The contest between good and bad currencies defines the divide between the North and the South. Dr Massimo Sbarbaro

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1 The contest between good and bad currencies defines the divide between the North and the South

2 Everything starts from the mintage of: 1252: Florence - florin and, 32 years later 1284 Venice - ducat

3 1250 Holy Roman Empire Dr. Massimo Sbarbaro

4 Frederick II, House of Hohenstaufen (Jesi, 26 December 1194 Fiorentino di Puglia, 13 December 1250) 1198 King of Sicily 1212 Duke of Swabia 1212 King of the Romans 1220 Holy Roman Emperor 1225 King of Jerusalem King of Germany, Italy, and Burgundy. 5 June 1224: Frederick II founded the Univesity of Naples (first state and non-clerical university of the World, in contrast to the University of Bologna which was a private students and professors association) 1231 Constitutions of Melfi and Augustalis mintage 1239 Excommunication

5 The reversion to gold in Western Europe: the Augustalis The coin weighed about 5.24 grams, which is ¼ of a Sicilian gold ounce. The obverse contains a classical (not medieval) bust of the emperor wearing a laureate wreath with the legend CESAR AVG IMP ROM (Caesar Augustus, Emperor of the Romans); the reverse shows an eagle, the imperial symbol, with the name FRIDE RICVS (Frederick).

6 Augustalis Tarì Coin Weight Value augustalis 1/5 of tarì s ounce = 6 tarì ¼ of tarì s ounce= 7.5 tarì ounce 26.4 g or 30 tarì tarì 26.4 /30 = 0.88 g

7 After December 1250 In December 1250, following the death of the Emperor, his son Manfred sent a heartfelt letter where he wrote: The sun of the world that shone over the people has gone down. In Rome Pope Innocent IV ordered the churches bells to ring out joyous peals to announce to the world the death of the Antichrist. The obsequies took place without any pomp or ceremony, according to the wish of the departed. The funeral procession passed for the last time through the beloved Apulian land. Afterwards, the corpse was embarked in Taranto and returned to Palermo (Sicily).

8 The legacy od Frederick II between the bankers of Florence and the power of the Pope

9 Florence and Tuscany before the House of Medici The design of the original Florentine florins was the distinctive fleur-de-lis badge of the city and a standing and facing figure of St. John the Baptist wearing a hair shirt. It was 3.52 g of pure gold (24 carats). Money Weight 1 florin 3.52 g 3.52 g 0.88 g x 4 1 florin 4 tarì

10 The Gresham s Law in practice: the Florentine florin as a weapon against Sicily In economics, Gresham's law is a monetary principle stating that "bad money drives out the good one". For example, if there are two forms of commodity money in circulation, which are accepted by law as having similar face value, the more valuable commodity will disappear from circulation. Money Weight 1 florin 3.52g 3.52 g 0.88 g x 4 1 florin 4 tarì 1 augustalis 1 florin + ¼ 1 florin g 1 florin + 1 tarì 4 tarì + 1 tarì 5 tarì Money Weight Value augustalis 6 tarì 7,5 tarì

11 Florence and the florin Benefits for Florence: 1. the augustalis is used as raw; 2. the gold needed to mint the new money is found; 3. it is necessary to pay duty on the gold imported to Florence incomes for Florence; 4. seigniorage; 5. increased Florence s economic power.

12 1284: Venice and the ducat The Venetian ducat: Made of 24-carat pure gold and weighed 3.52 gr The obverse: the Doge of Venice kneeling before St. Mark; the patron of Venice presents a oriflamme with a cross. The reverse: Christ stands and holds the Gospel in the left hand and blesses with the right. The mintage of the Venetian ducat in 1284 happened when: 1. the inflation was becoming steady after the market euphoria started in 1252; 2. the silver reference currency for Eastern markets was the Venetian grosso.

13 Values, changes and relations among the currencies

14 Grosso of Venice The Venetian grosso was a silver coin first introduced in 1199 under the doge Enrico Dandolo. It originally weighed 2.18 g, was composed of 98.5% pure silver and was valued at 26 denari.

15 The Gresham s Law in practice: the Venetian ducat as a reaction against the Orient 1 grosso of Constantinople (Andronicus II Palaeologus basilikòn ) = 1 Venetian grosso 1 grosso of Constantinople = 70% silver 1 Venetian grosso = 98.5% silver The grosso of Constantinople as a bad currency that would destroy the Venetian grosso according to the Gresham s law. 1 ducat = 32 Venetian grossi was the defence against the bad currency

16 1284: Venice and the ducat 1. First indications of the inflation becoming steady after the market euphoria started in Protection of the grosso on the Eastern markets.

17 In conclusion: 1252 Florence - florin 1284 Venice - ducat 32 years later - why?

18 1284 Venice ducat financial point of view 32 years before 1252 Florence florin political point of view