Coin reconsidered: The political alchemy of commodity money

Theoretical Inquiries in Law

Volumn 11, Issue 1, 2010, Pages

  Desan, Christine ^a  

^a HARVARD LAW SCHOOL   (United States)

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EID: 77649089576     PISSN: None     EISSN: 15653404     Source Type: Journal    
DOI: 10.2202/1565-3404.1245     Document Type: Article

References (183)

1. R.A. Radford, The Economic Organization of a P.O.W. Camp, 12 ECONOMICA 189, 190 (1945).
2. Donald W. Katzner, Unity of Subject Matter in the Teaching of Intermediate Microeconomic Theory, 22 J. ECON. EDUC. 154, 160 (1991);
3. see also, e.g., Michael Salemi, Discussion Questions, http://www.unc.edu/∼salemi/Econ101/Radford%20Discussion%20Questions.pdf (last visited Apr. 2, 2009);
4. N. GREGORY MANKIW, MACROECONOMICS 157 (4th ed. 2000).
5. Radford, supra note 1, at 190-91.
6. Id. at 192-93, 195-96. Radford apparently intended his case study to certify the primacy of exchange as the essential dynamic of the market, remarking that a market had arisen despite the absence of labor and production and was thus "difficult to reconcile" with the labor theory of value. Id. at 192-93. His textbook demonstration of the quantity theory included attention to the elasticity of demand for cigarettes and the effect of expectations. Id. at 195.
7. Id. at 195, 196-200.
8. Id. at 189.
9. For a review of the apocryphal histories often attributed to money, see for example L. Randall Wray, Alternative Approaches to Money, 11 THEORETICAL INQUIRIES L. 29 (2010).
10. -1 KARL MARX, CAPITAL: A CRITIQUE OF POLITICAL ECONOMY 162-63 (Ben Fowkes trans., Penguin Books 1976) (1867);
11. CARL MENGER, PRINCIPLES OF ECONOMICS 263 (James Dingwall & Bert F. Hoselitz trans., N.Y. Univ. Press 1981) (1871). Angela Redish describes the popular account of the gold standard as providing a nominal anchor for price.
12. see ANGELA REDISH, BIMETALLISM: AN ECONOMIC AND HISTORICAL ANALYSIS 3 (2000).
13. If, for some reason, the mint-master wanted to have less coin, he could of course double the amount of metal content in each unit and prices would drop. The effect would be the same as when stressed soldiers smoked their cigarette money and so took it out of circulation.
14. "An ideal commodity money system is designed to equate the price level to a relative price of metal for consumption goods, and by making stocks of coins endogenous, to prevent effects on the price level coming from exogenous fluctuations in the quantities of coins." THOMAS J. SARGENT & FRANCOIS R. VELDE, THE BIG PROBLEM OF SMALL CHANGE 11 (2d ed. 2002);
15. see also Id. at 22 ("An ideal commodity money makes the price level proportional to [oz silver/gd - the world price in silver], where the factor of proportionality is . . . the number of coins of [a certain type] per ounce of silver.");
16. id. at 12 (noting that the standard formula adopted in the nineteenth century made token coin "costless to produce upon demand," which would assumedly supplement larger denominations tied to metal);
17. see also REDISH, supra note 8, at 3. 11
18. See, e.g., SARGENT & VELDE, supra note 10, at 9-12.
19. See Radford, supra note 1, at 190, 192, 197, 199.
20. In the early Middle Ages, coins "counted" out an amount of weight in metal. Over time, the correspondence between the value of coins by count and the weight of coins in silver (or gold) declined. That correspondence was not necessary in order to create a system that marked value in regular ways, as the following centuries made clear. For the critical character of counting coins, even coins that had a corresponding weight in metal, see REDISH, supra note 8, at 5-6;
21. ALBERT EDGAR FEAVEARYEAR, THE POUND STERLING: A HISTORY OF ENGLISH MONEY 2 (E. Victor Morgan ed., 2d ed. 1963);
22. Nicholas J. Mayhew, From Regional to Central Minting 1158-1464, in A NEW HISTORY OF THE ROYAL MINT 83, 97 (C.E. Challis ed., 2d ed. 1992).
