Monete cudende ratio – Essay on the Coinage of Money (1526)

Although there are countless scourges which in general debilitate kingdoms, principalities, and republics, the four most important (in my judgment) are dissension, [abnormal] mortality, barren soil, and debasement of the currency. The first three are so obvious that nobody is unaware of their existence. But the fourth, which concerns money, is taken into account by few persons and only the most perspicacious. For it undermines states, not by a single attack all at once, but gradually and in a certain covert manner.

Coinage is imprinted gold or silver, by which the prices of things bought and sold are reckoned according to the regulations of any State or its ruler. Therefore money is, as it were, a common measure of values. That which ought to be a measure, however, must always preserve a fixed and constant standard. Otherwise, public order is necessarily disturbed, with buyers and sellers being cheated in many ways, just as if the yard, bushel, or pound did not maintain an invariable magnitude. Hence this measure is in my opinion the coin’s face value. Although this is based on the metal’s purity, nevertheless intrinsic value must be distinguished from face value. For, the denomination of a coin may exceed its metallic content, and the other way around.

Coinage was introduced for a necessary reason. Things could have been exchanged for gold and silver by weight alone, because mankind’s common judgment prizes gold and silver everywhere. But to carry weights around all the time was very inconvenient. The purity of the gold and silver, moreover, was not instantly recognizable by everybody. Accordingly people ordained that a coin should be marked with a universally recognized symbol to indicate that it contained the proper amount of gold or silver, and to instill confidence in its reliability.

In the next place, copper is usually mixed with coins, especially those made of silver. [This is done,] I believe, for two reasons. First, the coinage is less vulnerable to the schemes of crooks and those who would melt it down if it consisted of pure silver. Secondly, when silver bullion is broken down into little pieces and the smallest coins, it keeps a convenient size when it is alloyed with copper. A third reason may be added, namely, to stop it from disappearing sooner by being worn down through constant use, and to make it last longer by strengthening it with copper.

The face value of a coin is just and proper when the coin contains slightly less gold or silver than may be bought with it, since only the expenses of the minters should be deduced. For, the symbol should add some value to the metal.

Money loses its value most of all through excessive abundance, if so much silver is coined as to heighten people’s desire for silver bullion more than for coined money. For in this way the coinage’s market value vanishes when with it it is not possible to buy as much silver as the money itself contains, and is found a greater advantage in destroying the coin by melting the silver. The solution is to mint no more coinage until it recovers its par value and becomes more desirable than silver.

This [face-value] Valor is corrupted in many ways. First, the metal, alone may be defective, when for the same weight of coin more than the right amount of copper is alloyed with the silver. Secondly, the weight may be defective, even though the proportion of copper and silver is correct. Thirdly, and this is the worst, both defects may be present at the same time.

The value of a coin deteriorates also by itself as the coin is worn down through long use. Only for this reason should it be renewed and replaced. This is indicated if somewhat less silver is found in the coin than is bought with it. This is the condition in which depreciation of the coinage is properly perceived.

Having discussed money in a general way above, let me turn to Prussian money in particular by first showing how it became so debased. It circulates under the names mark, skoter, and the like, which are also names of weights. As a weight, a mark is 1/2 pound. As a coin, however, a mark consists of 60 shillings, all this is very well known. But lest ambiguity, as between weight and coin, give rise to misunderstanding, wherever “mark” is used, let it be understood as denoting the coin. On the other hand, where weight is involved, I shall interpret the term “pound” as a weight of marks, but a “mark” by weight as 1/2 pound.

Now in the old records of proceedings and official correspondence we find that when Conrad of Jungingen was Grand Master, that is just before the battle of Tannenberg, 1/2 pound, that is, 1 mark [by weight] of pure silver cost 2 Prussian marks, 8 skoters. That was when 3 parts of pure silver were alloyed with a 4th part of copper, and from 1/2 pound of this [pure] material they made 112 shillings. To this amount add 1/3, which is 37 1/3 shillings, making a total of 149 1/3 shillings. The total weighs 2/3 pound, that is, 32 skoters, containing of course 3 parts (which are 1/2 pound) of pure silver. Its price, however, as was just said, was 140 shillings for 1/2 pound. But the remainder of 9 1/3 shillings, which was missing, was made up by the money’s face value. Its face value was therefore suitably linked with its intrinsic value.

