A Date to Remember

A Yuletide story of a King's ransom, coins and carucage.

Dec 20, 2022

Dateline: Woking, 20th December 2022.

For me, 20th December is a very important date in the history of financial services. A very important date in the history of money. A very important date in the history of England…

My Christmas time story begins at the siege of Acre in 1191, during the Third Crusade. Richard the Lionheart conquered the city and immediately fell out with Duke Leopold V of Austria over how to divide up the loot kicked out of Leopold’s. He beheaded 2,800 prisoners in a dispute with Saladin and then packed up to go back to England to stop his brother Bad King John (“Lackland”) from usurping him.

On his way back to Blighty, Richard had to bypass France. Not, as is traditional these days, because of air traffic controllers going on strike but because Philip of France was in cahoots with John and had closed French harbours to Richard and his men. He therefore had to come across country from the Adriatic. Unfortunately, he was captured by Duke Leopold near Vienna on 20th December 1192.

Ah, Vienna.

When it comes to how exactly Richard was captured recollections, as they say in Royal circles, vary. The most plausible version of events centres on coins. Richard was disguised as a merchant and sent his serving boy to the market to buy provisions, but gave him coins minted in Syria. These somewhat inevitably attracted attention in a medieval Austrian market, much as trying to pay in my local supermarket with Bitcoin would do.

The coins caused Leopold’s men to pay particular attention to the boy, who showed up in the market a couple of days later with Richard’s ornate and expensive gloves - at which point he was arrested and subject to enhanced interrogation techniques until he revealed Richard’s location in a nearby tavern. At which point Richard was subject to extraordinary rendition to Dürnstein Castle.

Leopold was quite rightly excommunicated for this dastardly act by Pope Celestine III (kidnapping a crusader really did cross the line in the twelfth century) but he wasn’t that bothered. He sold Richard to the “Holy” “Roman” “Emperor”, Henry VI (who was also excommunicated) who then demanded a ransom of 150,000 marks.

That ransom is something in the region of two billion quid at today’s prices but the figure doesn’t quite convey its magnitude. It was something like twice the total annual income of the English Crown at the time. That was a colossal amount of money in those times.

And it wasn’t just the amount that is staggering. Sending two billion quid from London to Vienna can be done today via Dogecoin or with a van full of 500 euro notes, but in 1193 the problem of moving a substantial fraction of England’s GDP across a thousand miles of warring European principalities was significant.

It took some amazing planning to do this and, as we will see, an amazing woman to do it. It was a unique episode in English financial history with far-reaching consequences.

Richard

In 2006 David Boyle wrote the brilliant book “Blondel’s Song: The Capture, Imprisonment and Ransom of Richard the Lionheart” and I invited him to give a talk on this early experiment in pan-European cross-border multi-currency funds transfer.

(That talk significantly contributed to my interest in the subject of money and David’s observations on the unpredictable consequences on the transition from a feudal economy were fascinating.)

The ransom and its payment were a significant event in the history of England, its governance, the world of finance and money in general. David writes about the ransom’s profound impact, saying that while the “accounts may have long since disappeared – and may even have been destroyed by those who felt embarrassed by the public record of their generosity to Richard when his brother was on the throne” this episode marked the beginning of the shift from an economy of hierarchical obligations to the very start of taxing income.

It would be impossible to imagine collecting taxes on such a massive scale (or, indeed, any scale at all) in a great many modern countries, so the feat of collecting such a large sum of money in the pre-industrial economy should not be underestimated. It took an inventive series of taxes, enforced and collected, to get the Richard back. In fact “both clergy and laymen were taxed for a quarter of the value of their property, the gold and silver treasures of the churches were confiscated, and money was raised from the scutage and the carucage taxes”.

Scutage was the tax paid by knights to get out of military service. Carucage was a tax imposed on anyone with property worth more than ten shillings. It was first imposed in 1194 and fell upon landowners at an initial rate of two shillings per 100 acres but it didn’t bring in the anticipated revenue, so later on it was turned into a full-blown land tax. .

John

After Richard died in 1199 he was succeeded by John, who my friend Dominic Frisby in his book "Daylight Robbery: How tax shaped our past and will change our future” rightly called “one of the most infamous tax collectors in history”.

John raised scutage and carucage many times and these taxes became one of the main causes of the discontent leading to the Magna Carta in 1215. This seminal document owes its existence not only to taxes, of course, but to wider a economic crisis: bad harvests, shortage of coin, inflation, disruption of trade and a general decline in productivity.

If you are wondering why people refer to him as Bad King John, by the way, even Graham Seel’s 2012 book "King John: An Underrated King" explains that a contemporary chronicle “The History of William Marshall” (otherwise known as England’s greatest knight), calls John faithless, unwarlike, unwise, mean, nasty and suspicious.

His critics called him far worse.

The Queen and the Ransom

Anyway, back to Richard. Through scutage, carucage and other taxes, the English gathered several tons of silver. David says twenty tons, but in Alison Weir’s “Eleanor of Acquitaine: By the Wrath of God, Queen of England“, the figure implied is considerably higher, more like fifty tons. The money was brought to London in the form of treasure (melted down to form ingots) and coins.

According to my 1962 copy of “Money in Britain”, there were no continuously minted gold coins in England until the reign of Henry III (1216-72). The coins for the ransom must therefore have been mainly in the form of the silver pennies that had been first minted under Richard’s father, Henry II.

