A 1695 book has been strongly recommended to me, [amazon_link id=”1402168403″ target=”_blank” ]A report containing an essay for the amendment of the silver coins[/amazon_link], by William Lowndes. There are free e-versions of the text available at Open Library. Lowndes proposed a solution to the critical shortage of coins at the time, but the Government instead followed advice from John Locke (on the basis that he had saved the life of the King’s uncle by operating successfully on an intestinal infection – an interesting reason for taking economic advice). This is the crisis covered by Thomas Levenson’s excellent book [amazon_link id=”057122993X” target=”_blank” ]Newton and the Counterfeiter[/amazon_link]. Isaac Newton took charge of the Royal Mint from 1699 to his death in 1727, and finally sorted out the coinage crisis.
[amazon_image id=”1402168403″ link=”true” target=”_blank” size=”medium” ]A Report Containing an Essay for the Amendment of the Silver Coins[/amazon_image]
It looks delightful: “In the most ancient times, when money was first coined within this island, it was made of Pure Gold and Silver, like the Moneys now currant in some other Nations, particuarly in Hungary and Barbary where they have Pieces of Gold called Ducats and Sultanelles; and in the Kingdom of Industan, where they have pieces of Silver called Rupees, which I have seen.”
Maybe they were both right. As George Selgin documents in “Good Money: …”, you can have a shortage of a kind of coin in one part of an economy and a glut in another. Similarly, you can have a general shortage of coins without a shortage of money if the mint doesn’t produce enough.
We can’t expect Locke or Lowndes to get all these details right, but everything I’ve read by Locke shows that he had an intelligent grasp of almost all subjects. I love the point about how Locke won the king’s favour!