Such coins of Winrich, Ulrich, and Conrad are still found now and then in strongboxes. Then after the defeat of Prussia and the aforementioned battle [of Grunwald/Tannenberg], the damage to the Order began to be more and more apparent in the coinage day after day. For although the shillings of Heinrich look like those just mentioned, they are found to have no more than 3/5 silver. This mistake grew worse until the proportion was reversed and three parts of copper began to be alloyed with a fourth part of silver, so that “silver coinage” would no longer be the proper designation, but rather “copper coinage.” Yet it kept the weight of 112 shillings to 1/2 pound.

It is not in the least advisable to introduce a new, good coinage while an old, debased coinage remains in circulation. How much worse was this mistake, while an old, better coinage remained in circulation, to introduce a new, debased coinage, which not only spoiled the old coinage but, so to say, swept away! When Michael Rusdorf was the Grand Master, they wanted to eliminate this mistake, and restore the coinage to its former, better state. They minted new shillings, which we now call “groats.” But since the old, debased coins apparently could not be withdrawn without loss, they continued to circulate alongside the new coins, by an extraordinary error. Two old shillings were exchanged for 1 new one. It then came to pass that two kinds of marks were inflicted upon the people, namely, the new or good mark consisting of the new shillings, by contrast with the old or light mark consisting of the old shilling, with 60 shillings to each of the marks. However, the pennies remained as they had been, with only 6 pence being exchanged for 1 old shilling, but 12 pence for 1 new shilling. For it can easily be surmised that originally the shilling was equal to 12 pence. For just as we usually say mandel for the number 15, so in most parts of Germany the word schilling is still used for the number 12. The term “new shilling,” on the other hand, lasted right down to a time within our memory. How they finally became groats, I shall explain below.

As regards the new shillings, then, at 60 shillings to the mark, 8 mark contained 1 pound of pure silver, as it quite evident from their composition. For they consist 1/2 of copper, and 1/2 of silver. At 60 shillings to the mark, 8 of these marks weigh nearly 2 pounds. The old shillings, on the other hand, although equal to the new shillings in weight, as has been said, were worth half as much. For since the old shillings contained only 1/4 silver, 16 marks were produced from 1 pound of pure silver and weighed 4 times as much.

Later, when the country’s status changed, cities were granted the right to mint coins. As they exercised their new privilege, currency increased in quantity, though not in quality. Four parts of copper began to be alloyed with a fifth part of silver in the old shillings, until 20 marks were exchanged for 1 pound of silver. And so those new shillings, since they were now worth more than twice as much as the recent shillings, were made into skoters, reckoned at 24 to the light mark. Hence, 1/5 of the money’s value in the mark perished.

Afterwards, however, the new shillings, having become skoters, disappeared because they were accepted also throughout the Mark [of Brandenburg]. It was decided to recover them by evaluating them at a groat, that is, 3 shillings. This was a very bad miscalculation, quite unworthy of so distinguished a body of notables, as though Prussia could not get along without those [groats], even though they were worth no more than 15 pence of the coinage then in circulation, while its value was already depressed also by its abundance.

The groat in fact differed from the shilling in that it was worth 1/5 or 1/6 less than the standard. Through its false and unfair evaluation it dragged down the value of the shilling. Maybe the wrong previously inflicted by the shillings on the groats by forcing them to become skoters had to be avenged in this way. But woe to you, O Prussia, you who pay the penalty for a maladministered state by your ruin, alas! Thus, although the money’s market value and intrinsic value were gradually vanishing at the same time, nevertheless there was absolutely no interruption in the coining of money. The costs [of minting] did not cover the difference by which the later coinage would be equalized with the older coinage. Hence, a coinage always worse than the previous coinage was superimposed on it. This depressed the worth of the earlier coinage and drove it out, until the shilling’s face value coincided in due proportion with the groat’s intrinsic value, and 24 light marks were equivalent to 1 pound of silver.