23. The same phenomenon created money as a "store of value" insofar as the production and withdrawal of coin created a predictable path for the money supply.
24. REDISH, supra note 8, at 4.
25. It would assume too much global exchange to look for "world" prices in silver. See infra note 84. A realistic version of the spontaneous commodity money model would assume that the commodity prices stated in a common medium would emerge over a smaller but significant geographic region - southeast England, for example. The opposing argument is that goods would not gain a common commodity (e.g., silver) price tag until a political unit had selected that commodity as the relevant marker.
26. PETER SPUFFORD, MONEY AND ITS USE IN MEDIEVAL EUROPE 7-8 (1988).
27. Id. at 8-9. A smaller gold coin, the "tremissis" and later "trientes," also circulated.
28. Id. at 8-9, 19.
29. SPUFFORD, supra note 17;
30. Ian Stewart, The English and Norman Mints, c. 600-1158, in A NEW HISTORY OF THE ROYAL MINT, supra note 13, at 1, 3-4.
31. SPUFFORD, supra note 17, at 14-16.
32. For the decline of gold as a means of exchange more generally across western Europe, see id. at 14-22.
33. SPUFFORD, supra note 17, at 16, 55.
34. Id. at 15-18, 22. As Spufford details, while gold lost its "fiscal, rental, and commercial functions," it was still used as compensation for death or injury, certain fines, and wife-purchase. Id. at 17-18.
35. CARLO M. CIPOLLA, MONEY, PRICES, AND CIVILIZATION IN THE MEDITERRANEAN WORLD, FIFTH TO SEVENTEENTH CENTURY 3-4 (1967);
36. see also SPUFFORD, supra note 17, at 17-18, 22, 35.
37. CIPOLLA, supra note 23, at 7;
38. See also SPUFFORD, supra note 17, at 17-18;
39. GLYN DAVIES, A HISTORY OF MONEY: FROM ANCIENT TIMES TO THE PRESENT DAY 169 (3d ed. 2002).
40. For England in particular, see Stewart, supra note 19, at 3-4;
41. PHILIP GRIERSON & MARK BLACKBURN, MEDIEVAL EUROPEAN COINAGE:WITH A CATALOGUE OF THE COINS IN THE FITZWILLIAM MUSEUM 156 (1986).
42. CIPOLLA, supra note 23, at 9-10.
43. Id. at 6, 9-12.
44. Id. at 4-7. Note that to say that gold was not acting as a universal equivalent -a money - is not to say that it had no value as a commodity. The gold solidus continued to figure in records; in practice it referred to the smaller denomination of tremisses or trientes, themselves struck in small quantities and inferior quality across Gaul, Frisia, the Visigoth kingdom, the Frankish territory, and in seventh-century England.
45. See SPUFFORD, supra note 17, at 19.
46. Stewart, supra note 19, at 4-5, 11-12.
47. FEAVEARYEAR, supra note 13, at 7.
48. SPUFFORD, supra note 17, at 19.
49. Some scholarship posits a somewhat more significant, if temporary, role for a revived gold coinage in the seventh century. See DAVIES, supra note 24, at 119-23.
50. See SPUFFORD, supra note 17, at 23-24, 27-32;
51. Stewart, supra note 19, at 4-5, 11-13. The first English pennies were called "sceattas." Together with the Frisian pennies, they were much more abundant than Frankish coins. SPUFFORD, supra note 17, at 28-29;
52. see also Stewart, supra note 19, at 4-5.
53. For speculation on the political organization of the Frisian and Frankish communities responsible for the coinages, see SPUFFORD, supra note 17, at 27-30.
54. For commentary on the sources of silver, see Id. at 30-31. While Spufford assumes that a changing balance of payments brought silver to England, significant supplies of the metal may have existed in England long before being used for coin. That possibility is consistent with the understanding that the metal did not act as money until given that form by political authority.
55. For a similar delay in Greece, see Id. at 36-37.
56. For the argument that Offa innovated the broad penny relatively early in his reign, see Derek S. Chick, Towards a Chronology for Offa's Coinage: An Interim Study, 3 YORKSHIRE NUMISMATIST 47 (1997). He may also have copied the broad penny from his Kentish rivals, but been the first to establish the coin in the quantity and quality that made it revolutionary. See DAVIESs, supra note 24, at 124-28.
