Wallenstein‘s Wealth: How the Prague Coin Consortium made profit by provoking the Kipper and Wipper financial crisis in 1622-23
Wallenstein was an ingenious commander and a businessman whose unscrupulousness would make today’s managers change color. Here you will get to know how his consortium ruined the European monetary system.
Come along with us on our journey through the world of money. Today we are stopping in the Bohemian town of Jičín. We are in the year 1627 AD.
He was a great general, this Albrecht of Waldstein, whom we know today by the name of Wallenstein. When he minted this coin in his Jičín residence in 1627, he was at the height of his power. The Emperor had appointed him Duke of Friedland and entrusted to him the command of the entire imperial army.
And this despite Wallenstein coming from a hitherto completely insignificant dynasty. He had no choice but to find a promising appointment at a mighty lord.
He made his career in the imperial army. In addition, a rich marriage gave him the means to buy lands in southern Moravia. Wallenstein proved to be a successful entrepreneur. He made a fortune, with which he set out to assure his place in Vienna’s imperial court.
Wallenstein’s moment came with the Defenestration of Prague. War was unleashed, the whole of Central Europe was plunged into poverty, and a few businessmen were offered the opportunity to make outrageous profits.
For the Emperor needed huge sums to pay for his soldiers. And so the President of the Hofkammer, Hans Ulrich of Eggenberg, and Karl I of Liechtenstein made him a proposal: a consortium of nobles, Jews and citizens would pay the Emperor six million guilders. In return, the consortium would receive the prerogative of coinage from Bohemia, Moravia and Lower Austria for a year. Wallenstein was a member of this consortium. He sensed a great business opportunity.
The consortium minted very bad coins. Originally the law dictated that coins worth 79 guilders must contain approximately 230 g of silver. However, the consortium minted from 230 g silver coins worth at least 110, if not 120 guilders.
Agents of the consortium travelled around the country, buying up the old, good quality coins using the new coins made from bad silver. They weighed the coins on a balance, and sorted out the good old ones in order to melt them down. It was an extremely lucrative business!
Therefore, bad coins were not just minted in the Habsburg Empire, but also in the city of Magdeburg, in Nordhausen or in the county of Solms. Many mints had done the same since the beginning of the 30 Years War, but not as systematically and not to such a large extent as the imperial consortium.
The victims were the ones who were paid in these coins. Their coins were worth less and less. The income of the unfortunates was soon no longer enough to buy their daily bread. The rich, however, were unaffected. The value of their thalers and gold florins was not manipulated.
Trade stagnated. And more and more people were impoverished. The members of the consortium, however, had feathered their own nests, and not just financially.
For example, with his profits Wallenstein was able to buy around 50 dominions in North Bohemia which the emperor had confiscated from his opponents. Together with the Jičín residence, these lands were elevated to the Duchy of Friedland, and Wallenstein became a Duke. And he became richer and richer. He was so rich that the Emperor began to fear him.
In 1634 in Eger, officers loyal to the Emperor murdered Wallenstein. Did the Emperor give the order? We do not know. In any case, the Duchy of Friedland was occupied by imperial command, and Wallenstein’s possessions were distributed among his murderers.