Bimetallism, gold, silver and Gresham:a contribution to the study of the circulation of coins in Brazil in the XVIII century
Keywords:
Bimetallism, Gresham’s Law, metallic currency, colonial Brazil, monetary circulationAbstract
The large amount of gold coinage at the Brazilian mints in the first half of the XVIII century contributed to raise the level of monetisation, but was not sufficient to solve definitively the typical problems brought about by bimetallism, particularly those due to the consequences of Gresham’s Law, according to which “bad money drives out good”. At the beginning of that century, silver bought more gold in the market than at the mints. Therefore, there was an incentive to hoard silver, or to export it. After the 1760’s,the falling gold production, couple with the slow growth of the inflow of silver arriving from Buenos Aires reduced slowly the gap between the market and official prices of gold and silver. By the beginning of the nineteenth century, thanks to the rise in the market price of gold, silver had become “bad money”, ready to drive out gold from circulation.
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