By V.N. Borzykh, Director of the museum of the History of Banking
Twenty seven centuries ago, the rulers of the Eastern Mediterranean countries began to mint coins on a mass scale. Coins were standard pieces of gold, silver and other metals that could conveniently be used in one transaction after another. Counterfeiting emerged almost simultaneously with the appearance of money, as proved by the Athenian laws dating from the 6th century B.C. meted out harsh punishment to unauthorized persons minting money.
Counterfeit money was an easy way of getting rich. All you had to have was some skills in minting and an outlet for putting your product on the market. This last was, and still is, very important, as counterfeiters are mostly caught by counterfeit money being traced back to its source.
The counterfeiting involved producing coins of high nominal value similar to the real money but containing less precious metal than required. Highly skilled counterfeiters of ancient Greece
brought the silver content in their products down to ten percent of the stipulated amount. “Gold” coins were also often minted from lead, and “silver” coins, from copper.
In medieval Europe, especially in the period between the fifteenth and the seventeenth centuries, great amount of counterfeit money in circulation ruined the money systems of a number of countries.
Production of counterfeit money undermines the states principal monopoly, emission of currency, and has therefore always been regarded as a most heinous criminal offense. For centuries counterfeiters had their hands cut off, they were tortured, hanged, drowned, nailed to the gates of mints, burned alive. Until the middle of the 18 th century, Russian counterfeiters were executed by pouring molten metal down their throats.
While ruthlessly pursuing “private enterprise” in the matter of counterfeiting, rulers of states often went into the counterfeiting business themselves, spoiling state currency by reducing precious metal content in the coins while keeping their nominal value unchanged, whenever they needed to replenish their treasuries emptied by wars or other disasters.
Some of the better known counterfeiters of all times were the Roman emperor Claudius Caesar Nero (1 st century , A.D.), the French king Philip 1V the Handsome (late 13 th - early 14 th centuries), also nicknamed Counterfeiter, and Fridrich the Great, king of Prussia (18 th century).
In 17 th century Russia, under Czar Aleksei Mikhailovich, money was degraded by the state mint on a grand scale.
Copper coins were widely used in those times in Europe , while in Russia only silver coins had currency, and there was not enough silver to keep the value of coins level with the value of silver. In 1654, Czar passed a decree on putting into circulation silver coins whose nominal value was much higher than the real value of the silver contained in them. The same decree introduced copper coins that were to be treated as if they were made of silver, although copper was at that time 60 times cheaper than silver.
The operation brought the state treasury four million rubles, or two annual budgets, in net profit, but it also entailed a collapse of the country s entire economy. This resulted in the 1662 uprising in Moscow which was later called the Copper Mutiny. A year later, copper coins were dropped as a means of circulation for several decades.