(Henry II’s mint master, Isaac the Jew, set the 92.5 percent pure silver standard which became known as the “the ancient right standard of England” and continued until the 1920s! )

It wasn’t until 1257 that the twenty penny gold coin was struck. It was worth one-twelfth of a pound Sterling (remember, there were 240 pennies in a pound until 1973). This didn’t last very long and in 1265 it was replaced with a twenty four penny “florin” worth one-tenth of a pound. There were still florin coins when I was a kid, as they were minted until 1967, but they didn’t have the same economic impact as Henry III’s florin which was worth a couple of hundred quid at today’s prices.

Meanwhile, in 1193 under Queen Eleanor’s (i.e., Mrs. Lionheart’s) incredible direction, the growing piles of cash were stashed in the crypt of St. Paul’s, which was then the administrative centre of London. It took a long time to build the ransom, since the Faster Payment System of the day was a horse and cart.

When the Emporer’s men popped in in 1193 to see how things were coming along — checking out the tally sticks and the pipe rolls to assess the rate of collection and to take delivery of the first tranche of the ransom — there were only about fifteen tons of silver there. Nonetheless, this was loaded onto a fleet of ships and sent off to Henry as an interim payment.

The collection continued and at the end of the year, on 20th December 1193, only one year after her husband had been bushwhacked, Queen Eleanor set off with the rest of the cash.

The money was transported to Henry under a simple pre-PSD2 regulatory structure, known as the “King’s Peril”, which meant that were the money to have been lost along the way, it was an English problem. Until the money was actually in Henry’s hands then it was Richard’s responsibility, even in Henry’s lands.

Eleanor made it safely all the way to Henry’s court on 17th January, a journey of only three weeks, and handed the balance of the ransom over on 4th February 1194. Richard was released and landed back in England on 13th March 1194, bringing this incredible episode in English history to an end.

The only records of the greatest tax raid in English history that remained were the tally sticks.

Impact

The colossal ransom that England paid to get Richard back had some considerable consequences. The impact on Austria remains to this day because Leopold's share of the ransom was used to build the new city walls of Vienna as well as to found the towns of Wiener Neustadt and Friedberg in Styria. It was also used to found the Austrian mint in 1194 to make coins from the English silver handed over.

Henry VI also created a new silver coinage (in Sicily).

These actions had an impact across central Europe as other rulers began to centralise their coinage too and local currencies began to vanish.

The impact back in England was also long lasting, and for one group of people in particular it was catastrophic.

The Jewish Community

England’s small Jewish community was central to the nation’s economy. This is why, as David Carpenter’s detailed commentary on the Magna Carta (released on the 800th anniversary in 2015) makes clear, there are several references to Jews in the Great Charter itself.

In March 1194 a conference of Jewish financiers was organised in Northampton with the objective of working out how much more they could contribute to the ransom. Representatives from many major cities attended, other than (for example) York and Bury St. Edmunds, since the Jews in those places had already been slaughtered in the pogroms of 1190.

These pogroms had been widespread. Paul Johnson’s “A History of the Jews”, for example, tells how “all the Jews who were found in their own houses in Norwich were slaughtered”.

Under Richard, there had been an inquiry into the pogroms and Christian-Jewish financial supervision committees created. David says these were partly an early attempt at banking regulation and partly to protect the Jewish community in return for its considerable contributions to the Crown.

Christopher Dyer explores this further in “Making a Living in the Middle Ages—The People of Britain 850-1520”, pointing out that the Jews were the Crown’s mechanism for indirectly taxing landowners. The heavy taxes imposed on the Jewish community were passed on in interest rates, so that the common borrowers would blame the Jews rather than government spending for their reduced circumstances.

So it was in the case of the ransom. The Jewish community was called upon to extend huge loans to the Crown. This had a terrible consequence, because in order to provide these loans they had to call in their loans to other people — minor aristocrats, farmers, business people and so on — which caused great resentment against their community rather than the King (which was, of course, why it was done).

Within a century, in fact, their community was destroyed. Having come to England after the Norman conquest as moneychangers and bullion dealers, England’s Jews were reduced by a combination of taxation and murder until they were eventually expelled in 1290.

Money Supply

A side effect of the silver exodus from England was that while local currencies circulated to substitute for the missing pennies for a while, pretty soon the money literally ran out. After all, a quarter of England’s coinage had vanished.

In the absence of a medium of exchange, trade continued and somehow commerce was maintained. Peter Spufford in his magnificent “Power and Profit, the Merchant in Medieval Europe”, points out that “Only in the short run did political, or occasionally religious, actions have greater effects than trade balances on the large-scale movement of silver and gold, coined and uncoined”.

The transport of two year’s worth of Crown income across Europe certainly did have a greater effect on the large-scale movement of bullion than trade did, but only for a relatively short time. In a pre-industrial society in which everything ran on credit (a kind of reputation economy), the lack of coins did not stop the wheels from turning.

The 20th December is an anniversary and a reminder of an astonishing testament both to England’s medieval wealth and to its organisation and civil administration that the very, very high level of taxation necessary to pay that (literally) King’s Ransom could be imposed and collected, exported and delivered, and yet in the long run the economy survived and grew.