The Theory of Money and Credit - Ludwig von Mises [80]
All the same, the law does devote its attention to certain incidental questions of the value of money. It deals thoroughly with the question of how existing legal obligations and indebtednesses should be reckoned as affected by a transition from one currency to another. In earlier times, jurisprudence devoted the same attention to the royal debasement of the coinage as it was later to devote to the problems raised by the changing policies of states in choosing first between credit money and metallic money and then between gold and silver. Nevertheless, the treatment that these questions have received at the hands of the jurists has not resulted in recognition of the fact that the value of money is subject to continual fluctuation. In fact, the nature of the problem, and the way in which it was dealt with, made this impossible from the very beginning. It was treated, not as a question of the attitude of the law toward variations in the value of money, but as a question of the power of the prince or state arbitrarily to modify existing obligations and thus to destroy existing rights. At one time, this gave rise to the question whether the legal validity of the money was determined by the stamp of the ruler of the country or by the metal content of the coin; later, to the question whether the command of the law or the free usage of business was to settle if the money was legal tender or not. The answer of public opinion, grounded on the principles of private property and the protection of acquired rights, ran the same in both cases: "Prout quidque contractum est, ita et solvi debet; ut cum re contraximus, re solvi debet, veluti cum mutuum dedimus, ut retro pecuniae tantundem solvi debeat."[2] The proviso in this connection, that nothing was to be regarded as money except what passed for such at the time when the transaction was entered into and that the debt must be repaid not merely in the metal but in the currency that was specified in the contract, followed from the popular view, regarded as the only correct one by all classes of the community but especially by the tradesmen, that what was essential about a coin was its metallic content, and that the stamp had no other significance than as an authoritative certificate of weight and fineness. It occurred to nobody to treat coins in business transactions any differently from other pieces of metal of the same weight and fineness. In fact, it is now removed beyond doubt that the standard was a metallic one.
The view that in the fulfillment of obligations contracted in terms of money the metallic content alone of the money was to be taken into account prevailed against the nominalistic doctrine expounded by the minting authorities. It is manifested in the legal measures taken for stabilizing the metal content of the coinage, and since the end of the seventeenth century when currencies developed into systematic monetary standards it has provided the criterion for determining the ratio between different coins of the same metal (when current simultaneously or successively), and for the attempts, admittedly unsuccessful, to combine the two precious metals in a uniform monetary system.
Even the coming of credit money, and the problems that it raised, could not direct the attention of jurisprudence to the question of the value of money. A system of paper money was thought of as according with the spirit of the law only if the paper money remained constantly