QUESTION: Where the Crusades inspired by economics? You mentioned how Venice looted Constantinople.

Thank you for making history interesting

KR

ANSWER: To understand the Crusades, we have to first look at what was the original justification. The Catholic Church encouraged pilgrimages from the 4th century, but they began really during the 1st-2nd century and built in intensity. Pilgrimages became very popular once Constantine the Great became emperor. Contemporary historians reported that Roman Emperor Hadrian (117-138 AD) built a temple dedicated to the goddess Venus in order to hide the cave in which Jesus had been buried in hopes of ending early Christian pilgrimages. Constantine ordered during 325/326 AD that the temple of Venus be replaced by a church which has become known as the Church of the Holy Sepulchre. It was during the construction of this church that Constantine’s mother, Saint Helena, is believed to have rediscovered the tomb.  Socrates Scholasticus gives a full description of the discovery in his Ecclesiastical History. In her final years, Helena made a religious tour of Syria Palaestina and Jerusalem, during which she allegedly discovered the True Cross.

The pilgrimages to the Holy Land really began to rise in mass going into the year 1000. As the year 1000 approached, the doom and gloom was pervasive. Everyone assumed that the world would end and this would be last judgment. It became so common that the King of England removed his own portrait from the coinage and placed the Christian symbol of the lamb on one side and the Holy Ghost on the reverse. When the world did not end, he promptly restored his portrait to the coinage the following year.

This belief in the end of the world prompted people to make pilgrimages to the Holy Land. This is when they were being robbed on their travels which became known as highway robbery. Political relationships between the Muslim caliphates and the Christian kingdoms of Europe had remained in a state of somewhat state of suspended truce. The Muslims allowed the continuation of Christian pilgrimages into Muslim controlled lands generally, but as with all political leaders, policies change with the change of regimes. During the reign of Fatimid Caliph al-Hakim bi-Amr Allah (996-1021 AD), because of this view that the world was going to end, a massive wave of pilgrims flocked to the Holy Land. His policies proved to be arbitrary and extremely harsh and at times sheer madness. He ordered the killing of all dogs because their barking annoyed him. He banned various kinds of vegetables and shellfish that he personally disliked. He also engaged in religious persecutions of Sunnite Muslims, Jews, and Christians. He appears to have been insane for he held that he was the incarnation of divinity. Al-Ḥākim in response to the pilgrims from Europe ordered the destruction of the Church of the Holy Sepulchre, which in part inspired the Crusades. Nevertheless, only to have his successor, Abū’l-Ḥasan ‘Alī al-Ẓāhir li-I’zāz Dīn Allāh (1021–1036), allow the Byzantine Empire to rebuild it. Al-Ḥākim was overthrown for he mysteriously vanished while taking a walk on the night of February 13, 1021, never to be heard from again. It was his actions that formed much of the basis for the Crusades. The four main crusader armies left Europe around the appointed time in August 1096. The Seljuk Turks also systematically disrupted Christian pilgrimage routes, which also became a major factor triggering the crusades.

So while the Crusades began as a religious quest of a Holy War, eventually they turned into profit ventures. The Venetian Empire finally saw the opportunity to conquer Constantinople. So while the Crusades did begin over religious issues, once there was money to be had, they became the means to pillage the old capital of the Roman Empire and carry off the loot back to Europe.

The Venetians stole the body of Saint Mark (one of the apostles of Christ) from Egypt and built a church in what is now known as Saint Mark’s square. On the facade of the Church stand four bronze horses, which are really 96.7% copper because copper melts at a higher temperature than bronze making it more difficult to work with. These were stolen from Constantinople in 1204 when the Venetians sacked the city. Their origins are not actually known. They may be the horses that were long displayed at the Hippodrome of Constantinople where chariot racing took place. They were perhaps the “four gilt horses that stand above the Hippodrome” as mentioned in the 8th- or early 9th-century contemporary historians. While the Venetians looted them in 1204 during in the Fourth Crusade, the collars that appear around the necks of the horses were added in 1204 to obscure where the fact that the heads had been severed for transport. Then in 1797, when Napoleon conquered Venice, he had the horses removed and sent to Paris. After the defeat of Napoleon, the horses were return to Venice in 1815.

