The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Money, Classical Theory of

  • Roy Green
Reference work entry


An integral part of the classical theory of value and distribution, the classical theory of money emerged largely in response to the issue of the relationship between changes in the money supply and the price level. This issue was central to the Price Revolution of the 16th and 17th centuries, the Napoleonic war inflation and the industrial crises of the mid-19th century. It was not the existence of an empirical correlation that was in dispute, but the direction of causation. A solution would therefore require a theoretical approach as well as knowledge of the facts.


Bank Charter Act 1844 (UK) Bank Restriction period Banking School Bullion Report (1810) (UK) Bullionist controversies Cantillon, R. Classical dichotomy Classical law of circulation Classical theories of distribution Classical theory of money Convertibility Credit Currency School Equation of exchange Fiduciary money Hume, D. Inflation Law of reflux Law, J. Metallic money Monetarism Money, classical theory of Money supply Paper money Price Revolution Quantity theory of money Real bills doctrine Say’s Law Specie-flow mechanism Steuart, J. Tooke, T. Torrens, R. Value theory 

JEL Classifications

This is a preview of subscription content, log in to check access.


  1. Cantillon, R. 1775. Essai sur la nature du commerce en général. London: Macmillan, 1931.Google Scholar
  2. Eatwell, J. 1983. The analytical foundations of monetarism. In Keynes’s economics and the theory of value and distribution, ed. J. Eatwell and M. Milgate. London: Duckworth.Google Scholar
  3. Fullarton, J. 1845. On the regulation of the currency. London: John Murray.Google Scholar
  4. Green, R. 1982. Money, output and inflation in classical economics. Constitutional Political Economy 1: 59–85.Google Scholar
  5. Hume, D. 1752. Writings on economics. Oxford: Oxford University Press, 1955.Google Scholar
  6. Law, J. 1705. Money and trade considered. Edinburgh: Anderson.Google Scholar
  7. Locke, J. 1691. Consequences of the lowering of interest and raising the value of money. In Principles of political economy, ed. J.R. McCulloch. London: Ward, Lock & Co., 1825.Google Scholar
  8. Marx, K. 1867. Capital. Moscow: Progress Publishers, 1971.Google Scholar
  9. Marx, K. 1973. Grundrisse. Harmondsworth: Penguin.Google Scholar
  10. Montesquieu, C. 1748. The spirit of laws. London: George Bell & Sons, 1900.Google Scholar
  11. Morgan, E.V. 1965. The theory and practice of central banking, 1797–1913. London: Frank Cass.Google Scholar
  12. Nef, J.U. 1941. Silver production in central Europe: 1450–1618. Journal of Political Economy 49: 575–591.CrossRefGoogle Scholar
  13. Outhwaite, R.B. 1969. Inflation in Tudor and early Stuart England. London: Macmillan.CrossRefGoogle Scholar
  14. Petty, W. 1963. The economic writings of Sir William Petty. New York: Kelley.Google Scholar
  15. Ricardo, D. 1821. Principles of political economy and taxation (Ed. P. Sraffa). Cambridge: Cambridge University Press, 1951.Google Scholar
  16. Ricardo, D. 1923. Economic essays. London: Frank Cass.Google Scholar
  17. Schumpeter, J. 1954. A history of economic analysis. London: Allen & Unwin.Google Scholar
  18. Smith, A. 1776. An inquiry into the nature and causes of the wealth of nations. London: Routledge, 1890.Google Scholar
  19. Steuart, J. 1767. An inquiry into the principles of political economy. Edinburgh: Oliver and Boyd, 1966.Google Scholar
  20. Thornton, H. 1802. An enquiry into the nature and effects of the paper credit of Great Britain. London: LSE reprint series, 1939.Google Scholar
  21. Tooke, T. 1844. An inquiry into the currency principle. London: LSE reprint series, 1959.Google Scholar
  22. Vanderlint, J. 1734. Money answers all things. London: T. Cox.Google Scholar
  23. Vilar, P. 1976. A history of gold and money: 1450–1920. London: New Left Books.Google Scholar
  24. Viner, J. 1937. Studies in the theory of international trade. London: Allen & Unwin.Google Scholar
  25. Wilson, J. 1859. Capital, currency and banking, 2nd ed. London: The Economist.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Roy Green
    • 1
  1. 1.