57. D.M. Metcalf, The Prosperity of North-Western Europe in the Eighth and Ninth Centuries, 20 ECON. HIST. REV. (2d ser.) 344 (1967);
58. See also commentary in SPUFFORD, supra note 17, at 30 n.3.
59. SPUFFORD, supra note 17, at 35-40.
60. Stewart credits Offa with issuing the first broad pennies, although an earlier view identifies rival Anglo-Saxon rulers. See Stewart, supra note 19, at 13-14.;
61. SPUFFORD, supra note 17, at 41 n.6 (flagging alternative arguments).
62. On the tie between coinage and centralizing authority under both Offa and Charlemagne, see Stewart, supra note 19, at 13-14, 20;
63. SPUFFORD, supra note 17, at 40-44, 99-100.
64. For the dominance of the penny, see DAVIES, supra note 24, at 126-27;
65. SPUFFORD, supra note 17, at 27.
66. See, e.g., PAMELA NIGHTINGALE, The Evolution of Weight-Standards and the Creation of New Monetary and Commercial Links in Northern Europe from the Tenth Century to the Twelfth Century, in TRADE, MONEY, AND POWER IN MEDIEVAL ENGLAND, selection IV, 195-209 (2007).
67. See, e.g., SARGENT & VELDE supra note 10, at 18-21.
68. Stewart, supra note 19, at 49. Stewart reconstructs the lineage of types from coins found in hoards. Id. at 49-55.
69. See SPUFFORD, supra note 17, at 94.
70. Stewart, supra note 19, at 50-58;
71. SPUFFORD, supra note 17, at 94.
72. Stewart, supra note 19, at 55-59;
73. SPUFFORD, supra note 17, at 93 & n.2, 94-95.
74. See generally Stewart, supra note 19, at 55-59;
75. RICHARD FITZNIGEL, DIALOGUS DE SCACCARIO (1178), cited in Id. at 59;
76. see also SPUFFORD, supra note 17, at 93.
77. -1 ENGLISH HISTORICAL DOCUMENTS 384 (Dorothy Whitelock ed., 1955), cited in SPUFFORD, supra note 17, at 87. Although existing scholarship does not address the possibility, the law may have applied to the new coins produced at each renovatio monetae.
78. SPUFFORD, supra note 17, at 90-91.
79. For the recent argument that the Anglo-Saxon period was characterized by strong governance, see PATRICK WORMALD, THE MAKING OF ENGLISH LAW (1999). A consensus to that effect has prevailed among those considering monetary dimensions of English history. See, e.g., PAMELA NIGHTINGALE, "The King's Profit": Trends in English Mint and Monetary Policy in the Eleventh and Twelfth Centuries, in TRADE, MONEY, AND POWER IN MEDIEVAL ENGLAND, supra note 36, at 61, 61-63, 70-71;
80. SPUFFORD, supra note 17, at 92-94.
81. JAMES STEVEN ROGERS, THE EARLY HISTORY OF THE LAW OF BILLS AND NOTES: A STUDY OF THE ORIGINS OF ANGLO- AMERICAN COMMERCIAL LAW 170-93 (1995);
82. J.K. Horsefield, The Beginnings of Paper Money in England, 117 J. EUR. ECON. HIST. 36 (1977).
83. See SPUFFORD, supra note 17, at 87-90;
84. NICHOLAS J. MAYHEW, STERLING: THE HISTORY OF A CURRENCY 3-5 (2000). The evaluation of the Domesday Book is from Mayhew, Id. at 3;
85. Spufford's evaluation is at SPUFFORD, supra note 17, at 77.
86. MAYHEW, supra note 46, at 3-5, 16-18;
87. DAVIES, supra note 24, at 135-38, 140-42;
88. Mayhew, supra note 13, at 83-86.
89. See DAVIES, supra note 24, at 140-41.
90. See also MAYHEW, supra note 46, at 11-12, for more on the way that coinage during the twelfth-century civil war reflected the fracturing of sovereign power.
