Henry Vaughan argues that it is the voluntary and “universal concurrence of mankind”, not the laws, which makes money acceptable as a medium of exchange (1675)

John Ramsay McCulloch (1789-1864) was a follower of David Ricardo, the first professor of political economy at the University of London in 1828, and a pioneer in the collection of economic statistics and historical economic tracts. In 1856 he published two valuable collections of documents, one on commerce and the other on money. Henry Vaughan’s treatise comes from the latter. In it he makes the excellent point that money (in this case gold coins) emerges from a commonly agreed upon standard of exchange. He debates whether “the mint” (i.e. the government) or the “universal concurrence of mankind” is the more powerful force in inducing people to accept certain coins in order to make their sales and purchases. He seems to come down on the side of voluntary, popular acceptance by the users as the key factor. This is a similar theory to that developed by Ludwig von Mises in his 1912 work The Theory of Money and Credit, a cornerstone text in the development of the Austrian school of economics.