Monetae cudendae ratio


"Monetae cudendae ratio" is a paper on coinage by Nicolaus Copernicus. It was written in 1526 at the request of Sigismund I the Old, King of Poland, and presented to the Prussian Diet.

History

Copernicus' earliest draft of his essay in 1517 was entitled "De aestimatione monetae". He revised his original notes, while at Olsztyn in 1519, as "Tractatus de monetis" and "Modus cudendi monetam". He made these the basis of a report which he presented to the Prussian Diet at Grudziądz in 1522; Copernicus' friend Tiedemann Giese accompanied him on the trip to Graudenz. For the 1528 Prussian Diet, Copernicus wrote an expanded version of this paper, "Monetae cudendae ratio", 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 after a later describer, Sir Thomas Gresham. This phenomenon had been noted earlier by Nicole Oresme, but Copernicus rediscovered it independently. Gresham's Law is still known in Poland and Central and Eastern Europe as the Copernicus-Gresham Law.
In the same work, Copernicus also formulated an early version of the quantity theory of money, or the relation between a stock of money, its velocity, its price level, and the output of an economy. Like many later classical economists of the 18th and 19th centuries, he focused on the connection between increased money supply and inflation.
"Monetae cudendae ratio" also draws a distinction between the use value and exchange value of commodities, anticipating by some 250 years the use of these concepts by Adam Smith—although it, too, had antecedents in earlier writers, including Aristotle.
Copernicus' essay was republished in 1816 in the Polish capital, Warsaw, as Dissertatio de optima monetae cudendae ratione, few copies of which survive.

Journal