, generally by seasoned Saxon miners who brought with them their expertise, their customs and traditions of personal liberty. From this period may date the folk stories of central European, with their dwarves toiling in mountain caves glittering with ores and precious stones. {2,6}

Demise of Feudalism

Given these fresh if somewhat precarious silver supplies, countries throughout Europe once again began striking their own coins, their efforts still at the mercy of changing conditions at individual mines, new finds and the drain of silver outwards for trade or warfare with the Muslim east. When serfs could pay their dues in rent or taxes rather than a share of their produce, money started to undo the feudal system. Count Henry the Liberal of Champagne began in the 1170s to cut forests for cash, to plant new ones, and to clear scrub land for agriculture, charging rent in cash rather than payment in kind. He built mills, ovens, and wine-presses, again charging coined money for their use. Count Philip of Flanders drained swamp country, selling the peat for fuel and renting out the improved land for farming. Count Matthew of Boulogne founded new trading ports at Calais, Dunkirk, Damme, Nieuwpoort, and Gravelines as commercial investments. Individual peasants could also buy land, becoming by industry as rich as the lower classes of knights. Military campaigns were no longer restricted to feudal levees, moreover, but could employ mercenaries paid by taxation or from loans advanced against plunder and future profits. With taxes came the need for records, for an educated civil service to maintain them, and for an orderly administration of regions by cities like Paris, London, Venice, and Florence. Castles, cathedrals and palaces could now be built with the best that the newly-available money would buy, and embellished by local or imported craftsmen. Prosperity spread into the growing guilds, industries and middle classes, who sought luxury goods, often imported, but also developed a sound business sense in constructing canals, warehouses and comfortable town residences. Coinage expanded accordingly. English mints at London and Canterbury in the 1220 struck 15 tonnes of silver into 10 million silver pennies in a little over two years. English mints turned out an average of 4 million silver pennies a year in the 1220s, a figure rising to 10 million a year in the 1240s, 15 million in the 1250s, and 40 million a year in 1279-1281. The coins were struck of high-quality silver, moreover, and enjoyed a wide circulation in Europe as well. {2, 6, 12}

Silver Trade

Central European silver found its way over the Alps to Venice, where 'German silver' became the everyday currency. The Serene Republic built a trading centre, the Fondaco dei Tedeschi, to assist German activities, and charged them 2.5% duty on goods they traded. Central European silver was also used to buy woollen cloth from England and the Low Countries, and great trading cities rose on land routes or along the Rhine and Danube. Luxury goods from the Mediterranean, the Byzantine Empire and Muslim countries more than counterbalanced this trade, however, and generally created a net outflow of silver through the Italian trading ports. Silver mines declined throughout central Europe in the middle of the 14th century, partly a result of labour shortages after the Black Death, but more the simple geological facts. Mines had reached the limits to which the shafts could be pumped dry with available technology. Similar problems afflicted the large copper mines of Rio Tinto in Spain, where silver was extracted as a by-product. With coins expected to contain their face value of silver, such dwindling silver supplies led to reduced coin mintages. Edward I of England had 100 tonnes of silver to work with when he issued new coins in 1278-80, but Henry IV in 1412-1414 was limited to two tonnes. Silver shortages had caused almost all mints of northwest Europe to close by 1450. The last money-changer at Dieppe went out of business in 1446. {2}

Gold Trade

Gold was still available, for commerce and display, but everyday transactions required silver, which had been drained off to buy that very gold from intermediaries of the Mali empire. Europe was often subject to events beyond its borders. The Mamluk Sultans of north Africa, for example, controlled commodities essential to a Europe that had few means of preserving food. In 1426 the new Sultan Barsbay of the Mamluks — whose kingdom oversaw the passage of spices from Jiddah, where oriental supplies were unloaded, to Cairo and so sale to the Venetians — made pepper a royal monopoly. Prices were increased in 1426, 1428 and 1430. The extra expenditures came at an unwelcome time for the Venetians who were fighting Milan for control of the northern plain, and indeed hampered their campaigns. By the 1390s, there were silver shortages all over Europe. Output from the silver mines at Kutná Hora had declined after the 1370s, and closed down after Sigismund's raid in 1422. The only significant surviving sources were mines at Srebrenica in Bosnia and Novo Brdo in southern Serbia, and most of that production was shipped through the Venetian ports and fortresses that controlled the Dalmatian coast. As the Venetian trade with the east in the 1420s amounted to about 600,000 ducats a year, some 20 tonnes of silver a year may have drained out of Europe by this route. Some gold was mined in Europe certainly, from Rio Tinto and elsewhere, but Hungarian production fell markedly in the 1440s. {2}

