On the Minting of Money

Nicolaus Copernicus is remembered primarily as the astronomer who displaced the Earth from the center of the cosmos. Yet his Monetae Cudendae Ratio (“On the Minting of Money”) reveals another Copernicus: a careful observer of monetary disorder and a thoughtful analyst of the social consequences of debased currency.

The short volume under review, which presents Copernicus’s treatise alongside essays by contemporary commentators, and the entire text in Latin, succeeds admirably in making this neglected work accessible to modern readers.

The editor and contributors are particularly effective in highlighting Copernicus’s insights into monetary stability, the dangers of debasement, a version of the quantity theory of money, and the phenomenon later associated with Gresham’s Law.

At the same time, the book invites reflection not only on what Copernicus says, but also on what he leaves unsaid. It is precisely in the conjunction of those insights and omissions that the treatise becomes most valuable.

As Kurt Schuler and the other contributors emphasize, Copernicus deserves recognition as an important figure in the history of monetary thought.

His observations regarding the destructive consequences of currency debasement remain relevant, counting the “debasement of coinage” among the four most serious maladies “forever causing the decline of kingdoms” (p. 7). He understood that bad money drives good money from circulation, that monetary instability undermines social cooperation, and that a sound monetary order is a prerequisite for economic prosperity.

In this respect, the editor and contributors are correct to place Copernicus within a long tradition of thinkers concerned with monetary integrity.

The treatise also occupies an important position at the intersection of three intellectual traditions: the Aristotelian tradition, the medieval scholastic tradition associated with Nicholas Oresme, and the early modern tradition of monetary analysis.

Although there is no conclusive evidence that Copernicus directly read Oresme’s fourteenth-century treatise De Moneta, the similarities are striking. Moreover, his education makes it highly likely that he knew Aristotelian discussions of money. Whether or not Oresme influenced him directly, Copernicus belongs to a broader intellectual lineage extending from Aristotle through the Scholastics into the early modern period.

Yet the most interesting aspects of Copernicus’s treatise may be found in its limitations. One concerns his conception of money itself. Modern readers both from the mainstream and Austrian economics often approach monetary theory through a catallactics perspective, in which money is understood primarily as a generally accepted medium of exchange generated spontaneously by the identification of a more liquid merchandize by the economic agents. Copernicus, by contrast, like the neo-Chartalists today, appears to approach money primarily as a unit of account and a measure of value:

Money, or “coinage,” is gold or silver that has been specially marked—in accordance with policy established by any government or head of government—for the purpose of reckoning the prices of things that are bought and sold. Money is therefore a kind of common ‘measuring stick’ for the valuation of things. (p. 7)

His analogies are drawn less from commerce than from metrology. Money is treated as a standard analogous to measures of weight, volume, or length.

This emphasis is significant because it shifts the focus of monetary theory. Rather than asking how a generally accepted medium of exchange emerges, Copernicus asks how a society can maintain a stable measure. The result is a theory that is more metrological than catallactic. While this perspective yields important insights into monetary stability, it also narrows the scope of the analysis.

An even more striking omission concerns credit. Copernicus lived in a highly commercial environment connected to Baltic and Hanseatic trade. Bills of exchange, merchant credit, and other financial instruments were well known in Europe by his time. Yet they are almost entirely absent from the treatise. One can read Monetae Cudendae Ratio from beginning to end without realizing that credit exists.

This omission is revealing. Copernicus was not attempting to explain the monetary economy as a whole. He was concerned with the integrity of the monetary unit itself. Bills of exchange and other credit instruments presuppose a unit of account. For Copernicus, the prior question was what makes that unit trustworthy. Nevertheless, the absence of any discussion of money substitutes remains striking and limits the applicability of his analysis to more complex monetary systems.