So yes, whatever “good” deed is done, when there is money to be had, it appears that we should then just follow the money to reach the truth.

QUESTION: Mr. Armstrong, what were the gold custom units issued by the Bank of China with the image of Sun Yat-sen.

PHR

ANSWER: The Customs Gold Unit (CGU) was a currency issued by the Central Bank of China between 1930 and 1948. On May 1, 1930, the Central Bank of China put in circulation notes in denominations of 0.10, 0.20, 1, 5, and 10 Customs Gold Units. These notes were printed by American Bank Note Company and dated 1930. CGU notes were originally issued by the Central Bank of China for payment of import duties. These notes were backed by U.S. dollars until 1935.

During and after WWII, the large-size CGU notes were issued for general circulation in China. The vertical face depicts Sun Yat-sen, who was the first president of the Republic of China. The reverse side features the Customs House in Shanghai, which was the commercial and financial hub of Chin

Gold rings were discovered in Ireland and they seem to be uncertain about their original use. The Celts did not create their own coins for many centuries. They used ring money which is commonly found throughout Europe, north of Italy. Celtic ring money is typically bronze. However, it is known that the Minoians sailed into the Atlantic and traveled to England where they traded to obtain tin, which when mixed with copper created bronze. However, the Celts were not the first people to inhabit Ireland for it was inhabited by humans since 6000 BC. There was no Celtic invasion but rather some Celts migrated only arriving in 500 BC. Nevertheless, ring money was probably known to the Irish prior to 500 BC.

The ancient Irish learned how to make bronze from the French Celts who settled in Ireland and brought the materials needed for casting simple bronze objects like arrows and taught the Irish the trade. The technology had already been in place for quite some time on the continent.  Ireland did have abundant copper deposits, which actually inspired the Irish to search the entire island looking for copper. They found it in Mount Gabriel in county Cork and Ross Island in county Kerry, two of the few known Bronze Age mines in all of Europe.

The gold rings recently discovered were handed over to the Donegal County Museum. The curator Caroline Carr told the BBC that: “This is a once in a lifetime find for our county…” Ireland was out-of-the-way even for the ancient Celts. When St. Patrick visited Ireland during the 5th century AD, he wrote that the monetary unit of account was slave girls. That did not mean you went shopping dragging slave girls with you to pay for things. Everything else was valued in terms of slave girls, so they were the “unit of account” which St Patrick said he had spent money valued at the price of several humans.

Nonetheless, Eqypt also did not strike coins until they were conquered by Alexander the Great in the autumn of 332 BC, thereby beginning the Greek period in Egyptian history. The Egyptians also used ring money. Coins were not invented until the 7th century BC in Lydia, located in modern day Turkey. They began as simply modules of a standardized weight. Later they were stamped with the seal of the king, a head of a lion. This effectively certified the first “official” monetization by any state.

The gold rings discovered in Ireland are money, not jewelry. There were areas in Ireland where gold was deposited that were known to inhabitants of Ireland in 2500-500 BC. Most people would never guess, but in fact, there are more Bronze Age gold hoards that have been found in Ireland than anywhere else in Europe! So the gold rings do not necessarily reflect international trade. Ireland was largely isolated.

The question of money supply and inflation has been erroneously been set in stone predominantly by the debasement of Spain and Britain during the period of Henry VIII. This was really a period where there were various countries and their currency completely relied on the exchange market in Amsterdam, which was based entirely upon their metal content. This period was far less judgmental insofar as we have today where currencies rise and fall purely on anticipation of political events. During the middle ages, this influence of anticipating future value based upon possible political decisions was not readily dominant and the coins of one nation were compared entirely on their metal content.

For example, because of the French at war with Britain, they created a wave of inflation that spread like a contagion to other nations, namely Spain and Italy, because money was commodity based using gold and silver. In this way, there was really a single currency base among nations and the problems of one would be exported to all others by their debasement.