But at least some small remnants of the money’s worth must have persisted in the end, since no consideration was given to restoring it. Yet this practice or abuse of counterfeiting, clipping, and tampering with money was ingrained so long that it could not stop, nor has it stopped to this very day. For what kind of money it will become hereafter and what its condition is now, it is shameful and painful to say. For it has fallen so low today that 30 marks contain hardly 1 pound of silver. Then what remains in the absence of help except that hereafter Prussia, drained of gold and silver, will have an exclusively copper currency? Consequently imports of foreign merchandise and all foreign trade will soon end. For what foreign merchant will want to exchange his goods for copper coins? Lastly, which of our merchants will be able to buy foreign merchandise in foreign lands with the same money? Yet those in authority scornfully disregard this immense misfortune of the Prussian state. To their very dear country they owe, not to mention the deepest devotion, after piety to God, even their very lives. Yet by their thoughtless indifference they let their country slip wretchedly downhill further and further day after day and crash.

While, then, such grave evils beset Prussian money and consequently the whole country, its calamities benefit only the goldsmiths and those who know the purity of metal by experience. For from the mixed coinage they collect the old pieces, from which they melt down the silver and sell it. From the inexperienced public they constantly receive more silver with the coinage. But after those old shillings now disappear completely, the next best are selected, while the inferior mass of money remains behind. Hence [arises] that widespread and incessant complaint: gold, silver, food, household wages, workmen’s labor, and whatever is customary in human consumption soar in price. But, being inattentive, we do not realize that the dearness of everything is produced by the debasement of the coinage. For in line with the quality of money everything, especially gold and silver, rises and falls, prices being based not on brass or copper, but on gold and silver. For we declare that gold and silver are, as it were, the foundation of money, on which its value rests.

But maybe someone will argue that cheap money is more convenient for human needs, forsooth, by alleviating the poverty of people, lowering the price of food, and facilitating the supply of all the other necessities of human life, whereas sound money makes everything dearer, while burdening tenants and payers of an annual rental more heavily than usual. This point of view will be applauded by those who were heretofore granted the right to coin money and would be deprived of the hope of gain. Nor will it perhaps be rejected by merchants and artisans, who lose nothing on that account since they sell their goods and products in terms of gold, and the cheaper the money is, the greater is the number of coins they receive in exchange.

But if they will have regard for the common good, they will surely be unable to deny that sound money benefits not only the state but also themselves and every class of people, whereas debased coinage is harmful. Although this is quite clear for many reasons, we learn that it is so also through experience, the teacher of objective truth. For we see that those countries flourish the most which have sound money, whereas those which use interior coinage decline and fall. Certainly Prussia too prospered when 1 Prussian mark [as coin] was worth 2 Hungarian florins and when, as was said above, 2 Prussian marks, 8 skoters, were exchanged for 1/2 pound, that is, 1 mark [by weight] of pure silver. But in the meantime, as its coinage was debased more and more day after day, our fatherland too declined, and as a result of this plague and other misfortunes it was brought down almost to its final destruction. Moreover, those places which use sound money, as is well known, have flourishing trades, excellent craftsmen, and an abundance of commodities. On the other hand, where cheap money prevails, through listlessness, lethargy, and slothful idleness the development of the fine arts as well as of the intellect is neglected, and the plentifulness of all goods is also a thing of the past. The memory of man has not yet forgotten that grain and produce were bought in Prussia with a smaller number of coins while sound money was still being used. Now, however, as it is being debased, we experience a rise in the price of everything related to food and human consumption. Hence it can be seen that cheap money fosters laziness more than it helps poor people. An improvement of the currency will not be able to impose a heavy burden on tenants. If they seem to pay more than usual for their land, they are going to sell the products of their fields, their livestock, and that kind of output at an even higher price. For the adjusted evaluation of the money will balance the mutual exchange of giving and receiving.

Therefore, if it is decided to let Prussia at last recover at some future time from its previous depression by restoring its currency, the most urgent task will be to avoid the confusion arising from the differences between the various mints where the coinage is to be struck. For, multiplicity interferes with uniformity, and to maintain standardized production in several mints is harder than in one. It would therefore be advantageous to have for all of Prussia one common mint producing coinage of every denomination. On one side, the device will be the arms or insignia of the lands of Prussia, surmounted by the crown to signify the overlordship of the kingdom [of Poland]. But the other side will display the arms of the duke of Prussia with the crown of the kingdom resting thereon.

If, however, this could not be done because of the opposition of the duke of Prussia on the ground that he wants to have his own mint, let two places be designated at the most, one in his Royal Majesty’s territory and the other in the duke’s domain. Let the first mint strike coins showing the royal insignia on one side, and on the other the arms of the lands of Prussia. Let the second mint, however, issue coins stamped with the royal insignia on one side, and on the other side the duke’s. Let both coinages be subject to royal control, and by His Majesty’s order be used and accepted throughout the entire kingdom. This arrangement will produce no small effect on the reconciliation of attitudes and participation in trade.

