Monetae cudendae ratio
Encyclopedia
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
by Nicolaus Copernicus
Nicolaus Copernicus
Nicolaus Copernicus was a Renaissance astronomer and the first person to formulate a comprehensive heliocentric cosmology which displaced the Earth from the center of the universe....
(Polish: Mikołaj Kopernik). It was written in 1526 at the request of Sigismund I the Old
Sigismund I the Old
Sigismund I of Poland , of the Jagiellon dynasty, reigned as King of Poland and also as the Grand Duke of Lithuania from 1506 until 1548...
, King of Poland, and presented to the Prussian Diet
Prussian estates
The Prussian estates were representative bodies of Prussia, first created by the Monastic state of Teutonic Prussia in the 14th century but later becoming a devolved legislature for Royal Prussia within the Kingdom of Poland...
.
History
Copernicus' earliest draft of his essay in 1517 was entitled De aestimatione monetae (On the Value of Coin). He revised his original notes, while at OlsztynOlsztyn
Olsztyn is a city in northeastern Poland, on the Łyna River. Olsztyn has been the capital of the Warmian-Masurian Voivodeship since 1999. It was previously in the Olsztyn Voivodeship...
(Allenstein) in 1519 (which he defended against the Teutonic Knights), as Tractatus de monetis (Treatise on Coin) and Modus cudendi monetam (The Way to Strike Coin). He made these the basis of a report which he presented to the Prussian Diet at Grudziądz
Grudziadz
Grudziądz is a city in northern Poland on the Vistula River, with 96 042 inhabitants . Situated in the Kuyavian-Pomeranian Voivodeship , the city was previously in the Toruń Voivodeship .- History :-Early history:...
(Graudenz) in 1522; Copernicus' friend Tiedemann Giese
Tiedemann Giese
Tiedemann Giese Tiedemann Giese Tiedemann Giese (1 June 1480 – 23 October 1550, Heilsberg (Lidzbark), was a member of the patrician Giese family of Danzig (Gdańsk). The brother of the Hanseatic League merchant Georg Giese and relative of Albrecht Giese he became Bishop of Culm (Chełmno) first...
accompanied him on the trip to Graudenz. For the 1528 Prussian Diet
Prussian estates
The Prussian estates were representative bodies of Prussia, first created by the Monastic state of Teutonic Prussia in the 14th century but later becoming a devolved legislature for Royal Prussia within the Kingdom of Poland...
, Copernicus wrote an expanded version of this paper, Monetae cudendae ratio (On the Minting of Coin), setting forth a general theory of money.
In the paper, Copernicus postulated the principle that "bad money drives out good", which later came to be referred to as Gresham's Law
Gresham's Law
Gresham's law is an economic principle that states: "When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation." It is commonly...
after a later describer
Stigler's law of eponymy
Stigler's law of eponymy is a process proposed by University of Chicago statistics professor Stephen Stigler in his 1980 publication "Stigler’s law of eponymy". In its simplest and strongest form it says: "No scientific discovery is named after its original discoverer." Stigler named the...
, Sir Thomas Gresham
Thomas Gresham
Sir Thomas Gresham was an English merchant and financier who worked for King Edward VI of England and for Edward's half-sisters, Queens Mary I and Elizabeth I.-Family and childhood:...
. This phenomenon had been noted earlier by Nicole Oresme, but Copernicus rediscovered it independently. Gresham's Law is still known in Poland and Central
Central Europe
Central Europe or alternatively Middle Europe is a region of the European continent lying between the variously defined areas of Eastern and Western Europe...
and Eastern Europe
Eastern Europe
Eastern Europe is the eastern part of Europe. The term has widely disparate geopolitical, geographical, cultural and socioeconomic readings, which makes it highly context-dependent and even volatile, and there are "almost as many definitions of Eastern Europe as there are scholars of the region"...
as Kopernik's Law.
In the same work, Copernicus also formulated an early version of the quantity theory of money
Quantity theory of money
In monetary economics, the quantity theory of money is the theory that money supply has a direct, proportional relationship with the price level....
, or the relation between a stock of money, its velocity, its price level, and the output of an economy. Like many later classical economists
Classical economics
Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill....
of the 18th and 19th centuries, he focused on the connection between increased money supply
Money supply
In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time. There are several ways to define "money," but standard measures usually include currency in circulation and demand deposits .Money supply data are recorded and published, usually...
and inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
.
Monetae cudendae ratio also draws a distinction between the use value
Use value
Use value or value in use is the utility of consuming a good; the want-satisfying power of a good or service in classical political economy. In Marx's critique of political economy, any labor-product has a value and a use-value, and if it is traded as a commodity in markets, it additionally has an...
and exchange value
Exchange value
In political economy and especially Marxian economics, exchange value refers to one of four major attributes of a commodity, i.e., an item or service produced for, and sold on the market...
of commodities, anticipating by some 250 years the use of these concepts by Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...
—although it, too, had antecedents in earlier writers, including Aristotle
Aristotle
Aristotle was a Greek philosopher and polymath, a student of Plato and teacher of Alexander the Great. His writings cover many subjects, including physics, metaphysics, poetry, theater, music, logic, rhetoric, linguistics, politics, government, ethics, biology, and zoology...
.
Copernicus' essay was republished in 1816 in the Polish capital, Warsaw
Warsaw
Warsaw is the capital and largest city of Poland. It is located on the Vistula River, roughly from the Baltic Sea and from the Carpathian Mountains. Its population in 2010 was estimated at 1,716,855 residents with a greater metropolitan area of 2,631,902 residents, making Warsaw the 10th most...
, as Dissertatio de optima monetae cudendae ratione (Dissertation on the Optimal Minting of Coin), few copies of which survive.
See also
- List of multiple discoveries: Fourteenth century