Gresham’s Law

  • George SelginEmail author
Living reference work entry


“Gresham’s Law” – the tendency for bad money to drive good money out of circulation – is one of the most well-known propositions of economics. Although it is far from universally valid, provided it is appropriately qualified, by noting the particular conditions that can make it operate, it helps to account for many important episodes in the history of money. This chapter reviews early statements of Gresham’s Law and the circumstances that informed them. It then considers the determinants of currency selection in different market settings, starting with the case of unhindered market, so as to arrive at a more precise understanding of the factors that can cause Gresham’s Law to operate. Next it shows how Gresham’s Law can account for some past episodes involving irredeemable paper money and bimetallism, and why it cannot predict the consequences of private coinage, or explain the replacement of coins by redeemable paper money. The chapter ends by critically assessing Arthur Rolnick and Warren Weber’s claim that Gresham’s Law, even in its more carefully stated versions, is a “fallacy.”


Gresham’s Law Debasement Bimetallism Legal tender 


  1. Balch TW (1908) The law of Oresme, Copernicus and Gresham. Proc Am Philos Soc 47(188):18–29Google Scholar
  2. Bezanson A (1951) Prices and inflation during the American Revolution: Pennsylvania, 1770–1790. University of Pennsylvania Press, PhiladelphiaCrossRefGoogle Scholar
  3. Breckenridge SP (1903) Legal tender: a study in English and American monetary history. University of Chicago Press, ChicagoGoogle Scholar
  4. Bridrey E (1906) La Théorie de la Monnaie au XIV Siecle: Nicolas Oresme. V. Giard et E. Brière, ParisGoogle Scholar
  5. Calomiris CW (1988) Institutional failure, monetary scarcity, and the depreciation of the continental. J Econ Hist 48(1):47–68CrossRefGoogle Scholar
  6. Chown J (1994) A history of money from AD 800. Routledge, LondonGoogle Scholar
  7. Dutu R (2004) Moneychangers, private information and Gresham’s law in late medieval Europe. Rev Hist Economica – J Iber Lat Am Econ Hist 22(3):555–571Google Scholar
  8. Fisher I (1894) The mechanics of bimetallism. Econ J 4(15):527–537CrossRefGoogle Scholar
  9. Flandreau M (2004) The glitter of gold: France, bimetallism, and the emergence of the international gold standard, 1848–1873. Oxford University Press, New YorkCrossRefGoogle Scholar
  10. Friedman M (1992) Bimetallism Revisited. In: Money mischief: episodes in monetary history. Harcourt, Brace, Jovanovich, New York, pp 126–156Google Scholar
  11. Friedman M, Schwartz AJ (1963) A monetary history of the United States, 1863–1960. Princeton University Press and NBER, PrincetonGoogle Scholar
  12. Giffen R (1891) The Gresham law. Econ J 1(2):304–306CrossRefGoogle Scholar
  13. Greenfield RL, Rockoff H (1995) Gresham’s Law in nineteenth-century America. J Money Credit Bank 27(4, Part 1):1086–1098CrossRefGoogle Scholar
  14. Harris SE (1930) The Assignats. Harvard University Press, CambridgeCrossRefGoogle Scholar
  15. Hayek FA (1978) Denationalisation of money: the argument refined. Institute of Economic Affairs, LondonGoogle Scholar
  16. Head BV (1888) A catalogue of the greek coins in the british museum: Attica-Megaris-Aegina. Longmans & Co, LondonGoogle Scholar
  17. Hicks J (1969) A theory of economic history. The Clarendon Press, OxfordGoogle Scholar
  18. Jevons WS (1875) Money and the mechanism of exchange. D. Appleton and Company, New YorkGoogle Scholar
  19. Johnson C (1956) The de moneta of nicholas oresme and english mint documents. Thomas Nelson and Sons Ltd, LondonGoogle Scholar
