Kipper and wipper inflation
The kipper and wipper inflation (German; Tipper and See-Saw Time in English) was a severe inflation in the Habsburg lands in early 17th century.[1] The terms kipper and wipper came to mean counterfeiters or cheats in general. Many have seen the inflation as the sign of the End of Days.[2]
The inflation
After the peak of silver production in the Holy Roman Empire in 16th century, the rising silver prices made silver coins more worth than their nominal value - and so were they molten down or exported. But a larger problem was the too high precious metal content in small coins (the pfennigs, kreuzer and groschen), that were coined at a loss to the minter. The demand for them was so large, that many small minters produced lesser coins against the regulations. The practice was forbidden, but despite many calls and resolutions it had reached alarming proportions by the beginning of the 17th century. Many of the mints have been rented and sold, run for purely fiscal reasons. An additional motive were the preparations and arming for war, which many have seen coming by 1615. Paradoxically, the inflation came before a war and ended in its beginning phases in 1623.
Many merchants have taken up the trading and exchanging of coins. The "kipper" and "wipper" were names for the dealers with money (named after the weighing of coins to filter out high quality pieces and melt them down or to shave them - see the Tipper and See-Saw Time, in German Kipper- und Wipperzeit). Mints have been popping up everywhere. In 1610 was the currency formally reformed, making the production of small coins profitable. But many minters have continued to make devalued coins, and the good Thaler continued to vanish abroad.
In particularly hit Saxony, where 110-130 of good groschen were once made from a mark* silver, and in 1610-1617 they were not more than 170, by 1619 it was already up to 270. This rose to 320 in 1620 and 330 groschen on a mark in 1621. The Schinderling inflation was 150 years ago and not widespread, so the dangers of inflation were not recognized. Everybody enjoyed the easy money and believed to get rich quickly, and at first there seemed to be an economic boom. But the prices have risen in consequence. Those with fixed incomes were hit first, by 1621 were the complaints universal. Particularly clergymen have seen in this the work of the devil. In 1622 was the unrest widespread; miners have rioted and plundered the coin dealers. Copper itself has become so expensive, that housewives sold their pans and kettels to the mints. Everyone paid their debts and taxes, and many lawsuits followed due to paying with bad money. The thalers were requested for all payments and the devalued coins were rejected. Some towns held public collections to protect clergy and teachers from misery.[1]
| Prices of cereals in Dresden:[1] | 1600-1620 | 1621 | 1622 | 1623 |
|---|---|---|---|---|
| a scheffel of wheat | 2 thaler 15 groschen | 5 thaler 13 groschen | 11 thaler 5 groschen | |
| a scheffel of rye | 2 thaler | 4 thaler 19 groschen | 9 thaler 19 groschen | 11 thaler 10 groschen |
The exchange rate of the Reichstaler rose from 1 florin 32 Kreuzer in 1618 to 6 fl. in 1622 (i.e., the value quadrupled) when averaged over different states of the Empire. It climbed to 7 fl. in Frankfurt, 10 fl. in Southern Germany, 11 fl. 15 Kr. in Bohemia, and 15 fl. in Electoral Saxony ("Kursachsen"). (1 florin equaled 60 Kreuzers.)[3]
The inflation has worsened after the Battle of White Mountain in 1620 and the integration of Bohemia. Karl I, Prince of Liechtenstein was appointed to stadtholder and viceroy of Bohemia, and quickly began to inflate. In 1622 was all currency-making loaned to a consortium co-owned by the prince and Albrecht von Wallenstein, among others. (The profit was also used to buy land of protestants in Bohemia; an estimated ⅔ of its land area was confiscated after their defeat). A rapid inflation followed, the export of good coins was forbidden, and they were soon melted down. The rising prices caused a general unrest and a rebellion almost broke out in Vienna.
To bring the situation under control, some cities began to take measures by 1618. In 1622, Lower Saxony demanded according to old laws the personal introduction and swearing in of every Münzmeister, upon which most of them vanished. 1623 followed Lower Saxony suit, and returned to the old currency. The debased coins were withdrawn and replaced with good coins, the losses mostly carried by the population. Finally, the emperor ordered to stop the production of the 'easy coins' in all Habsburg lands and return to to the Viennese standard. 100 debased thalers were exchanged for 13,3 reichsthaler from silver. Germany was more destroyed by inflation than by the Thirty Years' War and likened by some pamphlets to pestilence.[1]
*) In Germany became the Cologne mark standard, with 233,856 g. The English mark was 233,275, the Spanish 230,348, the Portugese mark 229,50 g.
References
- ↑ 1.0 1.1 1.2 1.3 Richard Gaettens. Geschichte der Inflationen Von Altertum bis zum Gegenwart (German: History of Inflations from Old Ages to the Present), Die Zeit der Kipper und Wipper (The time of kippers and wippers) p. 74-99. ISBN: ISBN 3-87045-211-0. Referenced 2010-02-04.
- ↑ Tryntje Helfferich. "The Thirty Years War: a documentary history", Google Books, Hackett Publishing, 2009. Referenced 2011-06-30.
- ↑ "The "Kipper- und Wipperzeit" and the Foundation of Public Deposit Banks", by Isabel Schnabel, Max Planck Institute, Bonn and Hyun Song Shin, Princeton University. November 2006, referenced 2010-02-22.
Links
- The German economic crisis of 1618 to 1623 (the Kipper and Wipper period) (pdf), Deutsche Bundesbank
- “Kipper und Wipper”: Rogue Traders, Rogue Princes, Rogue Bishops and the German Financial Meltdown of 1621-23 by Mike Dash, March 2012
- Tipper and See-Saw Time on Wikipedia
