Chapter 6 - Understanding Money Use and Value

Summary

Gresham’s law is much more than the idea that ‘bad money drives out good’ always and everywhere. Instead, historians should use Gresham’s law as a complex and interconnected set of conditions and premises involving ‘external’ elements (legal tender laws, differing coinage standards, transaction costs etc.) and an ‘internal’ sensitivity among (some!) coin-users to the precious metal content of coins.The ‘external’ conditions of Gresham’s law seem to have been inconsistently present at best. Legal coin values and precious metal values were more or less redundant during first century and a half of the Principate. A growing dissonance between legal value and metal value, however, emerged by the late second century AD, putting pressure on coin-users’ monetary habits. The actions of Roman authorities encouraged any metallist-minded coin-users to avoid the now relative high costs of monetary exchange at legal values and instead adopt special-purpose uses for money. The counterfactual logic of Gresham’s law, therefore, offers historians both improved understanding of Roman coin-users’ thinking as well as broader insights into the workings of the Roman monetary economy.