The Frankfurt 'Champagne Thaler' in 1843 - or: How to overcome the Problem of two German Currency Areas with a Mathematic Trick, promoting Trade
19th century Germany was bothered by many different currencies. Nevertheless, in the end these currencies were brought together. This podcast will tell you how.
Come along with us on our journey through the world of money. Today we are stopping in Frankfurt. We are in the year 1843.
It is a buzzing scene that unfolds before our eyes on the Main River.
The river used to be the main artery of Frankfurt, connecting the important commercial city with the rest of the world in the pre-railway era.
Like pearls on a string, one proud bourgeois house follows the next on the waterside promenade. The ships anchor in the Main port. Some have already cast off and move smoothly over the water although the sun is just rising behind the Main Bridge.
"Freie Stadt Frankfurt", Free City of Frankfurt, can be read above the scene. And the most important concern of the citizens of Frankfurt in 1843 is depicted below, in the exergue.
A winged Mercury staff entwined with snakes symbolizes the trade while the two cornucopiae filled with flowers represent the high yield that comes with it.
It was not self-evident that Frankfurt enjoyed the status of a free city. In 1806 Napoleon added Frankfurt to the Principality of Aschaffenburg.
Yet, during the Congress of Vienna, the envoys from Frankfurt were so deft at negotiating that they secured themselves autonomy. From then on, there were only four free cities in Germany: Bremen, Hamburg, Lübeck, and, well, Frankfurt.
After the French had left, the city was beginning to boom. Bankers like Amschel Mayer Rothschild and Johann Jakob Bethmann-Hollweg turned Frankfurt into a center of finances. A free trade agreement with England built on the tradition as international business metropolis.
Joining the German Customs Union in 1836 boosted Frankfurt’s intra-German trade tremendously. But there was still one obstacle that all the ambitious merchants had to overcome. Every German State, no matter its size, had its own currency.
Naturally, some efforts were being made to standardize the currencies. Sentimental emotions were simply not as important as profit. Prussia was the first to introduce a single currency in its entire territory in 1821. The thaler became standard currency whose silver content was set: 14 specimens were to be coined from one fine mark of silver.
Back then, a mark equaled 233.8555 grams. Hence, a thaler was to contain 16.7 grams of pure silver.
Other states like Anhalt, Brunswick and Hanover formally joined the Prussian standard in order to facilitate trade. The reverse of this thaler from Brunswick makes it abundantly clear that it, too, contained one fourteenth of a fine mark of silver. Soon it seemed that the entire northern part of Germany intended to follow the Prussian standard. In order to counter that, the states in southern Germany negotiated on a currency of their own. Bavaria, Wuerttemberg, Baden, Hesse, Nassau and Frankfurt concluded the Coinage Confederation of Southern Germany in 1837.
Its standard currency was the gulden, worth 60 kreutzer, of which 24 ½ were to be coined from the famous fine mark of silver. Thus, a gulden contained 9.55 grams of silver.
In 1838 and 1839, Saxe-Meiningen, Hohenzollern-Sigmaringen, Hohenzollern-Hechingen, Hesse-Homburg and Schwarzburg-Rudolfstadt likewise joined the treaty
This meant that the thaler circulated in the north, while the south had its gulden. Which was not really convenient in an area which was already united in a customs union. It goes without saying that the currency was planned to be standardized, too. The south, however, refused to abandon the gulden. It was the same with the north that did not want to let go of its thaler.
Only a mathematic trick could solve that dilemma:
Three and a half gulden equaled – when rounded properly – two thaler. That was how a vereinsmünze, a union coin, came into being, suited to circulate in two different currency areas because it conformed to two different standards.
Thus, this coin from Frankfurt is a double thaler. Or, for those who prefer calculating in gulden, a 3 ½ gulden piece. Anyhow, seven specimens of this coin made one fine mark of silver.
The new coin was suited to cross intra-German borders in international trade. In everyday-life the double thaler, I’m sorry, the 3 ½ gulden piece, was of no use. When did the little guy on Main Street ever buy something so pricy that he would need such a coin?
It is hardly surprising that people referred to that coin as ‘champagne thaler”.
Thank you for listening. And you can find more podcasts about coins and money on the Sunflower Foundation Web page.