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This article analyzes the reduction of the money supply in England before the Black Death. Since scholars first detected a fall in the level of prices in the later Middle Ages a number of different arguments have been put forward to explain it. Initially, it was believed that prices fell because of a shortage of money and money metals. Then in the 1950's it was argued that changes in population were the cause of falling prices and, although advocates of the monetary theory have continued to question it, it is the population thesis, which still largely holds the field. No one has done more to scatter the ranks of the monetary theorists than professor M.M. Postan, and his explanation of the economic fluctuations of the thirteenth and fourteenth centuries makes a good starting point. His argument is that increasing population in the thirteenth century first stimulated the economy of Europe but later began to exert undue pressure on the food supply. Disaster was postponed by the colonization of marginal lands, but survival based on the cultivation of poorer soils became more and more precarious. In these conditions a fortuitous combination of adverse events, such as the succession of bad seasons in the second decade of the fourteenth century, was sufficient to reverse the entire trend of agricultural production and to send the population figures tumbling down.

The article attempts to cover four centuries, 1500 to 1700, and will draw on both demographic and monetary data of England. Recent medieval scholarship tends less towards single factor explanations. Demographers combine a growing mastery of their own discipline with an interest in, and tolerance of, other approaches, while historians of money are more likely to make claims for the importance of their subject than for its pre-eminence. It is often assumed that the velocity of circulation has risen steadily through the centuries as the use of money has become more widespread. One may note at the outset that if velocity did behave in this way between 1500 and 1700, then it was at variance with its well-documented behavior for the period from 1700 until the twentieth century. Modern monetary and banking historians are in no doubt that velocity fell during their period as money--in all its forms--became more plentiful. Velocity is really only a measure of how hard the money supply is being called upon to work. Accordingly, the question is best approached by an examination of the money supply and of the size of the economy which it serves.

This article presents response of the author to an article by Harry A. Miskimin on sixteenth century monetary matters, published in the May 1, 1996 issue of the journal "Economic History Review." Where Miskimin deals in constant pounds of silver, the author prefers to look at the rising price of bullion, reflected in the reduced silver weight of the pound sterling. Indeed, in England government action reducing the silver weight of the pound was following the changing value of silver on the open market, rather than leading it. Since the value of silver was changing, prices expressed in silver should not be compared uncritically over the long term, any more than should nominal prices. The author's approach has the additional advantage of setting the medieval experience of falling velocity in the same context as the similar trend extending from century 1600 to the twentieth century. Nonetheless, even using his approach the author confirm Miskimin's observation of rising velocity in the sixteenth century.