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RESOURCE ENDOWMENTS, AGENCY PROBLEMS, AND MONETARY OUTCOMES IN TWO COLONIAL AMERICAN MINTS, 1600-1700
Published online by Cambridge University Press: 30 September 2022
Abstract
This paper examines the role that resource endowments played in the performance of two New World coinages. Massachusetts Bay and the Viceroyalty of Peru provide a useful study in contrasts, having markedly different institutions and resource endowments. Both colonies originally emphasised the provision of «good» money, that is, the provision of a uniform coin (in weight and fineness) and of a sensible mix of large and small denomination coins that would support the domestic economy. Their outcomes, however, differed. We suggest that in Potosi, the sheer volume of the resource endowment (silver) incentivised fraud and the neglect of the provision of fractionary coinage in the viceroyalty. In contrast, in Massachusetts Bay, the scarcity of the resource produced incentives better aligned with the production of «good» money. The northern colony produced a trustworthy coinage that provided small denomination coins for the domestic market.
Resumen
Este artículo contribuye a la literatura sobre la gestión de políticas monetarias en la Edad Moderna. El contraste del caso del virreinato peruano con el de Massachusetts Bay es de particular utilidad para ilustrar este tema, dados sus enormes contrastes en la disponibilidad del recurso natural. Las dos colonias originalmente enfatizaron el interés público: la producción de una moneda confiable, compuesta por altas y bajas denominaciones, que satisficiera al mercado doméstico. Sin embargo, sus resultados fueron marcadamente diferentes. En Potosí, la abundancia de la plata, y la consecuente enorme escala de las operaciones de la fábrica de monedas, incentivaron el fraude y la producción de monedas de alta denominación, lo que llevó al descuido del mercado interno. En el caso de Massachusetts Bay, la escasez de la plata generó incentivos mejor alineados con la producción de una moneda confiable que respondiera de manera más efectiva a las demandas del público.
Keywords
- Type
- Articles/Artículos
- Information
- Revista de Historia Economica - Journal of Iberian and Latin American Economic History , Volume 41 , Issue 2 , September 2023 , pp. 343 - 373
- Copyright
- Copyright © The Author(s), 2022. Published by Cambridge University Press on behalf of Instituto Figuerola, Universidad Carlos III de Madrid
Footnotes
a
Department of Economics, Burlington, USA. jane.knodell@uvm.edu
b
Department of Economics, Burlington, USA. catalina.vizcarra@uvm.edu
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Vizcarra and Knodell supplementary material
Vizcarra and Knodell supplementary material
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