Quote: bad money drives out the good money (antedating Thomas Babington Macaulay 1855)

[Garson O'Toole]

Bad money drives out good

This phrase is usually referred to as Gresham's law, and the idea
behind it has a long history starting with Aristophanes. In this post
I am tracing the current popular formulation; thus, the goal is to
find a close match to the wording above.

I have found that the famous English historian Thomas Babington
Macaulay uses the phrase "bad money drives out the good money" in
1855. This antedates economist Henry Dunning Macleod's use of the
phrase "bad money drives out good money" in 1866. It also antedates
Macleod's original naming of Gresham's law in 1858.

The Proverb section of the online Oxford Dictionary of Quotations
contains the saying "Bad money drives out good" and the connection to
Gresham is noted. The reference assigns an early 20th century time
frame for the proverb in its modern form.

The Yale Book of Quotations has four relevant entries. One entry for
Aristophanes (dated 405 B.C. in its original form) contains a long
quotation from the play The Frogs that discusses coinage. Citizens are
not using coins of "trusty stamp and pure assay"; instead, they are
using "vile, adulterate issue, drossy, counterfeit and base" coins.
This passage is one of the earliest observations of the economic
concept now known as Gresham's law.

Another entry in YBQ contains Gresham's letter to Queen Elizabeth I in
1558. It begins: "Ytt may pleasse your majesty to understande, thatt
the firste occasion of the fall of exchainge did growe by the Kinges
majesty, your latte ffather, in abasinge his quoyne ffrome vi ounces
fine too iii ounces fine." Clearly, this passage is not concise and
snappy, but it is important historically.

The other two YBQ entries are for the economist Henry Dunning Macleod.
In the 1858 entry Macleod gives a name to the relevant economic
principle: "Gresham's law of currency". But he does not state "bad
money drives out good" or anything similar. In the 1866 entry Macleod
uses the phrase "Bad money drives out good money from circulation."


The phrase "bad money drives out the good money" appears in a footnote
in Thomas Macaulay's History of England in 1855, and the author
reaches back in time past Gresham to Aristophanes to bestow credit for
the idea.

Citation: 1855, The History of England from the Accession of James the
Second by Thomas Babington Macaulay, Page 84, Bernhard Tauchnitz,
Leipzig.

The first writer who noticed the fact that, where good money and bad
money are thrown into circulation together, the bad money drives out
the good money, was Aristophanes. He seems to have thought that the
preference which his fellow citizens gave to light coins was to be
attributed to a depraved taste, such as led them to entrust men like
Cleon and Hyperbolus with the conduct of great affairs. But, though
his political economy will not bear examination, his verses are
excellent.

http://books.google.com/books?id=bRE-AAAAcAAJ&q=money+drives#v=snippet&


The Wikipedia article on Gresham's law states that Nicolaus Copernicus
presented a similar idea "in a treatise  called Monetae cudendae
ratio", but it is unclear if this influenced the evolution of the
English language proverb.

http://en.wikipedia.org/wiki/Gresham%27s_law


An 1828 work discusses the principle of bad money replacing good but
does not contain the proverb.

Citation: 1828, The Citizen's Pocket Chronicle: Containing a Digested
View of the History, Antiquity and Temporal Government of the City of
London, Page 276, Arthur Seguin, London.

The natural consequence of good money floating along with bad money
is, that the good will be bought up for melting, and must soon be lost
to the country. To prevent this catastrophe, which was approaching
with hasty steps, severe punishments were denounced, by parliament,
against such as should "exchange any coined gold or silver, receiving
or paying more than the value placed on the same by the king."

http://books.google.com/books?id=Y6EKAAAAYAAJ&q=money+floating#v=snippet&

Garson O'Toole

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