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INTRODUCTION
Today we are seeing the advent of the euro and the increasing discussion of "dollarization," the adoption by a country of the U.S. dollar or other major currency (such as the euro) as its currency.1 This represents something of a return to the past in that one can argue that prior to the rise of national currencies in the 19th and 20th centuries, dollarization-in the sense of a country using another country's money-- was common [Helleiner, 1997].
One particularly noteworthy historical example of an international money is the silver coin known as the Maria Theresa thaler or taler (MTT). (Appendix A provides a physical description of the coin.) The story of the rise and subsequent decline in the role of the MTT is the reverse of the story of the rise of national movies. My goals in providing a rich description of a particular case are to illuminate the general phenomenon and perhaps to provide an entertaining anecdote for teachers of international finance or money and banking.
The next section discusses the history of the MTT, followed by some analysis of the reasons for its waxing in the 19th century and its subsequent waning. The paper concludes with a summary.
HISTORY
Between 1741 and the present, mints throughout Europe (plus Bombay) have produced some 390 million or more MTTs (also known as Maria Theresa or Levant dollars), amounting to about 300 million ounces of pure silver.2 The only other coin of the modern era that was arguably more important in international trade than the MTT was the Mexican peso or Mexican silver dollar [Andrew, 1904; Pond, 1941b]. If the Mexican dollar provided a great part of the silver that Flynn [1995] credits with providing the basis for the development of world trade from the 16th century, the MTT provided the silver that fueled Europe's trade with the Middle East, the Arabian Peninsula, and the Horn of Africa in the 18th and 19th centuries.3
Eight Hapsburg mints and the successor Austrian mint in Vienna produced more than three-quarters of the documented mintages (Table 1). For reasons we discuss below, from the mid-1930s to 1961, mints in Birmingham, Bombay, Brussels, London, Paris, Rome and Utrecht also produced the MTT (Table 2). (Appendix B provides some...