We have already drawn attention to the fact that there was no branch
of economics about which such profound ignorance ruled in the earlier
Middle Ages as that of money. As we stated above, even as late as
the twelfth century, the theologians were quite content to quote the
ill-founded and erroneous opinions of Isidore of Seville as final
on the subject. It will be remembered that we also remarked that
the question of money was the first economic question to receive
systematic scientific treatment from the writers of the later Middle
Ages. This remarkable development of opinion on this subject is
practically the work of one man, Nicholas Oresme, Bishop of Lisieux,
whose treatise, _De Origine, Natura, Jure et Mutationibus Monetarum_,
is the earliest example of a pure economic monograph in the modern
sense. 'The scholastics,' says Roscher, 'extended their inquiries from
the economic point of view further than one is generally disposed to
believe; although it is true that they often did so under a singular
form.... We can, however, single out Oresme as the greatest scholastic
economist for two reasons: on account of the exactitude and clarity
of his ideas, and because he succeeded in freeing himself from the
pseudo-theological systematisation of things in general, and from the
pseudo-philosophical deduction in details.'[1]
[Footnote 1: Quoted in the Introduction to Wolowski's edition of
Oresme's _Tractatus_ (Paris, 1864).]
Even in the thirteenth century natural economy had not been
replaced to any large extent by money economy. The great majority
of transactions between man and man were carried on without the
intervention of money payments; and the amount of coin in circulation
was consequently small.[1] The question of currency was not therefore
one to engage the serious attention of the writers of the time.
Aquinas does not deal with money in the _Summa_, except
incidentally, and his references to the subject in the _De Regimine
Principum_--which occur in the chapters of that work of which
the authorship is disputed--simply go to the length of approving
Aristotle's opinions on money, and advising the prince to exercise
moderation in the exercise of his power of coining _sive in mutando
sive in diminuendo pondus_.[2]
[Footnote 1: Brants, _op. cit._, p. 179; Rambaud, _op. cit._, p. 73.]
[Footnote 2: _De Reg. Prin._, ii. 13.]
As is often the case, the discussion of the rights and duties of the
sovereign in connection with the currency only arose when it became
necessary for the public to protest against abuses. Philip the Fair of
France made it part of his policy to increase the revenue by tampering
with the coinage, a policy which was continued by his successors,
until it became an intolerable grievance to his subjects. In vain did
the Pope thunder against Philip;[1] in vain did the greatest poet of
the age denounce
'him that doth work
With his adulterate money on the Seine.'[2]
[Footnote 1: Le Blant, _Traité historique des Monnaies de France_, p.
184.]
[Footnote 2: Dante, _Paradiso_, xix.]
Matters continued to grow steadily worse until the middle of the
fourteenth century. During the year 1348 there were no less than
eleven variations in the value of money in France; in 1349 there were
nine, in 1351 eighteen, in 1353 thirteen, and in 1355 eighteen again.
In the course of a single year the value of the silver mark sprang
from four to seventeen livres, and fell back again to four.[1] The
practice of fixing the price of many necessary commodities must have
aggravated the natural evil consequences of such fluctuations.[2]
[Footnote 1: Wolowski's Introduction to Oresme's _Tractatus_, p.
xxvii.]
[Footnote 2: See Endemann, _Studien_, vol. ii. p. 34.]
This grievance had the good result of fixing the attention of scholars
on the money question. 'Under the stress of facts and of necessity,'
says Brants, 'thinkers applied their minds to the details of the
theory of money, which was the department of economics which, thanks
to events, received the earliest illumination. Lawyers, bankers,
money-changers, doctors of theology, and publicists of every kind,
attached a thoroughly justifiable importance to the question of money.
We are no doubt far from knowing all the treatises which saw the light
in the fourteenth century upon this weighty question; but we know
enough to affirm that the monetary doctrine was very developed and
very far-seeing.'[1] Buridan analysed the different functions and
utilities of money, and explained the different ways in which its
value might be changed.[2] He did not, however, proceed to discuss the
much more important question as to when the sovereign was entitled
to make these alterations. This was reserved for Nicholas Oresme, who
published his famous treatise about the year 1373. The merits of this
work have excited the unanimous admiration of all who have studied it.
Roscher says that it contains 'a theory of money, elaborated in the
fourteenth century, which remains perfectly correct to-day, under the
test of the principles applied in the nineteenth century, and that
with a brevity, a precision, a clarity, and a simplicity of language
which is a striking proof of the superior genius of its author.'[3]
According to Brants, 'the treatise of Oresme is one of the first to
be devoted _ex professo_ to an economic subject, and it expresses many
ideas which are very just, more just than those which held the field
for a long period after him, under the name of mercantilism, and more
just than those which allowed of the reduction of money as if it were
nothing more than a counter of exchange.'[4] 'Oresme's treatise on
money,' says Macleod, 'may be justly said to stand at the head of
modern economic literature. This treatise laid the foundations of
monetary science, which are now accepted by all sound economists.'[5]
'Oresme's completely secular and naturalistic method of treating one
of the most important problems of political economy,' says Espinas,
'is a signal of the approaching end of the Middle Ages and the dawn of
the Renaissance.'[6] Dr. Cunningham adds his tribute of praise: 'The
conceptions of national wealth and national power were ruling ideas in
economic matters for several centuries, and Oresme appears to be the
earliest of the economic writers by whom they were explicitly adopted
as the very basis of his argument.... A large number of points
of economic doctrine in regard to coinage are discussed with much
judgment and clearness.'[7] Endemann alone is[8] inclined to quarrel
with the pre-eminence of Oresme; but on this question, he is in a
minority of one.[9]
[Footnote 1: _Op. cit._, p. 186.]