Bullion Decline and Revival

But still there was enough gold for trade, at least at first. By 1423, the Venetians were taking in some 400,000 ducats a year paid by Florentine bankers, presumably in settlement of accounts by traders over a wide area of Europe, and over a million ducats from the burgeoning Duchy of Milan. But supplies were not uniform and eventually ran out. A French and a Florentine galley reaching Valencia in 1451 were unable to sell their goods because no ready money could be produced. The Turks overran the Serbian silver mines in 1455, and captured the last Bosnian mine in 1460. The final Venetian silver grosso was minted in 1462, and on 17th March 1464 Venice sent the city's cash for trade with Syria, leaving behind nothing but small and debased coins. Important banks failed, including the Strozzi bank of Florence, the second largest in the city, and entire regions in the Middle East sank into impoverishment and depopulation, exacerbated by centuries of neglect of agriculture and irrigation, military disasters, rapacious taxation, and misgovernment.

European deliverance came from two sources: improved mining techniques and New World bullion. The 1450s improvements of Claus of Gotha solved flooding problems in the Saxony mines, and old mines were quickly re-opened across Europe. A new lead amalgamation process introduced in 1451 facilitated the separation of copper from silver, and mining was resumed at full strength at Kutná Hora, Freiberg, and Rammelsberg. New mines were opened, particularly those at Schneeberg in Saxony and at Schwats in the Tirol. More important still was the Joachimsthal find in 1516, which was producing 3 million ounces of silver a year at its peak in the 1530s. The resulting coinage, the so-called Joachimsthaler, became the thaler denomination, and in time the dollar. {2}

Growth of Banking

The unequal trade with the Middle East also revived. Some 300,000 ducats' worth of silver per year was reaching these countries by 1496, and silver was again plentiful in Italy in 1471. The chief bullion exchange cities were now Milan for the Italian route, and Frankfurt for wool from Flanders and England. The financial world was re-established with better banking and credit procedures. Banks of sound reputation began to lend out 90% of the deposits, so increasing commissions and business opportunities. Silver was increasingly bought and sold as a commodity, and silver needed for coinage often bought with gold coins. With new copper supplies from mines in the Alps and Carpathians, the Venetians from 1473 minted a copper coinage: sound coins that were accepted because they contained their face value in metal. {2}

Old and New World Sources

Mining technology continued to improve. At Rammelsberg, the Saxon miners built a 2600 m long drainage adit which took 99 years to complete, constructed a dam, and pumped out mines with water wheels driven by sluice waters. Saxony miners were the acknowledged experts when Agricola wrote his treatise 'De Re Metallica', and they developed techniques not improved on until modern times. Mine ventilation was instigated, fire-cracking of rocks greatly reduced, basket haulage replaced by sleds and wheelbarrows, and ore lifted by windlasses powered by hand and then horses. Advances in metal extraction allowed lower-grade ores to be worked. In time, however, though or because increasing bullion from the New World corrected the trade imbalance, working practices in the European mines sank back into their old ways. Miners were reduced to virtual slavery, and many mines were in fact worked by prisoner-of-war and convict labour. Indeed the whole balance of trade shifted when Muslim intermediaries were bypassed as Europe developed sea routes to the orient. The Portuguese, Dutch, and English exported bullion to Asia and brought back spices, tea, silks, and porcelain. Most of that bullion came not from Europe but mines in Peru and Mexico, its Spanish masters redistributing this wealth in ruinous European wars and lavish court spectacle rather than in sensible investment. {2, 6}

References and Further Reading

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