Demonetization

The initial meaning of the term “demonetization” is deprivation of some type of coin of “monetary quality”, monetary functions (in the economic sense), status of legal tender (in the legal sense) ^{[11] [5] [3] [12]} . At the same time, coins deprived of this status may be subject to mandatory seizure, followed by re-enrollment , and may remain in circulation, but not at face value , but only at the price of the metal contained in them. Thus, for example, in France, after the introduction of the franc in 1795 and the demonetization of the old system in 1834 ( ecu , liard , etc.), many of them remained in circulation throughout the 19th century, along with even coins from earlier historical periods ^[13] .

Demonetization as a tool for regulating money circulation began to be used in antiquity and could be caused by both political and economic reasons. Thus, for political reasons, in the year 107 of our era, Emperor Traian ordered to remove from circulation worn silver coins and issue instead a series of restorative republican denarii . The goal is to present the Roman history as a continuous whole, the Empire inherits the Republic ^[14] . From comparatively recent Russian history, an example of demonetization for political reasons may be the prohibition of royal coinage coins in the early years of Soviet power ^[4] .

The economic motives for demonetization can be very diverse - from the need to unify the money circulation (see the article “ Elena Glinskaya ’s currency reform ”) or extract additional profit as a result of using the monetary regalia (see, for example, the “ Coin Renovation ” article) to the transition to a new type of monetary system . In the latter case, the most typical examples of demonetization are associated with the transition from one base metal to another or from monometallism to bimetallism and back, finally, with the loss of all or part of monetary functions by metals and gold and silver in connection with the expanding use of credit tickets , checks ) and paper money , non-cash payments ^{[1] [2]} . To describe the economic processes associated with the loss of precious metals of the functions of money, can be used more specific concepts - "demonetization of silver" and "demonetization of gold".

The key coins of antiquity, the Middle Ages and the new time were full, that is, their denomination was close to the value of the metal from which they were made. The metal at the same time served as money directly. The implementation of these functions was carried out, including through the right to free coinage of metal coins belonging to private individuals. That is, any person had the right to hand over an unlimited amount of some metal to the mint and, having paid only a fee to cover production costs, to mint a full-fledged hard coin from it ^[15] . With a silver standard, free coinage of silver coins is allowed, but may be limited to gold; with a gold standard, vice versa. For example, in Russia, free coinage of private silver existed until the middle of the 17th century ^[16] , but then the issue of coins into circulation was monopolized by the state. After the reform of 1839–1843 and the introduction of the silver standard, the right of free coinage was restored for both gold and silver coins, and after the reform of 1895–1897 and the introduction of the gold standard only gold. Additional tools for demonetization of a specific metal - chasing from it only change coins (as an addition to exchange rate coins ) and / or imposing restrictions on the receipt of coins from this metal by statutory marginal amounts ^[17] .

Bronze Demonetization

The first money of ancient Rome was the bars of almost untreated bronze ( Aes rude ), then - the bronze bars with images ( Aes signatum ). Around 312 BC. er there were cast bronze coins, "heavy bronze" ( Aes grave ) - ass and its derivatives ( semis , triens , quadrant , ounce , etc.).

Initially, the ass weighed 1 libra ( libral ass ), but then its weight steadily declined: in 289 BC. er - up to ¹ ⁄ ₂ libra, in the 268th - up to ¹ ⁄ ₆ , in the 217th - up to ¹ ⁄ ₁₂ , finally, in the 89th - up to ¹ ⁄ ₂₄ libras. In 268 BC. er In addition to the bronze coins, Rome began to mint silver denarii , weighing 4 scrapers (4.55 g). Based on the established by the time the ratio of prices for copper and silver (120: 1), 1 denarius was equal to 10 assam. In 217 BC. er at the same time as the weight of the ass was reduced to ¹ ⁄ ₁₂ libra, Rome devalued the denarius to 3½ of the scrubber. As a result, its value was equal to 16 assam.

In 89 BC e., reducing the weight of the ass to ¹ ⁄ ₂₄ libra, but retaining the same weight of silver coins, as well as the ratio of the denarius to the ass (1:16), Rome essentially turned the copper coins into fiat money . This meant the demonetization of bronze (copper), the loss of the functions of money by this alloy (metal) directly ^{[18] [4]} .

Demonetization of silver

Silver performed the functions of money much longer. In a number of countries, the silver standard for a long time (for example, in Russia it existed for short periods from the inception of the monetary system until the end of the 19th century) or bimetallism , which implies parallel and almost equal use of silver and gold or silver and copper ^[19] .

The demonetization of silver and the transition to the gold or gold exchange standard ended in Europe and the United States in the 19th century, and in many countries of Asia and Africa in the middle of the 20th century. The reason is the sharp fluctuations in the ratio of gold and silver prices. So in antiquity and the Middle Ages, the price ratio of silver to gold was 10-12: 1, in the XVII-XVIII centuries - 14.5-15.6: 1, by the end of the XIX century - 33.33: 1, by the middle of the XX-th - 50: 1 ^[20] . In the XIX century, these fluctuations were caused both by discoveries of new gold deposits (especially large ones were found in California and Australia ), and by an increase in the ratio of silver production to gold ^[11] .

One of the first countries that abandoned bimetallism and, accordingly, the use of silver as the equivalent of money, was the United Kingdom in 1816 ^[11] . The German Empire ^[11] , the United States in 1873 (see the article “ The Coin Act of 1873 ”) ^[21] , Sweden, Norway and Austria-Hungary in 1892 ^[11] demonetization of silver in the Russian Empire followed it. and the transition to the gold standard occurred as a result of the monetary reform of Witte of 1895-1897 .

Demonetization of gold

The demonetization of gold is a gradual process of gold losing its monetary functions . It finally ended in 1971-1976 with the collapse of the Bretton Woods monetary system - historically the last international monetary system based on gold. After the refusal in 1971 of the US government unilaterally from the commitments made in 1944 at the international conference in Bretton Woods to maintain the official price of gold (in exchange for which the status of the reserve currency was fixed to the US dollar), cross-country comparisons of the scale of prices lost their “gold base” and gold has ceased to play the role of "universal equivalent" in international economic relations ^{[22] [7]} .

In the period between the first and second world wars, the demonetization of gold took place at the level of national monetary systems, where gold coins were forcibly removed from domestic monetary circulation in the 1930s. As a result, gold ceased to perform the functions of a means of circulation, a means of payment, and also a means of treasury education (private hoarding was declared illegal, in particular, in the USA). However, gold continued to perform the functions of world money , as well as a measure of value — as the basis for establishing the national scale of prices and, through it, exchange rates ^[7] .

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