Doctor Navarrus on the Value of Money – Misconceptions


“Before we form our own opinion we should do well to listen to the old Spanish economists, who were often shrewd observers and who felt the effects of the inflation at first hand.”
Marjorie Grice-Hutchinson (Early Economic Thought in Spain, 1177-1740)

One of the most influential proto-Austrian Spanish Scholastics was Martín de Azpilcueta Navarro, also known as Doctor Navarrus. He elaborated on many economic concepts of his time, much of it present in his On Exchange, which he published as an appendix to his Manual de confesores y penitentes. In this text, he works to morally justify the exchange of money, requiring him to delve into the concept of money from an economic perspective.

He begins his appendix with the claim that the main reason the exchange of money exists is because some currencies must be worth more in some places than others. He then lays out eight possible uses for money. The first three are from Aristotle, who argued that money serves as a medium of exchange, a store of value, and a unit of account.

But Azpilcueta adds several more possible uses. The fourth use is “to display one’s riches.” In other words, to promote social status. The fifth use is as medals or clothing decorations, which applies more to gold and silver as valuable metals rather than currency itself. The sixth use is “to cheer with its presence.” The seventh is to cure illness as gold powder. Like the fifth, the seventh use does not deal with currency but rather the metal it is made of. The eighth and final use is as security or collateral for a debt.

Although Azpilcueta’s uses for money may not seem like much today, these five additional uses were quite significant. They provided him with grounds to justify interest (in some cases) and the exchange of money, which, from the common Aristotelian view, was immoral and unnatural. Since money was understood to have only three primary uses, it was “barren” and could not produce value, which means profiting off the exchange of money cannot justly happen.

But now that Azpilcueta expanded the possible uses for money, these five other uses make money more similar to other goods, which can be exchanged and rented.

After going into more detail on the types of exchanges, Doctor Navarrus puts forth eight possible factors that can influence the value of money.

The first three factors relate to the physical qualities of money: Its metal, carat, and condition. Gold coins are worth more than silver coins, coins with a higher carat than other coins of the same type are worth more, and a coin with greater weight and in good condition can be worth more than a damaged (and thus lighter) coin. He also points out that while small coins are worth less than large coins in pure metal value, small coins are uniquely valuable as spare change, and large coins have added value for being easier to transport than small coins.

A fourth influence is geographical. Using a modern example, the British pound has greater value in the United Kingdom than in Russia, because it is custom to trade such currency in the U.K. but not so in Russia. The value of the Russian ruble would have a similar effect in the opposite manner.

A fifth influence is the public disapproval for a mandated increase or decrease in the value of a currency. In other words, Azpilcueta is saying that if a government were to raise or lower the legal value of their currency, and the public were not confident that this change reflected the true value of the currency, their distrust will influence the currency’s value on the market.

A sixth influence is time. Some economic historians credit Azpilcueta for reviving the concept of time preference in another of his works, but in this listing, he specifies that time itself does not change the value of money, but rather that the other factors change over time, which means that the value of money will also change over time.

The final two influences are, in simple terms, supply and demand. Economic historians credit Azpilcueta as being one of the first to lay out the complete concept of the quantity theory of money. Doctor Navarrus explains that not only does the supply of money affect its value, but so does the demand for that particular money. For example, a wealthy city will have a great demand for large coins, while a poor village can do little with such large units. The value of money itself will be higher in communities where money is scarce, and lower in areas where money is plentiful.

His reasoning is based on some observations. For one, merchandise becomes expensive during times of high demand and low supply, and money is a form of merchandise. He also observes that there is a greater demand for gold when there is a lack of gold and plenty of silver.

Though Azpilcueta’s arguments may seem ancient and somewhat outdated by modern standards, his writings on economics, along with those of many other Spanish Scholastics, influenced many future thinkers, including numerous classical economists.

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Nathan A. Kreider is author of the Misconceptions column for Being Libertarian, and has written for the Austrian Economics Center, the Foundation for Economic Education, and the Liberalists. He also occasionally publishes a blog and video content, including short book reviews, which can be found on his website, He can be contacted by email via [email protected]