91. See DAVIES, supra note 24, at 144.
92. All three prices thus came as coins per amount of metal (e.g., pennies/oz silver). See REDISH, supra note 8, at 27-28. Sargent and Velde model the total charge by the government as a percentage σ, so that the amount of silver received back from the mint for each ounce is 1-σ. SARGENT & VELDE, supra note 10, at 20. That is received back in the form of coin: (1-σ)/b, where b specifies a certain number of oz/penny. The mint equivalent determined the amount of metal in a coin by controlling the number of coins that would be struck from a given weight.
93. Englishmen identified the minting point for coin by considering prices in coin for consumer goods, e.g., pennies/bread, compared to how much those goods would cost in silver. When prices fell, the value of coin was rising, making a trip to the mint more worthwhile. Tracking forward the way that Sargent and Velde model the situation, if the number of coins that can be procured from the mint is (1-σ)/b in pennies/oz and the relative price of consumption goods is φ in oz/good, then the price level (pennies/good) at which minting occurred is the number of coins that could be procured ((1-σ)/b) times the price of goods in silver (φ). SARGENT & VELDE, supra note 10, at 20. If the charge for coin increased, in other words, prices in coin would have to drop farther relative to prices in silver before it was worth going to the mint.
94. More precisely, people would melt coin when the coin had lost sufficient value that, even including the added cost of melting coin, the retrieved silver would be worth more than the coin.
95. On private credit's lack of negotiability, see for example Horsefield, supra note 45. On Henry's centralizing initiative, see Mayhew, supra note 13, at 132 & passim.
96. On the Crown's commitment to support the private exchange of coin by count and to discourage weighing of coin by the public, see Id. at 97-98.
97. On the provision that silver, and eventually gold, be legal tender in private transactions, see 1 ROGERS RUDING, ANNALS OF THE COINAGE OF GREAT BRITAIN AND ITS DEPENDENCIES 215 (London, J. Hearne 3d ed. 1840).
98. For an example of the debt obligations of merchants in the late thirteenth and early fourteenth century that were filed in Chancery and enforced by that court, see Pamela Nightingale, Monetary Contraction and Mercantile Credit in Later Medieval England, 43 ECON. HIST. REV. 560 (1990). The evaluation of the amount of foreign coin circulating is from Mayhew, supra note 13, at 131-32.
99. For accounts that explore the rising demand for money in circumstances where people perceived it as increasingly useful to pay public and private obligations, see, for example, Nicholas J. Mayhew, Population, Money Supply, and the Velocity of Circulation in England, 1300-1700, 48 ECON. HIST. REV. 238, 240 (1995);
100. Peter H. Lindert, English Population, Wages, and Prices: 1541-1913, 15 J. INTERDISC. HIST. 609 (1985);
101. Charles W. Calomiris, Institutional Failure, Monetary Scarcity, and the Depreciation of the Continental, 48 J. ECON. HIST. 47 (1988).
102. Mayhew, supra note 13, at 83-84 & n.3.
103. For the adoption of free minting throughout Europe, see SARGENT & VELDE, supra note 10, at 128-29. The reduction in renewals correlated with a new practice at the Exchequer: It began to "blanch" coin brought in or require additional payment if the coin did not meet minimum quality standards. Id. at 90;
104. S. Harvey, Royal Revenue and Domesday Terminology, 20 ECON. HIST. REV. 221 (1967). That practice would, indirectly, pressure people to take coin in to be reminted when it had reached a point of obvious wear. Insofar as the renovatio monetae system went without such a practice, it reinforces the assumption that the earlier method included a requirement that taxes be paid in new coin, which would not require an assay of value.
105. SARGENT & VELDE, supra note 10, at 85 (quoting Bernardo Davanzati).
106. Sargent and Velde call it an approach that "imperfectly realized" that model. Id. at 11.
107. REDISH, supra note 8, at 28.
108. I use the term "gross seigniorage" here to include all government charges, profit and production costs. See REDISH, supra note 8, at 27 & n.10.
109. SARGENT & VELDE, supra note 10, at 91, 96 (citing CORPUS JURIS CANONICI, LIBER EXTRA X 2.24.18, 1581, 1965, 2:130; 2.24.18; 1570, 285v).