It will be essential, moreover, that these two coinages should be of a single standard, intrinsic value, and face value, and remain forever, under the watchful supervision of the leaders of the State, in agreement with the regulation to be established now. It is also essential that in both places the rulers should expect no profit from the minting of the coinage. Only as much copper should be added as would make the face value exceed the intrinsic value, so that it would be possible to recover the loss of the expenses [of the minting operation] and remove the opportunity of melting down the coinage.

Furthermore, let us hereafter avoid falling into our present age’s confusion arising from the mixture of new coinage with old. It seems necessary, when the new coinage is issued, to abolish the old coinage, wipe it out completely, and exchange it at the mints for the new coinage in proportion to its intrinsic value. Otherwise the work of renewing the money will be in vain, and the subsequent confusion will perhaps be worse than the earlier. For again the old coinage will spoil the value of the new coinage. The mixture will of course make the aggregate’s weight less than is right and its quantity excessive. The result will be the dislocation described above. In this regard, somebody may think that the solution is to assign to the remaining old coins a value as much beneath the new coinage’s as their intrinsic value is inferior or lower. But this cannot be done without a great error. For not only the groats and shillings but also the pennies are now so different in their many kinds that individual coins can hardly be rated according to the condition of their intrinsic value and differentiated from one another. Consequently the resulting variety of money would produce inescapable confusion and aggravate the difficulties, problems, and other annoyances of those who engage in business and enter into contracts. It will therefore always be better to withdraw the old coinage completely from circulation when money is being renewed afresh. For so small a loss will have to be borne calmly once, if that can be called a loss which gives rise to increased production and steadier serviceability as well as enhances the state.

To raise the Prussian coinage, however, to its original worth is very hard and perhaps impossible after so drastic a collapse. Although any renewal of the coinage is a matter of no small difficulty, still under the conditions prevailing at the present time it seems possible to restore it satisfactorily, at least with 1 pound of silver returning to 20 marks. The program would be as follows. For the shillings, take 3 pounds of copper, but as regards pure silver take 1 pound minus 1/2 ounce or as much as has to be deduced to cover the expenses [of minting]. From the molten mass mint 20 marks, which will buy 1 pound, that is, 2 marks [by weight] of silver. According to the same proportion, skoters or groats and pennies may be struck as desired.

Gold and silver, as was said above are the basis of coinage, in which its worth resides. Most of what has been set forth about silver coinage can be transferred also to gold coinage. It remains to explain the ratio for the mutual exchange of gold and silver. Accordingly, it is first necessary to examine the relative value of pure gold to pure or unalloyed silver, in order to proceed downward from the general to the particular and from the simple to the compound. In the next place, the ratio of gold to silver is the same in bullion form as in coinage of the same standard. Furthermore, the ratio of gold coin to gold bullion is the same as the ratio of silver coin to silver bullion of the same standard of alloy and weight. Now the purest gold coins found among us are the Hungarian florins. For they have the least alloy, and perhaps only as much as was necessary was deducted for expenses in the mints. Hence they are rightly exchanged for pure gold of the same weight, with the authority of the symbol making up for the deficiency of the florins. It therefore follows that the ratio of pure silver bullion to pure gold bullion is .the same as the ratio of that silver to Hungarian florins, the weights being unchanged. But 110 Hungarian florins of proper and uniform weight, namely, 72 grains, make 1 pound (by a “pound” I always mean the sum of 2 marks by weight). By this reasoning we find that generally among all people 1 pound of pure gold is worth as much as 12 741 pounds of pure silver. Yet we observe that 11 pounds [of silver] once equaled 1 pound of gold. For this reason, apparently, it was ordained of old that 10 Hungarian gold pieces should weigh 1/11th of a pound. But if the same price continued today for that weight, we would have a convenient interchangeability of Polish and Prussian money on the basis of the aforementioned ratio [gold : silver = l: 11]. For if 20 [prussian] marks were made from approximately 1 pound of silver, 1 gold piece would equal exactly 2 marks or 40 Polish groats. But after it became customary to exchange 12 parts of silver for 1 part of gold, the weight and price disagree, so that 10 Hungarian gold pieces are worth 1 pound of silver plus 1/11th of a pound. Therefore if 20 [prussian] marks are made from 1 1/11 pounds of silver, the Polish and Prussian coinages will be matched in the correct ratio, groat for groat, with 2 Prussian marks equal to 1 Hungarian gold piece. The price of silver, however, will be 9 marks, 10 shillings, or thereabouts, for 1/2 pound.

