Historic Bubbles- Tipper and See-Saw Time – 1621Posted: September 26, 2012
Historic Bubbles – Tipper and See-Saw Time 1621
Tipper and See-Saw Time (German: Kipper- und Wipperzeit) is name given to a financial crisis during the start of the Thirty Years’ War (1618–48).Starting around 1621, city-states in the Holy Roman Empire began to heavily debase currency in order to raise revenue for the Thirty Years’ War, as effective taxation did not exist.
The name refers to the use of tipping scales to identify not-yet-debased coins, which were then taken out of circulation, melted, mixed with baser metals such as lead, copper or tin, and re-issued. Often the states did not debase their own currency, but instead manufactured low-value imitations of coins from other territories and then spent them in yet other territories as far as possible from their own lands, hoping that the resulting damage would then occur to the economy of those other regions rather than their own. This worked for a while; but after a time, the general public caught on to the manipulation, resulting in pamphlets denouncing the practice, local riots and the refusal of soldiers and mercenaries to fight unless paid in “real”, non-debased money. Also the states began to get back their own debased coins in taxes and customs fees. Due to these problems the practice largely stopped around 1623, however, the damage done was so large that it created financial disarray in almost all the city-states in the area. The same thing re-occurred on a smaller scale near the end of the century and again during the middle of the 18th century, however,
What is interesting about this financial crisis is that specie (metal coin) was debased, not paper money. In contrast, the “Tulip Mania” of 1636–37 related to speculation in the value of tulip bulbs.
More and more mints were established until the debased metal coins were so worthless that children played with them in the street, which became the basis for the short story by Leo Tolstoy “Ivan the Fool“.