110. On seigniorage rates, see REDISH, supra note 8, at 34, 51-53;
111. see also FEAVEARYEAR, supra note 13, at 3 & app. (suggesting rates between 2 and 12 percent). Paris's words come from 5 MATTHEW PARIS, CHRONICA MAJORA 18-19 (Henry Richards Luard ed., London, Rolls Series 1880), translated in D.W. Dykes, The Coinage of Richard Olof, 33 BRIT. NUMISMATIC J. 73, 78 (1964), cited in Mayhew, supra note 13, at 108.
112. See Mayhew, supra note 13, at 90, 108, 153, 167-69;
113. NIGHTINGALE, supra note 44.
114. The cost of holding a non-interest-bearing medium (the loss of interest) would in that way be offset by the gain in value of money as prices fell. MILTON FRIEDMAN, THE OPTIMUM QUANTITY OF MONEY 1-48 (2006).
115. Mayhew, supra note 13, at 83-84 & n.3.
116. In turn, the destruction of liquidity would also be a matter of individualized calculation: it would occur when prices rose enough that any holder would melt his or her coin. Since that occurred, at least theoretically, only when users had factored in and recouped the government's charge for money (they would not melt coin until its value had fallen so far that it was worth only the amount of metal it contained), it would not pose the same problem as the drag on creating liquidity. Taken together, however, the drag on creating liquidity and the freedom to destroy it would both work to limit liquidity. (Note that there would be some qualification on destroying liquidity because people would have to pay for melting coin and retrieving the silver it contained.) Cf. SARGENT & VELDE, supra note 10, at 23-24 (explaining the irreversibility of making and melting coin in terms of arbitrage profits to individuals).
117. According to the quantity equation, Money × Velocity = Price × Transactions, MV = PT. The right side of the equation registers the number of times that goods are exchanged for money in a certain period of time, with P being the price for a typical transaction and T being the number of transactions. The PT total amounts to the total money value of all transactions. Since total transactions are hard to measure, T is often estimated at Y, the total output of an economy. The left side of the quantity equation registers the quantity of money (M) and the rate at which money circulates or changes hands in a given amount of time (V).
118. For example, in an economy with a large M, money would have to change hands less frequently than with a small M in order to service the total money value of transactions. See generally MANKIW, supra note 2, at 161-63. The demand for money tracks that relationship: in economies with a large quantity of money or M, people are holding more money relative to the total money value of transactions: D = M/PT. That is, "demand" or D as represented by the quantity equation, is larger. D is, in other words, the inverse of velocity. 67 Mayhew, supra note 54, at 240;
119. Lindert, supra note 54;
120. JAMES C. RILEY amp; JOHN J. MCCUSKER, Money Supply, Economic Growth, and the Quantity Theory of Money: France, 1650-1788, 20 EXPLORATIONS ECON. HIST. 274 (1983). In the late eleventh century, the English money supply amounted to about 4d (shillings) per person; by 1300, it was at about 36d/person. MAYHEW, supra note 46, at 5, 17. Mayhew and Spufford consider the effect of that increase on daily life and commercial exchange, in Id. at 15-20;
121. SPUFFORD, supra note 17, at 109-263.
122. For the increase in the money supply from the late thirteenth to the early sixteenth century, see Mayhew, supra note 57, at 244, 250-51. After the Great Debasement of the sixteenth century disrupted the pattern of a steadily increasing demand for liquidity, Englishmen (and Europeans more generally) reverted to that tendency throughout the modern period, from 1700 to 1900. In the modern period, the government was subsidizing the creation of money.
123. RUDING, supra note 53, at 215, 223-24.
124. For the secondary role of private credit in redressing the liquidity problem, see Nightingale, supra note 53;
125. DAVIES, supra note 24, at 169;
126. Mayhew, supra note 54, at 253-54.
127. For the way that the high pressure put on low denominations shaped the character of private credit in England, see Christine Desan, The Social Stratigraphy of Coin and Credit (Aug. 19, 2009) (unpublished manuscript, on file with author).
