Editing Gresham's law (section)

== History of the concept ==
Gresham was not the first to state the law which took his name. The phenomenon had been noted by [[Aristophanes]] in his play ''[[The Frogs]]'', which dates from around the end of the 5th century BC. The referenced passage from ''[[The Frogs]]'' is as follows (usually dated at 405 BC):<ref name="frogs">{{cite book |author1=Aristophanes |title=The Frogs (tr. Gilbert Murray) |year=1908 |page=[https://archive.org/details/frogstranslatedi00arisuoft/page/56 56] |url=https://archive.org/details/frogstranslatedi00arisuoft |access-date=17 April 2019 |publisher=George Allen & Sons |location=London}}</ref>

{{poemquote|It has often struck our notice that the course our city runs
Is the same towards men and money. She has true and worthy sons:
She has good and ancient silver, she has good and recent gold.
These are coins untouched with alloys; everywhere their fame is told;
Not all Hellas holds their equal, not all Barbary far and near.
Gold or silver, each well minted, tested each and ringing clear.
Yet, we never use them! Others always pass from hand to hand.
Sorry brass just struck last week and branded with a wretched brand.
So with men we know for upright, blameless lives and noble names.
Trained in music and palaestra, freemen's choirs and freemen's games,
These we spurn for men of brass...}}

According to Ben Tamari, the currency devaluation phenomenon was already recognized in ancient sources.<ref name="Tamari">Originally published as {{cite journal|last1=Tamari|first1=Ben|date=1982|script-title=he:חוק גרשם ופרדוקס החסכון |trans-title=Gresham's Law and the Savings Paradox|journal=רבעון לכלכלה|volume=115|access-date=15 March 2012|url=http://www.bentamari.com/PicturesEcometry/articals02-GreshamLawEn.pdf|language=he}} translated and updated in 2011 at {{cite web|url=http://www.bentamari.com/PicturesEcometry/articals02-GreshamLawEn.pdf|title=Gresham's Law|first=Ben|last=Tamar|others=Translated by Liat Etta|date=July 2011|access-date=15 March 2012}}</ref> He brings some examples which include the [[Machpela Cave]] transaction<ref>{{bibleverse||Genesis|23:16|HE}}</ref> and the building of the [[Solomon's Temple|Temple]]<ref>{{bibleverse|1|Kings|10:21|HE}}</ref> from the Bible and the Mishna in tractate Bava Metzia ([[s:Mishnah/Seder Nezikin/Tractate Bava Metzia/Chapter 4/1|Bava Metzia 4:1]]) from the [[Talmud]].<ref name = "Tamari" />

In China, [[Yuan dynasty]] economic authors [[Yeh Shih]] and [[Yuan Hsieh]] (c. 1223) were aware of the same phenomenon.<ref>{{cite book|title=Forty Centuries of Wage and Price Controls: How Not To Fight Inflation|first1=Robert L.|last1=Shuettinger|first2=Eamonn F.|last2=Butler|place=Thornwood, NY|publisher=The Heritage Foundation|year=1979|page=14|isbn= 0-89195-023-0}}</ref>

[[Ibn Taimiyyah]] (1263–1328) described the phenomenon as follows:

{{blockquote|If the ruler cancels the use of a certain coin and mints another kind of money for the people, he will spoil the riches (amwal) which they possess, by decreasing their value as the old coins will now become merely a commodity. He will do injustice to them by depriving them of the higher values originally owned by them. Moreover, if the intrinsic values of coins are different it will become a source of profit for the wicked to collect the small (bad) coins and exchange them (for good money) and then they will take them to another country and shift the small (bad) money of that country (to this country). So (the value of) people's goods will be damaged.}}

Notably this passage mentions only the flight of good money abroad and says nothing of its disappearance due to hoarding or melting.<ref>{{cite web|url=http://www.islamic-world.net/economics/ibn_taimiyyah.htm|archive-url=https://web.archive.org/web/20040316133009/http://www.islamic-world.net/economics/ibn_taimiyyah.htm|url-status=dead|archive-date=16 March 2004|title=Economic Concepts of Ibn Taimiyyah|date=16 March 2004|access-date=8 April 2018}}</ref> Palestinian economist Adel Zagha also attributes a similar concept to medieval Islamic thinker [[Al-Maqrizi]], who offered, claims Zagha, a close approximation to what would become known as Gresham's law centuries later.<ref>[https://www.dohainstitute.org/en/Events/Pages/ACRPS-Seminar-Al-Maqrizi's-Contribution-to-Economic-Thought.aspx "ACRPS Seminar on the Contribution of Al-Maqrizi to Economic Thinking"]. [[Arab Center for Research and Policy Studies]].</ref>

