ABSTRACT
This chapter formulates the hypothesis that town magistrates decided to shape their public debt in such a way that it contained a speculative element. It begins with a short introduction to monetary policy in the fifteenth century. The chapter explains how towns, under specific circumstances, could reduce interest payments by expressing debts in silver coin. It presents evidence for speculation: towns do not appear to have opposed the ruler’s policy of coin depreciation. The construction ruler and towns agreed to may therefore be considered as strategic default: well-timed reneging with limited consequences. The chapter focuses on developments in Holland, where public debt caused a severe financial crisis, which also must be connected to the aforementioned sixteenth-century developments in the field of public finance. In Holland and elsewhere in the late-medieval Low Countries, the sovereign was responsible for coinage and the towns were responsible for the largest part of sovereign debt.
