About this set: The LMU served the function of facilitating trade between different countries by setting the standards by which gold and silver currency could be minted and exchanged. In this manner a French trader could accept Italian liras for his or her goods with confidence that it could be converted back to a comparable amount of francs. Besides the named countries included in this set, Romania, Venezuela, Serbia, San Marino and Spain used similar weights in their coins to help facilitate trade. The LMU eventually failed for a number of reasons. Some members, notably the Papal State's treasurer, Giacomo Cardinal Antonelli, began to debase their currency. This meant he minted coins with an inadequate amount of silver and then exchanged them for coins from other countries that had been minted correctly. More importantly, because new discoveries and better refining techniques increased the supply of silver, the fixed LMU exchange rate eventually overvalued silver relative to gold. German traders, in particular, were known to bring silver to LMU countries, have it minted into coinage then exchanged those for gold coins at the discounted exchange rate. These destabilizing tactics eventually forced the LMU to convert to a pure gold standard for its currency. Funny how history repeats itself.
View comments left by other users, or add your own.
Login to comment on this set.