Encyclopedia of Money: Venetian Ducat

During the late Middle Ages the Venetian ducat became the preferred international currency, sometimes referred to as the dollar of its time, a reference to the dominant role the United States dollar played in post–World War II international trade. By the fifteenth century the prestige of the gold ducat of Venice made it the standard for currency reform in Muslim and Christian nations of the Mediterranean. The Mamluk ashraftil, the Ottoman altun, and the Portuguese and Castilian ducat were based upon the Venetian ducat.

Venice first minted the gold ducat in 1284 at a weight and fineness of 3.5 grams of virtually pure gold (0.997 fine), a standard of purity and fineness that would be maintained until the end of the Venetian Republic in 1797. Gold coinage had disappeared in Western Europe after the eighth century, and the Italian city-states were the first European governments to renew coinage of gold. Florence and Genoa first struck gold coins in 1252, and Venice minted its ducat at the same weight and fineness as the Florentine florin, a coin that commanded the prestige of an international currency before it lost credibility when the Florentine government minted issues of lighter weight. The florin also suffered from inferior imitations issued by other governments. The Venetian ducat clearly superseded the florin in the fifteenth century as the international currency par excellence.

Venice has been regarded as the birthplace of capitalism, a forerunner of capitalist cities such as Amsterdam and modern Hong Kong, economies whose only resources are good harbors and social and legal environments that favor commercial and financial activity. In Venice political power and social prestige had passed from the land-owning aristocracy, which still controlled most governments, to a class of hereditary mercantile families who jealously sought to preserve the position of Venice as an international trading center. Although feudal monarchies all too easily turned to currency devaluations, debasements, and seigniorage to finance government expenses, the mercantile oligarchy that ruled Venice weighed the long-term consequences and steadfastly maintained the integrity of its currency, symbolizing Venice’s commitment to fair dealings. The Venetians lodged complaints against other governments for issuing inferior imitations of Venetian ducats, and allowed only Venetian citizens to work at the mint, discouraging foreign access to stamp patterns employed to strike the Venetian coins.

Venice was on a silver standard when ducats were first struck. At first the value of gold rose as gold was in greater demand at mints for coinage. In 1326, however, the value of gold dropped significantly, putting a hardship on debtors using gold ducats to pay debts defined in silver. The debtors, including banks needing to pay depositors and the government needing to pay bondholders, persuaded the officials to switch to a gold standard, fixing the gold price of silver at a rate that prevailed before the value of gold plummeted.

During the mid-fifteenth century, the value of gold rose relative to silver, and Venice returned to a silver standard. The name of the gold ducat was changed to zecchino and the term ducat came to refer to a unit of account, such as dollars are a unit of account in the United States. The Venetian mint began producing silver ducats.

In 1797 Venice lost its independence as a sovereign state at the hands of Napoleon, ending the long history of the Venetian ducat (zecchino) as one of the most trusted coins in monetary history.