fourteenth to the end of the fifteenth century [pg 003] the purchasing power of money increased in the ratio of four to ten. Then into this situation came the great influx of gold and silver from the New World. Prices rose unequally; the trading and manufacturing classes were flourishing, while others were depressed. In the sixteenth century the price of wheat tripled, but wages only doubled; the laboring-classes of England deteriorated, while others were enriched, producing profound social changes and the well-known flood of pauperism, together with the rise of the mercantile classes. Then new channels of trade were opened to the East and West. Of course, men saw but dimly the operation of these economic causes; although the books now began to hint at the right understanding of the movements and the true laws of money.
Even before this time, however, Nicole Orêsme, Bishop of Lisieux (died 1382), had written intelligently on money;4 but, about 1526, the astronomer Copernicus gave a very good exposition of some of the functions of money. But he, as well as Latimer,5 while noticing the economic changes, gave no correct explanation. The Seigneur de Malestroit, a councilor of the King of France, however, by his errors drew out Jean Bodin6 to say that the rise of prices was due to the abundance of money brought from America. But he was in advance of his time, as well as William Stafford,7 the author of the first English treatise on money, which showed a perfect insight into the subject. Stafford distinctly grasped [pg 004] the idea that the high prices brought no loss to merchants, great gain to those who held long leases, and loss to those who did not buy and sell; that, in reality, commodities were exchanged when money was passed from hand to hand.
Such was the situation8 which prefaced the first general system destined to be based on supposed economic considerations, wrongly understood, to be sure, but vigorously carried out. I refer to the well-known mercantile system which over-spread Europe.9 Spain, as the first receiver of American gold and silver, attributed to it abnormal power, and by