In the 14th century it was noted by [[Nicole Oresme]] {{circa|1350}},<ref name="ReferenceA">Woods, Thomas E. ''How The Catholic Church Built Western Civilization''.</ref>{{full citation needed|date=November 2022}} in his treatise ''On the Origin, Nature, Law, and Alterations of Money'',<ref name="Durant 1957 252">{{cite book |last=Durant |first=Will |title=The Reformation |series=[[The Story of Civilization]] |volume=6 |publisher=[[Simon & Schuster]] |year=1957 |page=252}}</ref> and by jurist and historian [[Al-Maqrizi]] (1364–1442) in the [[Mamluk Empire]]<!--when exactly did he do it?-->.<ref>{{cite book|last=Baeck|first=Louis|title=The Mediterranean Tradition in Economic Thought|date=1994|publisher=Routledge|location=New York|isbn=0-415-09301-5<!-- |page=241 -->|pages=105–106}}</ref>

Johannes de Strigys, an agent of [[Ludovico III Gonzaga, Marquis of Mantua]] in [[Venice]], wrote in a June 1472 report {{lang|it|che la cativa cazarà via la bona}} ("that the bad money will chase out the good").<ref>{{cite book|author=Fernand Braudel|title=La Méditerranée et le monde méditerranéen à l'époque de Philippe II, Volume 2: Destins collectifs et mouvements d'ensemble|language=fr|date=1966|location=Paris|publisher=Armand Colin|page=41}}</ref>

In the year that Gresham was born, 1519, it was described by [[Nicolaus Copernicus]] in a [[treatise]] called {{lang|la|italic=yes|[[Monetae cudendae ratio]]}}: "bad (debased) coinage drives good (un-debased) coinage out of circulation". Copernicus was aware of the practice of exchanging bad coins for good ones and melting down the latter or sending them abroad, and he seems to have drawn up some notes on this subject while he was at [[Olsztyn]] in 1519. He made them the basis of a report which he presented to the [[Prussian estates|Prussian Diet]] held in 1522, attending the session with his friend [[Tiedemann Giese]] to represent his chapter. Copernicus's {{lang|la|italic=yes|Monetae cudendae ratio}} was an enlarged, [[Latin]] version of that report, setting forth a general theory of money for the 1528 diet. He also formulated a version of the [[quantity theory of money]].<ref name="Angus Armitage pp. 89">Angus Armitage, ''The World of Copernicus'', chapter 24: "The Diseases of Money", pp. 89–91</ref> For this reason, it is occasionally known as the Gresham–Copernicus law.<ref name="Measurement of Co-Circulation of Currencies">{{cite book |title=Measurement of Co-Circulation of Currencies |url=https://books.google.com/books?id=5XvPv3vWdSQC&pg=PT61 |access-date=16 March 2013 |publisher=International Monetary Fund |isbn=978-1-4552-9991-1 |page=61 |date=1995}}</ref>

Sir [[Thomas Gresham]], a 16th century financial agent of the English Crown in the city of Antwerp, was one in a long series of proponents of the law, which he did to explain to [[Elizabeth I of England|Queen Elizabeth I]] what was happening to the English shilling. Her father, [[Henry VIII of England|Henry VIII]], had replaced 40% of the silver in the coin with base metals, to increase the government's income without raising taxes. Astute English merchants and ordinary subjects saved the good shillings from pure silver and circulated the bad ones. Hence, the bad money would be used whenever possible, and the good coinage would be saved and disappear from circulation.

According to the economist [[George Selgin]] in his paper "Gresham's Law":

{{blockquote|As for Gresham himself, he observed "that good and bad coin cannot circulate together" in a letter written to Queen Elizabeth on the occasion of her accession in 1558. The statement was part of Gresham's explanation for the "unexampled state of badness" that England's coinage had been left in following the "Great Debasements" of Henry VIII and [[Edward VI of England|Edward VI]], which reduced the metallic value of English silver coins to a small fraction of what it had been at the time of Henry VII. Owing to these debasements, Gresham observed to the Queen, that "all your fine gold was convayed out of this your realm".<ref name="eh.net">{{cite web |url=http://eh.net/encyclopedia/article/selgin.gresham.law |title=Gresham's Law |website=EH.net |archive-url=https://web.archive.org/web/20130317073119/http://eh.net/encyclopedia/article/selgin.gresham.law |archive-date=2013-03-17}}</ref>}}

Gresham made his observations of good and bad money while in the service of Queen Elizabeth, with respect only to the observed poor quality of British coinage. Earlier monarchs, Henry VIII and Edward VI, had forced the people to accept debased coinage by means of legal tender laws. Gresham also made his comparison of good and bad money where the precious metal in the money was the same metal, but of different weight. He did not compare silver to gold, or gold to paper.

In his "Gresham's Law" article, Selgin also offers the following comments regarding the origin of the name:

{{blockquote|The expression "Gresham's Law" dates back only to 1858, when British economist [[Henry Dunning Macleod]] (1858, pp. 476–8) decided to name the tendency for bad money to drive good money out of circulation after Sir Thomas Gresham (1519–1579). However, references to such a tendency, sometimes accompanied by discussion of conditions promoting it, occur in various medieval writings, most notably Nicholas Oresme's (c. 1357) ''Treatise on money''. The concept can be traced to ancient works, including [[Aristophanes]]' ''The Frogs'', where the prevalence of bad politicians is attributed to forces similar to those favoring bad money over good.<ref name="eh.net"/>}}