The True Gold Standard (Second Edition)
The work of Sir Isaac Newton, as Master of the British Mint, in creating the classical gold standard is relatively well known.
The work of an equally great scientist, Copernicus, who gave us the heliocentric model of the solar system, is less so.
Leszek Zygner of Nicolaus Copernicus University, recently referenced in another entry here, provides substantial information on Copernicus's great contributions to monetary theory. These are by no means no less relevant today than are his breakthrough contributions to astronomy.
Copernicus wrote three versions of his treatise on the reform of Prussian coinage in the years 1517-26 which have survived in the form of copies and translations. As has been proved in the course of a thorough analysis of their contents, they are subsequent versions of the same work. The text of the first draft, usually referred to as Meditata, was written in Latin in 1517. This document was produced with Bishop Fabianus Lusianus and members of the cathedral chapter of Warmia in mind and was to support their arguments in debates on monetary reform held during assemblies of the Estates of Royal Prussia (Stany Prus Królewskich). The treatise consisted of two parts. In the first Copernicus discusses general issues related to the theory of money and formulates inter alia a law of bad money driving out good. In the second he focused on the current monetary situation in Royal Prussia and in particular on the decline in the value of Prussian coinage, enumerating its types and explaining the reasons for the decrease in value of individual coins. The second version, known from the 16th c. as Modus cudendi monetam (The Way to Strike Coin), was a German translation of the Meditata of 1517. This translation, incidentally abounding in oversimplifications and inaccuracies, was made in 1519 most probably as a document to be presented to the Prussian Assembly attended by the Polish King Sigismund I the Old (Zygmunt I Stary). Copernicus read the German version of his treatise before the Royal Prussian Assembly attended by King Sigismund Is envoys at Grudzi?dz (Graudenz) on 21 March 1522. Referring to the debate held before his speech, he concluded his presentation with a proposal to mint three Prussian szel?gi as an equivalent of one Polish grosz (groshen) and thus to equalize the value of the new Prussian coinage with that issued by the Crown. The third version of his treatise on money entitled Monete cudende ratio (On the Minting of Coin) survives in three copies and was most probably written before April 1526. This revised version partly based on the text of his 1517 paper, was complemented by a general theory of money with special emphasis placed on the debasement of money as one of the main reasons for the fall of a state.
The gold standard, in short, has an unrivaled intellectual pedigree.
The Federal Reserve System's James Narron and David Skeie, career officials with the Federal Reserve System, are two eminent historically erudite figures. Writing in the New York Federal Reserve Bank's online publication, Liberty Street Economics, they recently provided a continuation of their valuable historical "revue," Crisis Chronicles: The Collapse of the...
Jul 14, 2014
On July 6th, Nobel economics laureate and Princeton Professor launched, in the New York Times, one of his occasional polemics, entitled Conservative Delusions About Inflation, against proponents of the gold standard. Krugman Caricature under creative commons license from DonkeyHotey As usual, Prof. Krugman is, conveniently for the position he takes, beyond lopsided...
Jul 23, 2014
An article headline in Saturday’s Wall Street Journalread “Rate Talk Heats Up Within The Fed.” As Journalreporters Jon Hilsenrath and Michael Derby...
Why the Gold Standard?