Famed for his contributions to the hard sciences—most notably his theory of heliocentricity—the sixteenth-century astronomer Nicolaus Copernicus was also an acute analyst of monetary policy. To that end, Ralph Benko has done us all a great service with this new edition of Copernicus’s classic, if neglected, treatise On the Minting of Money. Indeed, its lessons, though nearly five centuries old, remain evergreen.
Writing in the foreword, Kurt Schuler, Senior Fellow in Financial History at the Center for Financial Stability, aptly summarizes some of Copernicus’s most astute and timeless observations—many of which would not be properly described and labeled for centuries:
- That the debasement of the coinage (inflation) is subtle but highly damaging, tending to drive prices upward as the money stock is effectively expanded (the quantity theory of money).
- That money worth more as metal than as currency will disappear from circulation as it is melted down and hoarded (later known as Gresham’s Law).
- That governments possess a strong tendency to depreciate the currency and that, while doing so may create short-term advantages for rulers, it ultimately harms the populace.
The tract itself was written in 1526 at the request of the Polish Crown under Sigismund I. In fact, Copernicus had been studying monetary questions for nearly a decade by that point, having begun his investigations around 1517. On the Minting of Money is therefore not the work of an amateur dabbler but a mature reflection on a subject to which he had devoted years of careful thought.
As Gerald Malsbary notes in the Translator’s Preface, Copernicus’s education was deeply shaped by late Scholastic and Humanist learning. His insights therefore appear less as a bolt from the blue than as part of a broader intellectual tradition. As Murray Rothbard demonstrates in An Austrian Perspective on the History of Economic Thought, the medieval Scholastics developed remarkably sophisticated analyses of money, prices, exchange, and the moral implications of currency debasement. Long before the classical economists, they understood that rulers who manipulated coinage effectively imposed a hidden tax on their subjects and distorted the market’s ability to coordinate economic activity. Copernicus thus stands not as an isolated genius in monetary theory but as one of the most important heirs to a rich Scholastic tradition of economic reasoning.
Benko begins his introduction by pointing out the curious coincidence that the classical gold standard was inaugurated at the Royal Mint in Great Britain under Sir Isaac Newton in the same year that, across the Channel, John Law was initiating his fateful experiment with paper money in France. Law’s scheme sought to monetize government debt through the issuance of paper currency backed by shares in the Mississippi Company. The result was one of history’s most spectacular financial catastrophes. Inflated by government privilege, easy credit, and speculative mania, Mississippi Company shares soared to absurd valuations before collapsing in 1720, wiping out fortunes and shattering public confidence. Together with Britain’s contemporaneous South Sea Bubble, the episode remains one of the earliest and clearest demonstrations of the dangers posed by politically managed money and credit expansion.
Modern-day advocates of hard money, with a century of fiat-money experiments behind them, could hardly fail to be impressed by Copernicus’s opening line:
“Although there are countless maladies that are forever causing the decline of kingdoms, princedoms, and republics, the following four are the most serious: civil discord, a high death rate, sterility of the soil, and the debasement of the coinage.”
Anticipating Keynes’s later quip that “not one man in a million” understands inflation, Copernicus continues:
“The first three are so obvious that everybody recognizes the damage they cause; but the fourth one, which has to do with money, is noticed by only a few very thoughtful people, since it does not operate all at once and at a single blow, but gradually overthrows governments.”
From there, Copernicus outlines what he believes to be the proper role of money: to serve as a stable measuring stick by which the value of goods and services may be reckoned. He then presents a history of monetary deterioration in Prussia. It is in these pages that he describes both the effects later associated with Gresham’s Law and the inflationary consequences resulting from the gradual debasement of the currency over many years.
In a lament that will sound all too familiar to Americans living through their own era of monetary depreciation, he writes:
“Those who are in charge think little of this huge disaster of the Prussian Republic…[and] allow it to languish and go to ruin…through their spineless negligence…[meanwhile] the family grocery bill, the cost of services, and anything that anybody needs is going up; but we are blind to the fact that the expensiveness of everything proceeds from the debasement of the money.”
Noting the connection between sound money and prosperity, Copernicus, Benko, and the volume’s contributors are right to trumpet the benefits of hard currency. Yet history offers little reason for optimism. Whether principality, kingdom, or republic, governments have repeatedly demonstrated a preference for monetary expediency over monetary integrity. The temptation to finance expenditures through currency manipulation has proven nearly irresistible across centuries and political systems alike.
Indeed, Copernicus himself was largely ignored. In that respect, today’s advocates of sound money can at least take comfort in their company. The history of monetary thought is filled with prophets whose warnings were dismissed until long after the damage had been done. Copernicus belongs among the most distinguished of them. Five centuries later, his diagnosis remains as relevant as ever—even if the political incentives that made it necessary remain unchanged.
