classical theory of money

(17th-19th century)

Money was considered a commodity, the price of which was determined by the amount of time needed to produce it (that is, gold, and silver mining).

Classical theory of money was revised by English economist David Ricardo (1772-1823) and the ensuing Bullionist Controversy which paved the way for the Currency School and Banking School of economics which, in turn, provided the framework of the modern British banking system.

Also see: quantity theory of money

Source:
F W Fetter, Development of British Monetary Orthodoxy 1719-1875 (Cambridge, Massachusetts, 1965)

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