Nicholas Oresme

The practical offshoot of the Austrian theory of money is that the production of money should best be left to the free market. Government interventionism does not improve monetary exchanges; it merely enriches a select few at the expense of all other money users. And on the aesthetic side, the disaster is of course complete: rather than deal with beautiful silver and gold coins, the citizens are compelled by law to hold unbecoming paper notes.

Present-day Austrian economists are not the first to point out that interventionism makes money unsightly and unreliable. Rather, they uphold a tradition of many centuries that includes illustrious economists such as Murray Rothbard, Ludwig von Mises, Carl Menger, Frédéric Bastiat, William Gouge, John Wheatley, Etienne de Condillac, and Thomas de Azpilcueta. In fact, this tradition can be traced back right to the very founding father of monetary economics, the great Nicholas Oresme. 

Oresme was born around 1320 near Caen in France. After a distinguished career as a scholar and confessor of King Charles V, he became Bishop in 1377 and died in Lisieux in 1382. Oresme was a brilliant mathematician, physicist, and economist. At some point before 1355, he wrote a treatise on the ethics and economics of money production. The book had the title Treatise on the Origin, Nature, Law, and Alterations of Monies, and it established his fame as an economist for all times. 

The most adequate modern rendering of the title would be “Treatise on Inflation.” Indeed, Oresme pioneered the political economy of inflation; he set standards that would not be surpassed for many centuries, and which in certain respects have not been surpassed at all. A closer look at the book reveals that monetary thinking has been sound at its inception and that present-day Austrians are the heirs of monetary orthodoxy in the true meaning of the word.

Nicholas Oresme is supposed to have been born about the year 1320 at the village of Allemagne near Caen, but the earliest certain fact about him is that he was a ‘bursar’ of the college of Navarre in the University of Paris from 1348 to 4 October 1356, when he was appointed Master. He is described as a Norman. He studied in Theology, but it is not known when he took his degree of Master in Theology. He remained Master of the college till 4 December 1361, when he was forced to resign. He became a canon of Rouen, 23 November 1362, and dean 18 March 1364. He preached a celebrated sermon before Pope Urban V on Christmas Eve 1363, denouncing the corruption of the world and the Church, and calling for repentance. Some time before 1370 he became one of the chaplains of Charles V (1364-80), since he undertook the translation of the Ethics (1370) and Politics and Economics of Aristotle at the king’s request. The treatise on Money in its Latin and French forms is earlier than these translations, since it is mentioned in the preface to the Politics. Oresme became bishop of Lisieux 16 November 1377 and was consecrated 28 January 1378. He died at Lisieux IIJuly 1382. 

Besides the works mentioned above, Oresme translated Aristotle’s DeCaelo et Mundo, and wrote several books directed against the· claim of astrologers to predict the future as well as sermons and theological tracts. The translations were not from the Greek, but· from the Latin versions of Grosseteste and William of Moerbeke. The .treatise on money, though based on the Politics, was an economic tract provoked by the successive debasements of the coinage by Philip VI and John II and the consequent derangement· of trade and social relations. It has been suggested that it brought its author to the notice of Charles V, who was then acting as regent during his father’s captivity in England. But it is more likely that he was already employed in the king’s service, as he is stated to have been engaged in raising a loan in Normandy in 1360, and there was a halt in the debasement of the coinage from 1360 to 1385.

In his treatise Oresme takes the Aristotelian view that a coin is a definite weight of precious metal, the quantity and fineness of which is guaranteed by the stamp of the authority issuing it. The currency does not belong to the issuing authority, but to the public which uses it for the purpose of exchange’ of goods.