[...]... invention of money (Hemming: 19 70) Eventually, societies developed the idea of coined metal Its natural advantages tended to supplant rival forms of money, and a sophisticated monetary economy developed in the ancient world It is quite clear, from even a cursory reading of the sources, that many of the problems and events we shall discuss had their parallels in earlier centuries I can offer only a tantalising... him seems to have survived4, and in any case the point had been made, much earlier, by Nicholas Oresme (c 13 60) and Aristophanes (445–383 BC) (see Chapter 12 ) Braudel quotes the Gonzaga agent writing, in June 14 72 ‘che la cativa cazara via la nona’ (Braudel 19 72:388) In Gresham’s day, money meant ‘coin’ In concept a coin is a piece of gold or silver, the weight and fineness of which is guaranteed by the... used mainly by the uneducated, the scope for gradual, and sometimes not so gradual, debasement was greater and was totally at the expense of workers and peasants ‘Honest’ petty coinage was unprofitable: the tradition of honest money in countries such as England was, from most other points of view, beneficial, but this very honesty caused a shortage of petty coins for trade The gap was filled partly... historian, as it presumably did for the contemporary accountant Cipolla SOME CONCEPTS OF MONEY 17 (19 67) discusses the problem of what he calls ‘ghost money , units of account which have names based on actual coins which have disappeared from circulation It arose, of course, from depreciation and the phenomena of bimetallism and petty coins The Carolingian system of pounds shillings and pence had survived... paying £3 17 s.6d on the spot a discount of less than 0.5 per cent Debasement It is a modern fallacy that monetary debasement is exclusively a disease of paper money The history of coined money is a history of an intermittent and from time to time dramatic fall in value The reason is not hard to find There is an interesting example in the famous Thalers or ‘Pieces of Eight’ of the Spanish Main, so called... could be based on a silver or a gold standard, or very occasionally on black money Two systems often existed side by side The value of actual real coins could fluctuate in terms of the appropriate money of account and this was often based on a ghost from the past In England, at least, it can be assumed that the term pound either refers to a weight of bullion, or to the value of 240 pennies, as the context... depreciation of the base penny, meant that by 13 40 the undebased florin was worth 384 pennies This rate was then to remain stable for the next sixty years, and during this period stability may well have been taken for granted, much as later generations have regarded any period of exchange rate stability of more than a couple of decades as normal and permanent—in spite of the lessons of history During this... Venetian grosso was struck to a uniform weight, but until 13 21 settlement was often by weighing In 13 21 payment in tale was made obligatory, and creditors had to accept at face value any that were no more than 10 per cent under weight 12 A HISTORY OF MONEY Changes in the value of metal Changes in the silver content of the penny, were not the only cause of price movements Silver itself does not necessarily... trying to prevent any further depreciation of the petty coins, and proposed a radical plan, approved on 24 October 13 80 This required the government to withdraw from circulation and melt down black coins to the value of 2,000 gold florins on 1 January in 13 81 and for each of the next eight years The aim was to cause the value of the petty coins actually to appreciate and to increase real wages without modifying... Gresham’s Law Sir Thomas Gresham (15 19– 71) was Queen Elizabeth’s financial adviser, responsible for clearing up the mess of her father’s ‘Great Debasement’, and founder of the Royal Exchange He is known for Gresham’s Law: ‘Bad money drives out good’ Properly understood, this simple statement can offer a deep insight into monetary policy and numismatic history No definitive statement of Gresham’s Law . States, Canada, Europe, Australasia and the Far East. He is currently on the editorial board of Treasury Today published by the Institute of Chartered Accountants. A HISTORY OF MONEY From AD 800 John. INTRODUCTION 11 4 14 CREDIT AND THE TRADE FAIRS 12 2 15 THE DEVELOPMENT OF BANKING AND FINANCE 12 7 16 THE SOUTH SEA BUBBLE: 17 20 13 7 17 DEPOSIT BANKING IN ENGLAND 14 7 18 MONEY AND BANKING IN THE UNITED STATES. STATES 15 8 19 AFTER THE BANK WARS: THE UK/US CRISES OF 18 36 TO 18 39 17 3 20 PRIVATE BANKING IN THE EARLY UNITED STATES 18 1 21 THE BANK CHARTER ACT OF 18 44 AND THE CRISIS OF 18 47 19 1 Part III