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Today, many economists want a better understanding of the impact of economic institutions on the economic processes. It therefore pays to know how economic institutions evolve, particularly in case the evolution is a spontaneous one. Besides building models on rational decision making it appears worthwhile to study how an 'organic' institutional evolution operates in the real world. The conditions for such a study were provided by medieval Frisia, a country without a central government during most of the time in nine centuries and yet one of the most prosperous and earliest monetised areas of its time. The evolution of its money of account system could be seen as the evolution of an economic institution that was almost entirely the unintended result of freely interacting market forces. The foregoing sections of this article have been focussed on the first rule of a medieval money of account system: what standard coin would be mutually recognised as the basis for the unit of account? We found that this problem occurred only five times in the nine centuries covered, resulting in a current money standard being replaced by another. Once this was politically enforced (the introduction of the Carolingian system by Charlemagne, in 793/794) but it was doubted whether this reform took really grounds; at least in Frisia Ulterior the Carolingian system was 'illegally' reduced to the bi-metallic system valid before the reform of Charlemagne as it seems. In the other four cases the change was of the kind that we are looking for. The 10th century transition was in fact the tacit reduction of the extant bi-metallic system to a silver standard based system after the gold base had gone out of use (the replacement of the Carolingian system by the 'old-Frisian' system, in the 10th century). The other three cases demonstrate, that shortcomings of a current system were met by incorporating new elements in the system of account (as an 'adaptive compromise'), which in some cases gradually grew into a new standard when becoming appreciated as preferable to the old standard. So we found 'sceattas' ousting solidi, in around 700; sterlings ousting 'old-Frisian' money, in the 13th century; 'new-Frisian' money ousting sterlings, in the 14th century. These three instances are to be considered as the 'organic' ones, characterised by path-dependence. They represent clear examples of the mechanism of institutional evolution. Because of the inherent limitation of an article, the other rules of the medieval Frisian money of account system remained under-exposed. Yet the second rule, mentioned above (p...), deserves attention. It rules as to what face value the standard coin was to be accepted. This rule too, was not ordered top-down – except in some very few cases which were not successful mostly – but was determined by the market that is, by the social response to the inevitable 'normal decrease'. However, this decrease was usually regular and slow: to c.0.3g of silver a century on the average. Because of the slow effect of these forces, the value decreased so little from generation to generation, that this itself would hardly have been felt in everyday life. But although the decrease was small in absolute figures, the percentage decrease was accelerating to the extent the coins became lighter and thus caused a growing upward pressure on prices. Therefore, during the process, its influence on the prices would have grown stronger; this is demonstrated particularly clearly in the 13th century. Taking this into account, the surprising discovery of the study is that the value of the money standard in medieval Frisia evolved rather orderly and, on the whole, rendered a slow and rather equable decline of the silver equivalence of the unit of account. It demonstrates a quiet acceptance of a phenomenon, that was apparently inevitable. But it also demonstrates the social tenacity of an ingrained custom, because the adaptations – as far as we can be sure about this with the scarcity of data – occurred often after the decrease in silver equivalence of the current standard coins had become almost general. This would imply the existence of trust in the social acceptance of the current face value of the standard coins to a certain degree, comparable with our trust nowadays in fiduciary money. Moreover, trust in the reliability of the private minters might have been stronger than trust in the royal minthouses operated by lords with selfish political motives. The experience in the 14th century with the lords of Coevorden, by then owners of the mint in Groningen, compared with the anonymous minters elsewhere in Frisia, seems to illustrate this. Taken together, it is surprising to find so stable a development of the money of account system in a country without central government, continually exposed to external threat and internal strife. No doubt the local economy must have suffered from the destruction caused by these conflicts, but floods or cattle-plague probably had an even more destabilising effect on production and commerce. To find nevertheless so balanced an evolution of an economic institution, not directed by intelligible governance but by a market controlled currency, for me, was quite unexpected. As I view it, this could only be attained under condition of social trust based on cultural experience; trust among the participants of the Frisian markets that 'the others' will behave accordingly in the current money system. This insight, not derived from a theory of rational decision making but from the understanding of a real world history, might contribute a little to the body of knowledge in economics, a science that nowadays is urged to face the problems of a global economy with a lack of proper economic institutions.

jahrbuch für wirtschaftsgeschichte

The Evolution of the Money Standard in Medieval Frisia. A treatise on the history of the systems of money of account in the former Frisia (c.600-c.l500)