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Devaluation

In 1294, France and England went to war and in 1297, the county of Flanders declared its independence from France. This conflict accelerated the financial problems incurred by the french monarch. As warfare continued and fiscal deficits persisted, Philip had no remedy but to use debasement of coinage as an alternative tool to meet his military expenditures. This measure made people wary of taking their coins to royal mints, preferring to take their silver abroad to exchange it for strong currencies, which by 1301 led to a dramatic disappearance of silver in France. Currency depreciation provided the crown with 1.419 million LP from November 1296 to Christmas 1299, more than enough to cover war costs of 1.066 million LP in the same period.

The resulting inflation damaged the real incomes of the creditors such as the aristocracy and the Church, who received a weaker currency in return for the loans they had issued in a stronger currency. The indebted lower classes did not benefit from the devaluation, as the high inflation ate into the purchasing power of their money. The result was social unrest. By 22 August 1303 this practice led to a two-thirds loss in the value of the livres, sous and deniers in circulation.

The defeat at the battle of Golden Spurs in 1302 was a crushing blow to French finance: the 15 months which followed this battle saw a depreciation of the currency by 37%, and new decrees were issued forbidding the export of gold and silver abroad. The royal government had to order officials and subjects to provide all or half, respectively, of their silver vessels for minting into coins. New taxes were levied to pay for the deficit. As people attempted to move their wealth out of the country in non-monetary form, Philip banned merchandise exports without royal approval. The king obtained another crusade tithe from the pope and returned the royal treasure to the Temple to gain the Templars as his creditors again.

Despite their consequences these decisions were not considered immoral at that time, as they were the prince's accepted right, and this right could be taken far if a special situation, such as war, justified it. Furthermore, the issue of coins with a lower content of silver was needed to maintain circulation, in a context where the inflation of silver produced a severe scarcity of currency due to the ongoing commercial revolution.