History of Political Economy Annual Supplement to Volume 35 (2003) 234-261
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Credit-Money as the Philosopher's Stone:
Alchemy and the Coinage Problem in Seventeenth-Century England
In Goethe's Faust, Mephistopheles proposes that the emperor solve his financial problems by implementing a system of paper money, backed by his royal land and the gold hidden therein. His advocate, the astrologer, favorably compares this scheme to the transmutation of base metals into gold, while the skeptics exclaim: "Oh, let us off, All warmed-up stuff / It's number mystic, Alchymistic" (Goethe  1976, 4973–74). Mephistopheles ultimately prevails, and after the credit-money system is established and great prosperity ensues, the emperor's treasurer marvels: "There shall not be the faintest breath of trouble / I cherish a magician for my double" (6141–42). In this, Faust's so-called paper-money scene,1 Goethe metaphorically connects credit-money to alchemy; however, he does so in a way that only hints at the complexity of the actual link between alchemy and credit-money in the seventeenth-century.
The idea that alchemy could be used to expand the money stock and thus stimulate the economy was rather well established during the seventeenth century, as witnessed by the writings of various social reformers and by the number of European regents who patronized alchemists. However, as experiments to transmute base metals into gold repeatedly failed, the search for a new money-creation mechanism continued, [End Page 234] resulting in the conceptualization of a credit-money system. The Hartlib Circle in England, having already pursued alchemy, offered one of the earliest proposals for credit-money. While their particular proposition was not implemented, it helped define the pool of ideas available to later reformers. Eventually, once the Bank of England showed in 1694 how credit-money could function, there was a rapid falloff in the patronage of alchemists, and credit-money was elevated to the position of the best available system for money creation. Hence, at a minimum, alchemy and credit-money were linked both metaphorically and as strategies to address the same problem. I suggest, however, that the ties between alchemy and credit-money ran deeper and were more profound than has been thought previously. This is particularly true in the English context, for which I hope to show that just as alchemy served as an important theoretical and empirical framework for the development of the Scientific Revolution (Dobbs 1975; Westfall 1980; Henry 1990, 1997), so, too, did it serve as a conceptual and discursive system that helped frame the debate about the shortage of money and how to overcome that problem.
Alchemy in the Seventeenth Century
While serious financial strains affected most emerging nation-states in seventeenth-century Europe, England was particularly hard hit. In the 1620s an outflow of money and a rapid decline in England's traditional export trades exacerbated an already precarious fiscal situation (Supple 1959; De Vries 1976; Appleby 1978; Braddick 2000). Numerous attempts were made to ameliorate the fiscal and economic problems, but all measures proved inadequate. Reduced flows of gold and silver from the Americas (Vilar 1976, 197) coupled with the rapid falloff in output from central European silver mines (Bonny 1991, 420) kept coin scarce, while debasements, though sporadically used on the Continent, had been effectively eliminated as an option in England by the failure of the Great Tudor Debasement of 1544–51 (Davies 1994, 206).
Desperate for a solution to the economic and fiscal crisis, European rulers looked to alchemy as an alternative to debasement; in fact, most of the European courts patronized alchemists throughout the seventeenth century.2 While the reasons for coveting the magic tincture were many—agricultural improvements, medicines, perfumes, and so forth—the idea [End Page 235] of turning base metals into gold and thus gaining the ability to relieve the pressure on the state's finances and revive commerce was a strong incentive. The list of regents known to have employed alchemists includes Cardinal Richelieu (Briggs 1991...