128. William I stabilized the weight of pennies at approximately 1.4 grams, where it remained until the end of the thirteenth century. MAYHEW, supra note 46, at 3. By comparison, English pennies in the ninth century were somewhat heavier (about 1.55 grams), as were Charlemagne's pennies (1.7 grams). REDISH, supra note 8, at 4, 47. Pennies lost weight between the late thirteenth and mid-fourteenth centuries (1.4 to 1.2 grams), the start of a trend that continued through the seventeenth century.
129. See Id. at 47 & n.2.
130. MAYHEW, supra note 46, at 20;
131. Mayhew, supra note 13, at 101;
132. SARGENT & VELDE, supra note 10, at 132. Short experiments with gold coins in the thirteenth century - a penny in 1257 and a groat in 1279 - failed. The Crown would not turn to gold for money again until 1343.
133. REDISH, supra note 8, at 48.
134. For the "false" coin terminology applied to the foreign currency that occasionally invaded England, see SARGENT & VELDE, supra note 10, at 132.
135. For the etymology of sterling, see MAYHEW, supra note 46, at 2.
136. See SARGENT & VELDE, supra note 10, at 16-18, 69-71, 73-99.
137. MAYHEW, supra note 46, at 20;
138. Mayhew, supra note 13, at 101;
139. SARGENT & VELDE, supra note 10, at 132;
140. REDISH, supra note 8, at 48. The first concerted issues of fractional denominations began under Edward I, in 1279.
141. On the size of silver coin and the refusal of the English to use alloys, see REDISH, supra note 8, at 18-24, 48. The wage figure of 2.2d is for 1349 and is from SARGENT & VELDE, supra note 10, at 48.
142. On the turn to gold, including experiments with a gold penny in 1257, and a gold florin in 1343, see MAYHEW, supra note 46, at 23, 32; and for an example of the way gold and silver mint equivalents were supposed to equate,
143. see REDISH, supra note 8, at 27-29.
144. On the commitment of England to full-bodied coinage of proportionate intrinsic value, see Mayhew, supra note 13, at 130;
145. REDISH, supra note 8, at 48-49;
146. SARGENT & VELDE, supra note 10, at 4-5.
147. See CIPOLLA, supra note 23, at 38-51.
148. Medieval jurists did, however, grapple with problems of devaluation and demonetarization. See SARGENT & VELDE, supra note 10, at 69-99.
149. The effect has often been lumped into the assumption that "poor money drives out good," known as "Gresham's Law." In fact, it appears that people reacted in different ways to money with greater commodity value. REDISH, supra note 8, at 32-33.
150. See Mayhew, supra note 13, at 137;
151. MAYHEW, supra note 46, at 44.
152. REDISH, supra note 8, at 54-61 reviews the long delay before the English adopted minting technologies that significantly reduced clipping in the late seventeenth century.
153. REDISH, supra note 8, at 28-29.
154. As Redish defines the mint equivalent, it is the value of a coin, divided by the product of its fineness and its weight. See also SARGENT & VELDE, supra note 10, at 22.
155. REDISH, supra note 8, at 30-33 (reviewing the current debate);
156. See also SARGENT & VELDE, supra note 10, 261-90.
157. MAYHEW, supra note 46, at 32-34;
158. REDISH, supra note 8, at 29-32. Arbitrageurs would act when the mint equivalent of silver was less than the relative mint price of gold, adjusted by the price ratio of gold: silver on the world market. At that point, prices (each denominated in the same units of account but payable in different metals) were such that they would induce people to melt silver and to mint gold. Arbitrageurs could pay for the minting costs of money and still come out ahead. As Redish points out, their calculus would also have been affected by other costs left out here, like the cost of moving money and melting it. REDISH, supra note 8, at 31-32.
159. MAYHEW, supra note 46, at 33;
160. see also REDISH, supra note 8, at 107-35. Over the sixteenth century, and certain parts of the seventeenth, gold was more chronically undervalued. Id. at 43-44.
