Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

Central and Free Banking Theory 603THE BANKING AND CURRENCY VIEWS AND THESCHOOL OF SALAMANCAThe theorists of the School of Salamanca made importantcontributions in the monetary field which have been studiedin detail. 2The first Spanish scholastic to produce a treatise on moneywas Diego de Covarrubias y Leyva, who published Veterumcollatio numismatum (“Compilation on old moneys”) in 1550.In this work the famous Segovian bishop examines the historyof the devaluation of the Castilian maravedi and compiles alarge quantity of statistics on the evolution of prices. Althoughthe essential elements of the quantity theory of money arealready implicit in Covarrubias’s treatise, he still lacks anexplicit monetary theory. 3 It was not until 1556, several yearslater, that Martín de Azpilcueta unequivocally declared theincrease in prices, or decrease in the purchasing power ofmoney, to be the result of a rise in the money supply, anincrease triggered in Castile by the massive influx of preciousmetals from America.Indeed Martín de Azpilcueta’s description of the relationshipbetween the quantity of money and prices is faultless:2 See especially the research Marjorie Grice-Hutchinson published underthe direction of F.A. Hayek, The School of Salamanca: Readings in SpanishMonetary Theory, 1544–1605; Rothbard, “New Light on the Prehistory ofthe Austrian School,” pp. 52–74; Alejandro A. Chafuen, Christians forFreedom: Late-Scholastic Economics (San Francisco: Ignatius Press, 1986),pp. 74–86. On Marjorie Grice-Hutchinson see the laudatory commentsFabián Estapé makes in his introduction to the third Spanish edition ofSchumpeter’s book, The History of Economic Analysis (Historia del análisiseconómico [Barcelona: Editorial Ariel, 1994], pp. xvi–xvii).3 We have used the Omnia opera edition, published in Venice in 1604. Volume1 includes Diego de Covarrubias’s treatise on money under thecomplete title, Veterum collatio numismatum, cum his, quae modo expenduntur,publica, et regia authoritate perpensa, pp. 669–710. Davanzati oftenquotes this piece of writing, and Ferdinando Galiani does so at leastonce in chapter 2 of his famous work, Della moneta, p. 26. Carl Mengeralso refers to the treatise of Covarrubias in his book, Principles of Economics(New York and London: New York University Press, 1981), p.317; p. 257 in the original version, Grundsätze der Volkswirthschaftslehre.