[Footnote 2: _Quaest. super Lib. Eth._, v. 17; _Quaest. super Lib.
Pol._, i. 11.]
[Footnote 3: Quoted in Wolowski, _op. cit._, and see Roscher,
_Geschichte_, p. 25.]
[Footnote 4: _Op. cit._, p. 190.]
[Footnote 5: _History of Economics_, p. 37.]
[Footnote 6: _Op. cit._, p. 110.]
[Footnote 7: _Growth of English Industry and Commerce_, vol. i. p.
359.]
[Footnote 8: _Grundsätze_, p. 75.]
[Footnote 9: See an interesting note in Brants, _op. cit._, p. 187.]
The principal question which Oresme sets out to answer, according to
the first chapter of this treatise, is whether the sovereign has the
right to alter the value of the money in circulation at his pleasure,
and for his own benefit. He begins the discussion by going over the
same ground as Aristotle in demonstrating the origin and utility of
money, and then proceeds to discuss the most suitable materials
which can be made to serve as money. He decides in favour of gold and
silver, and shows himself an unquestioning bimetallist. He further
admits the necessity of some token money of small denominations, to be
composed of the baser metals. Having drawn attention to the transition
from the circulation of money, the value of which is recognised
solely by weight, to the circulation of that which is accepted for its
imprint or superscription, the author insists that the production of
such an imprinted coinage is essentially a matter for the sovereign
authority in the State. Oresme now comes to the central point of his
thesis. Although, he says, the prince has undoubtedly the power to
manufacture and control the coinage, he is by no means the owner of it
after it has passed into circulation, because money is a thing which
in its essence was invented and introduced in the interests of society
as a whole.
Oresme then proceeds to apply this central principle to the solution
of the question which he sets himself to answer, and concludes that,
as money is essentially a thing which exists for the public benefit,
it must not be tampered with, nor varied in value, except in cases of
absolute necessity, and in the presence of an uncontroverted general
utility. He bases his opposition to unnecessary monetary variation on
the perfectly sound ground that such variation is productive of loss
either to those who are bound to make or bound to receive fixed sums
in payment of obligations. The author then goes on to analyse the
various kinds of variation, which he says are five--_figurae_,
_proportionis_, _appellationis_, _ponderis_, and _materiae_. Changes
of form (_figurae_) are only justified when it is found that the
existing form is liable to increase the damage which the coins suffer
from the wear and tear of usage, or when the existing currency has
been degraded by widespread illegal coining; changes _proportionis_
are only allowable when the relative value of the different metals
constituting the coinage have themselves changed; simple changes of
name (_appellationis_), such as calling a mark a pound, are never
allowed. Changes of the weight of the coins (_ponderis_) are
pronounced by Oresme to be just as gross a fraud as the arbitrary
alteration of the weights or measures by which corn or wine are sold;
and changes of matter (_materiae_) are only to be tolerated when the
supply of the old metal has become insufficient. The debasement of the
coinage by the introduction of a cheaper alloy is condemned.
In conclusion, Oresme insists that no alteration of any of the above
kinds can be justified at the mere injunction of the prince; it must
be accomplished _per ipsam communitatem_. The prince exercises
the functions of the community in the matter of coinage not as
_principalis actor_, but as _ordinationis publicae executor_. It is
pointed out that arbitrary changes in the value of money are really
equivalent to a particularly noxious form of taxation; that they
seriously disorganise commerce and impoverish many merchants; and
that the bad coinage drives the good out of circulation. This last
observation is of special interest in a fourteenth-century writer,
as it shows that Gresham's Law, which is usually credited to a
sixteenth-century English economist, was perfectly well understood in
the Middle Ages.[1]
[Footnote 1: The best edition of Oresme's _Tractatus_ is that by
Wolowski, published at Paris in 1864, which includes both the Latin
and French texts.]
This brief account of the ground which Oresme covered, and the
conclusions at which he arrived, will enable us to appreciate his
importance. Although his clear elucidation of the principles which
govern the questions of money was not powerful enough to check the
financial abuses of the sovereigns of the later Middle Ages, they
exercised a profound influence on the thought of the period, and were
accepted by all the theologians of the fifteenth century.[2]
[Footnote 2: Biel, _op. cit._, IV. xv. 11; _De Monetarum Potestate et
Utilitate_, referred to in Jourdain, _op. cit._, p. 34.]