161. REDISH, supra note 8,at 47-48.
162. For occasions on which English sovereigns debated or actually reduced their gross seigniorage take without disturbing the mint equivalent, see Mayhew, supra note 13, at 176;
163. DAVIES, supra note 24, at 192-93.
164. Scholars have traditionally assumed that a "bullion famine" gripped England and the continent in the late Middle Ages. Europeans had exhausted local mines and a chronic balance of trade problem drained silver and gold to the East. Recent work has disputed that such a famine could have lasted indefinitely because, if the supply of bullion had remained short, prices in metal should have fallen along with prices in coin made out of it. Insofar as the country was operating as a closed economy, the change in prices would be long-lasting (as far as the impact of monetary quantity was concerned); the problems that haunted the English should have been soluble with the invention of new and lower denominations. (Here, as the value of bullion rose, the sovereign could be expected to offer new denominations that created mint equivalents in smaller units of account.) Insofar as the country was linked into global networks, low prices would eventually have induced a flow of bullion towards England in return for the goods available at the newly deflated prices. In either case, or to the extent that the economy responded in either fashion, the bullion famine would have eased.
165. For the narrative of bullion famine, see for example SPUFFORD, supra note 17, at 339-62.
166. For the response, see SARGENT & VELDE, supra note 10, at 124-35;
167. Nathan Sussman, The Late Medieval Bullion Famine Reconsidered, 58 J. ECON. HIST. 126 (1998). According to O'Rourke and Williamson, however, price convergence in goods did not occur until the nineteenth century. Kevin H. O'Rourke & Jeffrey G. Williamson, When Did Globalization Begin?, 6 EUR. REV. ECON. HIST. 23 (2002);
168. Kevin H. O'Rourke & Jeffrey G. Williamson, Once More, When Did Globalization Begin?, 8 EUR. REV. ECON. HIST. 109 (2004). O'Rourke and Williamson's work focuses on commodity prices and is suggestive only on the price convergence of precious metals. See Id. at 116. Extrapolating from their findings however, shortages of bullion could have remained a local phenomenon. In that case, debasement may have been the response that sovereigns preferred, for the reasons in the text, to deflation in facing what would have been, after all, a bullion famine in Europe. The relative effect of debasement on the terms of trade would, in any case, have been like a price drop caused by a loss of bullion: debasement should have cheapened exports and made imports more expensive. But if world markets were not well integrated, those trends may not have induced responses that changed the balance of trade.
169. See MAYHEW, supra note 46, at 10.
170. For impact of that strategy (or, more precisely, the impact of the absence of that strategy) on social and economic life, see for example Desan, supra note 69.
171. See for example the alterations to coin weight in 1344-1351 described by MAYHEW, supra note 13, at 165, 168.
172. SARGENT & VELDE, supra note 10, at 15-36, 131-35. Sargent and Velde argue that, because small coin held a higher liquidity value than larger coin, people were willing to hold it even when prices rose in small denomination coin. Put another way, the value of larger coin appreciated against small coin. In everyday life, that effect may have occurred as buyers successfully offered larger denominations to buy items at lower prices, because no one could or would part with smaller coin to do so.
173. On the problem of coin shortages, see also REDISH, supra note 8, at 107-15;
174. SPUFFORD, supra note 17, at 339-41, 344-38, 356-62.
175. REDISH, supra note 8, at 89-90. According to Redish's figures, the sterling £ (the mint equivalent) contained .769 troy lbs pure silver in 1343, and .299 troy lbs pure silver in 1666, a 61.1 percent drop. The sterling £ (the mint equivalent) contained .06 troy lbs pure gold in 1343 and .022 troy lbs pure gold in 1666, a 63 percent drop. Rates of depreciation were significantly higher in the rest of Europe.
176. See DAVIES, supra note 24, at 170;
177. REDISH, supra note 8, at 89-92;
178. MAYHEW, supra note 46, at 44.
179. See generally REDISH, supra note 8, at 33-34.
180. For the price index, see MAYHEW, supra note 46, at 258-59. The stability of medieval prices occurred despite the fact that the value of silver and gold rose, as Angela Redish puts it, "systematically. " REDISH, supra note 8, at 43-44. By the time of the 1696 recoinage, the government had assumed the costs of minting. Its expense for the recoinage was enormous.
181. For advocacy of depreciation as beneficial, see DAVIES supra note 24, at 172-73;
182. MAYHEW, supra note 46, at 26-38.
183. On the recoinage debate, see SARGENT & VELDE, supra note 10, at 276-90.