At the same time, Copernicus cannot be dismissed as a simple metallist. One of the most fascinating aspects of the treatise is his recognition that the value of a coin is not identical to the value of the metal it contains. He explicitly distinguishes the value of the material from the value of the coin as money:

Now, I think that the relevant measure here is the valuation [Latin aestimatio] of the money as such, and, although this is founded in the quality of the metal it is made of, nevertheless, money’s material or metallic value [Latin valor] must be distinguished from its valuation as money [aestimatio]; for money can be valued more in itself than the material it is composed of and vice versa [i.e., its material value may be more than its actual valuation].” (p. 8, emphasis in the original)

Once monetary value is distinguished from metallic value, the possibility emerges that money could derive part of its value from factors other than its material substrate.

To be sure, Copernicus never embraces such a conclusion. He insists that monetary valuation and metallic content should remain closely connected. Yet the conceptual distinction remains. In this sense, Copernicus is neither a pure metallist nor a pure nominalist. He occupies an intermediate position that recognizes the institutional dimension of monetary value while preserving a strong attachment to precious metals.

This observation leads to what may be the deepest implication of the treatise. Why, if monetary value is not identical to metallic value, should money be coined in gold and silver? Copernicus never fully answers this question, but the internal logic of his argument suggests a compelling interpretation. Gold and silver function not merely as commodities but as constitutional devices. Their importance lies in their capacity to constrain political authority, and the circumstance that he gave advice to the rulers of Prussia and Poland about how to fight inflation indicates what he had in his mind.

Throughout the treatise, Copernicus condemns debasement and insists that the monetary standard must remain stable. Yet he says remarkably little about the fiscal motivations that lead rulers to debase their currencies. The incentives behind seigniorage remain largely implicit. By tying money to precious metals, political authorities are prevented from manipulating the currency at will. Gold and silver therefore serve as external constraints on sovereign discretion.

From this perspective, the significance of precious metals is political as much as economic. The central concern is not intrinsic value but the prevention of arbitrary monetary manipulation. Copernicus’s monetary theory can thus be read as a form of monetary constitutionalism.

It is here that I part company, at least partially, with the editor, Ralph Benko, and with Jonathan Decker, one of the commentators. Benko understandably presents Copernicus as an important figure in the genealogy of the classical gold standard, while Decker states that Copernicus “presents the case for the classical gold standard” (p. 27). In one sense, this is entirely correct. The classical gold standard shared Copernicus’s concern with monetary stability, resistance to debasement, and limits on governmental discretion.

Yet it would be a mistake to read Copernicus as a defender of the classical gold standard itself. The monetary system described in Monetae Cudendae Ratio is fundamentally a specie standard. The classical gold standard, especially in its nineteenth-century form, was something quite different. It rested on extensive use of bank-created money substitutes, including deposits, bills of exchange, and other credit instruments. Gold functioned as the ultimate reserve asset, but the day-to-day operation of the system depended on a vast superstructure of credit. One does not need to read more than Walter Bagehot’s Lombard Street to realize that.

This distinction is crucial. The classical gold standard was not simply a world of gold coins. It was a world in which the endogenous creation of monetary instruments by banks expanded and contracted in response to profitable lending opportunities.

As Jacques Rueff argued in his entire corpus, the strength of such a system lies in its tendency to preserve the equivalence between goods and claims on goods. Inflation and social disorder arise when “false rights” are created—claims on goods generated not in association with a corresponding production of goods or services, but, mostly, by the actions of governments.

From this perspective, the editor and contributors are correct to place Copernicus within the genealogy of the classical gold standard.

They are correct to see a family resemblance between his concerns and those later articulated by defenders of monetary restraint. What seems less convincing is the suggestion that Copernicus can be read as a defender of the classical gold standard in its fully developed form.

For that reason, Monetae Cudendae Ratio should be read less as a direct defender of the classical gold standard than as a profound reflection about the integrity of money, and serve as an invitation to reflect further on the nature of money, sovereignty and monetary institutions.

Its enduring value lies not only in the arguments it advances but also in the questions it leaves unanswered. By forcing readers to confront the relationship between money and measurement, metallic value and monetary value, political authority and monetary stability, Copernicus provides a remarkably fruitful prompt for discussions that remain alive five centuries later.