This research examines the price inflation, often referred to as the "price revolution" (Hamilton, 1929) and the "great debasement" (Gould, 1970), which occurred in Europe in the sixteenth and early-seventeenth centuries. The purpose of the examination is to consider the underlying causes of the inflation.
The most widely attributed cause of the European price inflation in the sixteenth and early-seventeenth centuries in Europe is the massive export of American treasure (gold and silver from Central and South America) to Europe--primarily Spain (Hamilton, 1965). The phenomenon has, however, been attributed to many other causes by both modern and contemporary historians, and economists, and by contemporary politicians and writers (Challis, 1971; Helleiner, 1959; Malowist, 1972; Miskimin, 1975; Phelps Brown & Hopkins, 1959; Spooner, 1972).
Some economic historians have even suggested that the price increases in Europe in the sixteenth and early-seventeenth centuries did not even constitute a real economic revolution,
because they were relatively mild by modern standards (Gould, 1964), and because they were, at least in part, a part of a long-range trend (Cipolla, 1972).
Thus, while there exists little dispute as to what prices did in sixteenth and early-seventeenth century Europe, considerable dissension exists as to both the causes and the relative severity of the inflation. These disagreements provide the justification for this current examination.
Adam Smith (1776) held that the sole cause of the change in the price relationship between agricultural commodities and precious metals in the sixteenth century was the importation to Europe of American gold and silver. Earl Hamilton (1965) and most other modern economists through the 1960s concurred in Smith's assessment. John Gould (1964), however, disagreed.
Gould (1964) contended that the price increases in the sixteenth and early-seventeenth centuries really...