The Anglo-Scots Monetary Union of 1707
Author | |
DOI | 10.3366/elr.2019.0573 |
Published date | 01 September 2019 |
Date | 01 September 2019 |
Pages | 360-387 |
Debates over currency, monetary sovereignty and monetary unions have loomed large in European and British politics over the past two decades. The cession of national sovereignty needed to join a monetary union was seen, by the United Kingdom at least, as a step too far when formation of the euro-area was debated in the 1990s. More recently, the question of the currency that might be used by an independent Scotland has become a point of contention in the debates over Scottish independence.
The recent debates in Scotland have an historical backdrop which is the subject of this article. The existing monetary system of the United Kingdom results from at least two monetary unions and one partial dis-union in modern times. The monetary system of Scotland was merged with that of England and Wales by Article XVI of the two Acts of Union of 1707, which enacted the Treaty negotiated the previous year.
The Anglo-Scots monetary union has almost entirely escaped historians' attention. They have tended to concentrate instead on the political union of 1707 and its significance in ensuring a protestant succession north and south of the border. They have analysed the economic drivers for the union, such as access to England's overseas trading networks, the abolition of customs barriers and the harmonisation of tax regimes between the two countries.
The present article attempts a legal history of the 1707 monetary union. The task requires a contextual interpretation of Article XVI but, more especially, a fine analysis of the accounting and administrative documents that implemented the union as a numismatic process. Only when these are understood do the legal questions emerge from the interstices. Those questions depend as much on the complex arithmetic of metal-based monetary valuation as they do on large constitutional questions of monetary sovereignty.
Section B of the article considers the wording of Article XVI against the background of early eighteenth-century understandings of money. Section C turns to the monetary co-ordination between Scotland and England after the regal union of 1603. Article XVI only makes sense when read against the hundred years of Scottish monetary regulation that preceded it. This sheds light on why the Scottish and English commissioners who negotiated the union might have found the merger of their monetary systems an uncontentious step to take. Section D considers the heterogeneous state of the circulating coinage in Scotland in the decades before 1707 and the legal measures needed to make it work as a single currency system. Section E describes how the monetary systems of Scotland and England were actually combined. The transition from the old to the combined system raised legal problems that the union Commissioners and mint authorities deftly avoided. Section F considers the aftermath of the monetary union, which casts some light on the different degrees of legal coordination that are possible between countries that link their currencies in an international system. In that way, the article adds to the emerging literature on the economic history of monetary integration.
One theme in that literature is the relationship between political and monetary union between states. Political union usually requires monetary union. But states that prefer to avoid the full consequences of political union they may nonetheless accept some measure of monetary integration to facilitate the trade relations between them.
We begin with Article XVI of the two Acts of Union and explain some of the monetary background to it. The provision was identical in the two statutes. It was remarkably brief, one short phrase being enough to provide for the monetary union: “That, from and after the Union, the Coin shall be of the same Standard and Value throughout the united Kingdom, as now in England”.
The first legal question is why Article XVI should be expressed in terms of “Coin”. In 1707 coins minted from precious metals remained the foundation of the Scottish and English monetary systems so the word “Coin” could be used as a practical synonym for “money”. But the reference to “Coin” has a deeper significance which only becomes apparent if Article XVI is read by the usage of its own time. The reference to “Coin” shows that the provision was solely concerned with what was called in eighteenth century “real” rather than “imaginary” money.
Real money consisted of coins struck from intrinsically valuable precious metals. It functioned as money rather than bullion because the King ascribed to each denomination of coin an official value in the local money of account. Scots law, in common with all other Western systems, recognised the right to strike coin and to ascribe it a monetary value as pertaining exclusively to the sovereign.
It also lay in the King's prerogative to raise or lower the value of his own proper money. He could adopt foreign coins into the local monetary system by proclaiming that they would pass at official rates in Scots money of account. This was a common practice internationally. It was especially prevalent in Scotland during the seventeenth century where the total stock of real money comprised a great diversity of coins, both foreign and locally-minted.
“Imaginary” money was the name given to abstract systems of counting units. Before 1707 Scotland used two main systems of money of account. One was a version of the
The
Different counting systems could be applied to the same debts and coins. Alexander Justice, the early eighteenth-century English writer on foreign exchange, noted that the Scots kept their accounts “in three several ways”: Scots pounds, shillings and pence; Scots merks; and English (or sterling) pounds, shillings and pence.
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