ABSTRACT
Nicholas Oresme, one of the greatest figures in the scholastic tradition, a high priest and advisor to the French king, gave the Aristotelian monetary theory of the Medieval era its most compelling form. Since the time of its rediscovery in the 1860s – Roscher (1863, pp. 305-318) in Germany made scholars aware of the text’s importance and Wolowski (1864) in France edited and commented on the text – his Tractatus de origine et natura, iure & mutationibus monetarum has attracted controversy in the history of economic thought, concerning not only the interpretation of the text but also questions of priority. The text therefore provided an important impulse for the analysis of the economic substance of Medieval theology and late-Medieval jurisprudence and, ultimately, raises questions of general interest for the history of economics. Oresme, who was commissioned by the king to produce French translations
of Aristotle’s Politics and Nicomachean Ethics among others, and who was aware of the difficulty of expressing scientific concepts in modern language, also produced a French edition of his Tractatus. Though altered by later additions, this edition provides assistance in construing some of the less clear passages of the earlier Latin version. Oresme’s clear presentation and his linear argumentation make a strong
impression, but if read in isolation it can mislead. There are complex interpretative issues and historical connections, while the wealth of Oresme’s scientific knowledge is too easily overlooked. In the following sections, I will attempt to provide a brief overview of the
historical context, of Oresme the man and his other scientific activities, as well as a history of the text and its interpretation. My own interpretation follows in conclusion. Modern states only exceptionally finance themselves by printing money.
John Maynard Keynes’ Tract on Monetary Reform offered a brilliant analysis of the great inflation of 1923, in particular comparing Russia and Germany: ‘by printing paper money … a government can … secure the command over resources – resources just as real as those obtained by taxation. The method is condemned, but its efficacy, up to a point, must be admitted’ (Keynes 1971
[1923], p. 37). It might seem that financing state expenditure through the creation of money would only be possible where there is a paper currency, as described for example by Goethe in Faust Part II, where Mephistopheles’ invention of paper money replaces the alchemical project of the artificial production of gold (Binswanger 1985). When precious metals circulate as money the state has to devote not inconsiderable resources to the acquisition and stamping of bullion which then circulates as coin. An inflation involving paper money easily turns into hyperinflation and quickly escalates, making a currency reform unavoidable. Medieval rulers on the other hand, even entire dynasties, financed themselves for centuries by reminting the currency. And yet the system neither collapsed, as with modern hyperinflation, nor was seignorage negligibly small, as with the stamping of gold under the gold standard. At times when the conditions for general and just taxation barely existed,
the debasement of currency out of sheer necessity may have appeared unavoidable; it did finance warfare but was considered immoral. Florence minted the fiorino with a stable gold content and Dante, conscious of this stability, ranked King Philip the Fair of France, who was killed in 1314 chasing a wild boar, among the most malicious rulers of Europe on account of his currency debasement. At the Last Judgement this group will be even further removed from Christ than the pagans:
