½ Baiocco – Papal States

In 1831, the Papal States faced a severe monetary crisis rooted in decades of fiscal mismanagement and the political upheavals of the Napoleonic era. The currency system was a chaotic patchwork of coins from various previous regimes, including papal scudi, French francs, and local subsidiary coins, all circulating without a fixed legal ratio. This lack of a unified, trusted currency severely hampered commerce and state finances, as the government struggled to collect taxes in a reliable standard of value and faced widespread counterfeiting.

The immediate trigger for the crisis was the enormous public debt accumulated to pay for Austrian military intervention to suppress the revolutionary uprisings of 1831. To meet these obligations, the papal government, under Cardinal Tommaso Bernetti, resorted to issuing 3.5 million scudi in paper money. This was a desperate and unpopular move, as the notes were not backed by sufficient specie (gold or silver) and were met with immediate public distrust. Forced circulation laws failed, and the notes rapidly depreciated, causing inflation and further economic distress.

Pope Gregory XVI’s response was decisive but harsh. In 1834, he demonetized the failed paper issue, offering minimal compensation that amounted to a significant loss for holders, effectively a forced loan on the populace. More lastingly, he initiated a comprehensive monetary reform, introducing new, standardized silver scudi and subsidiary coins in 1835. This reform successfully restored a unified metallic currency and stability, but it came at a high social cost, exacerbating popular resentment toward the financially extractive and politically conservative papal administration.