On the other hand, if a debased coinage and the ruin of the fatherland are definitely desired, and so slight a restoration and adjustment seem too hard, and it is decided that 15 Polish groats should remain equal to 1 [Prussian] mark, and 2 marks, 16 skoters, to 1 Hungarian gold piece, that too will be accomplished with no great trouble in the manner described above, if 24 [Prussian] marks are made from 1 pound of silver. This was certainly the situation recently when the price of 1/2 pound of silver was still 12 marks, the amount of money for which [6] Hungarian florins were exchanged.

This is said by way of an example and guideline. For there are countless ways of establishing a currency, and it is not possible to explain all of them. But a general agreement after mature deliberation will be able to make this or that decision, which will seem most advantageous to the state. But if the currency is correctly related to the Hungarian florin, and no mistake is made, other florins will also be easily rated according to their content of gold and silver in comparison with the Hungarian florins.

Let these remarks about the restoration of the coinage be sufficient at least to make clear how its value bas fallen and how it can be restored. This, I hope, is evident from what was said above.

With reference to the restoration and maintenance of the currency, the following recommendations seem worthy of consideration.

First, the currency should not be renewed without the deliberate advice and unanimous consent of the Councillors.

Secondly, only one place, if possible, should be designated for a mint. There coins should be struck in the name, not of one city, but of the whole country with its insignia. The validity of this recommendation is proved by the Polish coinage, which for this reason alone maintains its value over so vast an extent of territory.

Thirdly, when new money is issued, the old coinage should be demonetized and abolished.

Fourthly, it should be a permanent rule, without change and without exception, to strike only 20 marks, and no more, from 1 pound of pure silver, minus what must be deducted for the expenses of the operation. The Prussian coinage will in this way be definitely adjusted to the Polish, with 20 Prussian groats as well as 20 Polish groats being worth 1 Prussian mark.

Fifthly, an excessive multiplicity of coinage should be avoided.

Sixthly, money should be issued in all denominations at the same time, that is, skoters or groats, shillings, and pennies should be minted simultaneously. How big should the proportion [of each denomination] be? Should groats as well as shillings be struck? Should silver pennies also [be minted], worth1/4 or 1/2 or even 1 whole mark? [These questions] are to be decided by those concerned, except that whatever the distribution, the decision should be made in such a way as to last forever after. Attention must also be paid to the ordinary pennies, since they are now worth altogether so little that a whole mark [of pennies by weight] contains hardly more than the silver in 1 groat.

Lastly, a difficulty arises from contracts and obligations made before and after the renewal of the money. In these matters a way must be found not to burden the contracting parties too much. This was done in former times, as is clear from what is copied out on the other side of this sheet.

Written by Nicolaus Copernicus, sometime before April 1526.

Translation by Edward Rosen

Nicolaus Copernicus (/koʊˈpɜːrnɪkəs, kə-/;[2][3][4] Polish: Mikołaj Kopernik;[5] German: Nikolaus Kopernikus; Niklas Koppernigk; 19 February 1473 – 24 May 1543) was a Renaissance- and Reformation-era mathematician and astronomer who formulated a model of the universe that placed the Sun rather than the Earth at the center of the universe, likely independently of Aristarchus of Samos, who had formulated such a model some eighteen centuries earlier.

The publication of Copernicus’ model in his book De revolutionibus orbium coelestium (On the Revolutions of the Celestial Spheres), just before his death in 1543, was a major event in the history of science, triggering the Copernican Revolution and making an important contribution to the Scientific Revolution.

Copernicus was born and died in Royal Prussia, a region that had been part of the Kingdom of Poland since 1466. A polyglot and polymath, he obtained a doctorate in canon law and was also a mathematician, astronomer, physician, classics scholar, translator, governor, diplomat, and economist. In 1517 he derived a quantity theory of money – a key concept in economics – and in 1519 he formulated an economics principle that later came to be called Gresham’s law.

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