We can see that wages more than doubled even in Spain as inflation became a contagion. To cover the cost of war, France began debasing their gold and silver coinage. There was clearly economic pressure for in 1305, the French Crown issued a restored monetary system. The gros now appears at 12d fine and the denier are also returned to a sound MONEY standard. These were now worth 300% greater than the debased coinage in circulation. The gros was now worth 10.5 deniers for with the end of the war, precious metals fell in value for a marc of silver collapsed back to 56s 8dt. Despite the end of the war, gold demand remained strong in all countries. By 1311, the coinage once again was debased as precious metals rose in value. A new gold coin was issued known as the angel d’or that was valued at 20 st. The silver to gold ration now jumped to 15:1. Silver begins to disappear being hoarded and gold becomes more commonly struck in France and England. Yet the volatility seems to have been incredible for the times. Gold prices crashed in value and the agnel d’or dropped from 20st to 15st. Silver collapsed falling 25% in value at this time, yet the silver to gold ratio remained at 15:1.

Silver began a three-year rally reaching a ratio of 12:1 in 1316. This rally coincided with the death of Philip IV, but his successor, Louis X (1314-1316), appears to have struck no silver gros whatsoever. The only coins struck in his name are the gold angel. The coinage reflects a surge in inflation as reflected in wages going into 1329. We see bullion prices rising again starting in 1322 whereby in October that year, there appears to be a significant debasement whereby the fineness collapses to about 47%. The debasement continued in 1323 and again into 1326.

The Capetian dynasty dies with the three sons of Philip IV, none of whom had produced a male heir and thereby the line passed to the Valois Dynasty. We come now to a Monetary Reform of 1330, with a major effort to restore sound MONEY once again. They did learn that one could not simply return the MONEY supply to a sound footing overnight. They tried to phase it in more gradually, for it has the tendency to lead to the new MONEY merely being hoarded. Nevertheless, this monetary reform under the new Valois Dynasty was short-lived, for, in 1337, there was the start of the Hundred Years War with England and the invasion of Edward III (1327-1377).

Their accounting books of Peruzzi Company, one the main Florence bankers, covering the period of 1335 to 1343 have survived to provide us with the detailed footnotes to the history of this period. For by 1330, the Peruzzi Company was the second largest banking house in Europe, just behind the Bardi, with 15 branches covering the Middle East all the way up to London. They were not just a super-rich merchant-banking firm they were one of the earliest truly international companies to emerge. Their capitalization stood at 100,000 gold florin in 1330 and they had a staff of about 100 people. The Peruzzi had made a fortune on taking English wool and turning it into fine cloth in Bruges, and selling luxury products to Avignon, London, Paris, and Naples to mention a few. They also dealt in spices, silk, drugs, and other luxury items from the East. They emerged as a great wholesaler supplying credit to the lesser merchants and creating a vast sales network. They became dealers in large quantities of commodities that even included grain from Italy. Yet with the defaults of Edward III, the Peruzzi collapsed in 1343 and were driven into bankruptcy by 1345.

Because of the French/English war, the French drove the price of silver up dramatically. In Florence, they utilized a two-tier monetary system with silver used as the domestic coinage for wages and gold for international transaction much as Bretton Woods after Roosevelt’s confiscation of gold in 1934 domestically. Because of the French debasement, the price of silver rose and this disrupted the economy in Florence. Companies could no longer pay wages in silver and businesses failed. As unemployment rose, the people, not understanding the real cause, stormed the palaces of the banks and burned them to the ground. The bankers were blamed for the action of kings.

Therefore, the precious metal monetary system was by NO MEANS a good stable system where money was tangible. It also allowed for contagions that people did not understand. If we are going to create a new monetary system, the “reserve” currency cannot be one of any single nation. It must be a basket at best for this is the ONLY way to prevent contagions. Currently, with the dollar as the reserve currency, because we still use Demand Economics, then the raising or lowering of interest rates sets in motions contagions that will either export inflation or deflation to other countries. We need to understand how contagions take place and their origin.