After the Great Debasement, 1544-51: did Gresham’s Law apply?
In England, across the whole period of the Great Debasement, the mint issued six different kinds of silver coins and three kinds of gold coins. According to Gresham’s Law, coins with the same face value but different intrinsic values can not circulate side by side for too long: only those coins with lower intrinsic values stay in circulation; those with relatively high intrinsic values would be hoarded, exported, or melted down. Neither contemporary sources nor modern research about the disappearance of good money over this period has provided any solid quantitative assessment of the effectiveness of Gresham’s Law. This paper intends to produce such an assessment. For this purpose, two types of evidence are examined: the composition of the re-coinage of 1560, and the trend of the exchange rate. The result shows that contrary to popular belief, Gresham’s Law was rather ineffective in mid-sixteenth-century England.
|Date of creation:||Oct 2009|
|Date of revision:|
|Contact details of provider:|| Postal: LSE, Dept. of Economic History Houghton Street London, WC2A 2AE, U.K.|
Phone: +44 (0) 20 7955 7084
Web page: http://www.lse.ac.uk/economicHistory/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Oliver Volckart, 2008. "‘The big problem of the petty coins’, and how it could be solved in the late Middle Ages," Economic History Working Papers 22310, London School of Economics and Political Science, Department of Economic History.
- George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
- T. H. Lloyd, 2000. "Early Elizabethan investigations into exchange and the value of sterling, 1558-1568," Economic History Review, Economic History Society, vol. 53(1), pages 60-83, 02.
- C. E. Challis, 1967. "The Debasement of the Coinage, 1542-1551," Economic History Review, Economic History Society, vol. 20(3), pages 441-455, December.
- Rolnick, Arthur J & Weber, Warren E, 1986.
"Gresham's Law or Gresham's Fallacy?,"
Journal of Political Economy,
University of Chicago Press, vol. 94(1), pages 185-99, February.
- Francois R. Velde & Warren E. Weber & Randall Wright, 1997.
"A model of commodity money, with applications to Gresham's law and the debasement puzzle,"
215, Federal Reserve Bank of Minneapolis.
- François R. Velde & Warren E. Weber & Randall Wright, 1999. "A Model of Commodity Money, with Applications to Gresham's Law and the Debasement Puzzle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(1), pages 291-323, January.
- Francois R. Velde & Warren E. Weber & Randall Wright, 1997. "A model of commodity money, with applications to Gresham's Law and the debasement puzzle," Working Paper Series, Macroeconomic Issues WP-97-12, Federal Reserve Bank of Chicago.
- Francois R. Velde & Warren E. Weber & Randall Wright, . "A Model of Commodity Money, With Application to Gresham's Law and the Debasement Puzzle," CARESS Working Papres 97-7, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
- ANDREW M. WATSON & Jacques Coeur, 1967. "Back to Gold — and Silver," Economic History Review, Economic History Society, vol. 20(1), pages 1-34, 04.
- Gandal, Neil & Sussman, Nathan, 1997. "Asymmetric Information and Commodity Money: Tickling the Tolerance in Medieval France," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(4), pages 440-57, November.
- Selgin, George, 1996. "Salvaging Gresham's Law: The Good, the Bad, and the Illegal," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 637-49, November.
- Lawrence Stone, 1949. "Elizabethan Overseas Trade," Economic History Review, Economic History Society, vol. 2(1), pages 30-58, 08.
- Greenfield, Robin L & Rockoff, Hugh, 1995. "Gresham's Law in Nineteenth-Century America," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(4), pages 1086-98, November.
When requesting a correction, please mention this item's handle: RePEc:ehl:wpaper:27874. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (LSERO Manager on behalf of EH Dept.)
If references are entirely missing, you can add them using this form.