Seizure of the Mint (England)

Seizure of the Mint (England)

The Seizure of the Mint refers to an episode in 1640 in which Charles I, reigning king of England from 1625 to 1672, intercepted the flow of coins from the mint to the government’s major creditors, the goldsmiths and merchants. Minting coins had become such a booming business under Charles I that the Tower Mint could not keep up, causing Charles I to open branch mints throughout the kingdom.

Charles I was always in need of money despite a treaty with Spain that assured him of abundant supplies of bullion. On one occasion Charles I forced the East India Company to sell him its entire stock of pepper on credit, payable after two years. Charles I bought the pepper at a price of 2 shillings 1 pence per pound, and then turned around and sold it for 1 shilling 8 pence per pound, raising instant cash in a roundabout credit transaction that angered the merchants of London. On two occasions the Privy Council blocked proposals that Charles I advanced to increase the mint profits by debasing the coins, a favorite stratagem of monarchs for squeezing more resources from subjects. Debasing the coin meant reducing the precious metal content in coins with a given face value.

The machinery of public finance was a bit primitive during the reign of Charles I. The government’s creditors, mainly goldsmiths and merchants, claimed freshly minted coins when they became available. In 1640 Charles I stopped the flow of coins from the mint, planning to use the coins for his own expenditures, and instead promised to pay the Crown’s creditors 8 percent interest on his outstanding debt. A howl rose up from goldsmiths and merchants who wanted their money immediately, causing Charles I to relent and send two-thirds of the coins to the Crown’s debtors. Charles I kept one-third of the coins and promised to pay his creditors 8 percent for six months.

Charles I eventually paid the creditors in full, but only after the merchants and goldsmiths had lost faith in the government’s management of monetary affairs. Already there was talk of setting up a national or public bank, and the incident of the mint seizure convinced influential people that the government could not be trusted with direct power over such a bank. The Bank of England came into being in 1694, and developed as a private institution that nevertheless enjoyed close ties with the government.