  20. Kindleberger CP (1989) Third lecture: Gresham’s Law. In: Economic laws and economic history: the Raffael Mattilioni lectures. Cambridge University Press, Cambridge, UK, pp 43–66Google Scholar
  21. Li L-F (2009) After the great debasement, 1544–51: did Gresham’s Law apply? LSE Department of Economic History working papers no. 126/09, OctoberGoogle Scholar
  22. Macleod HD (1858) Elements of political economy. Longmans, Green & Co., LondonGoogle Scholar
  23. Macleod HD (1896) The history of economics. Bliss, Sands, and Co, LondonGoogle Scholar
  24. Macleod HD (1899) Gresham’s Law and bimetallism. Sound Currency 6(5):57–72Google Scholar
  25. Meissner CM (2015) The limits of bimetallism. NBER working paper 20852, JanuaryGoogle Scholar
  26. Miskimin H (1989) The enforcement of Gresham’s Law. In: idem, Cash, credit and crisis in Europe, 1300–1600. Variorum Reprints, London, pp 147–61Google Scholar
  27. Mundell R (1998) Uses and abuses of Gresham’s Law in the history of money. Zagreb Journal of Economics 2(2):3–38Google Scholar
  28. Munro JHA (2012) Coinage debasements in Burgundian flanders, 1384–1482: monetary or fiscal policies? In: Nicholas D, Bachrach BS, Murray JM (eds) Comparative perspectives on history and historians: essays in memory of Bryce Lyon (1920–2007). Medieval Institute Publications, Western Michigan University, Kalamazoo, pp 314–360Google Scholar
  29. Redish A (2000) Bimetallism: an economic and historical analysis. Cambridge University Press, CambridgeGoogle Scholar
  30. Rolnick AJ, Weber WE (1986) Gresham’s Law or Gresham’s fallacy? J Polit Econ 94(1):185–199CrossRefGoogle Scholar
  31. Rolnick AJ, Velde FR, Weber WE (1996) The debasement puzzle: an essay on medieval monetary history. J Econ Hist 56(4):789–808CrossRefGoogle Scholar
  32. Sargent TJ, Smith B (1997) Coinage, debasements, and Gresham’s Laws. Economic Theory 10(2):197–226CrossRefGoogle Scholar
  33. Sargent T, Velde F (2002) The big problem of small change. Princeton University Press, PrincetonCrossRefGoogle Scholar
  34. Selgin G (1996) Salvaging Gresham’s Law: the good, the bad, and the illegal. J Money, Credit, Bank 28(4):637–649CrossRefGoogle Scholar
  35. Selgin G (2008) Good money: birmingham button makers, the royal mint, and the beginnings of modern coinage. University of Michigan Press, Ann ArborGoogle Scholar
  36. Spencer H (1851) Social statics. John Chapman, LondonGoogle Scholar
  37. State of Pennsylvania (1852) Minutes of the supreme executive council, vol 11. Theodore Fenn & Company, HarrisburgGoogle Scholar
  38. Summers B (1976) Private coinage in America. The Freeman 26(7):436–440Google Scholar
  39. Sumner WG (1892) The financier and the finances of the American revolution, vol 1. Dodd, Mead & Company, New YorkGoogle Scholar
  40. Velde FR, Weber WE, Wright R (1999) A model of commodity money, with applications to Gresham’s Law and the debasement puzzle. Rev Econ Dyn 2(1):291–323CrossRefGoogle Scholar
  41. Webster P (1791) Political essays on the nature and operation of money, public finances, and other subjects. Joseph Crukshank, PhiladelphiaGoogle Scholar
  42. White AD (1933) Fiat money inflation in France: how it came, what it brought, and how it ended. D. Appleton-Century Company, New YorkGoogle Scholar
  43. White LH (1984) Competitive payments systems and the unit of account. Am Econ Rev 74(4):699–712Google Scholar

Copyright information

© Springer Nature Singapore Pte Ltd. 2018

Authors and Affiliations

  1. 1.Center for Monetary and Financial AlternativesThe Cato InstituteWashingtonUSA

Personalised recommendations