Historical Stylisations and Monetary Theory

The paper discusses technical features of the dual money system, and in particular the relationship between imaginary money and bank money (a relationship often emphasized in classical analyses of this issue). In particular, the paper describes a specific eighteenth-century monetary disturbance: the monetary disorder (disordine monetario) that engulfed the Hapsburg-ruled State of Milan in the mid-eighteenth century. The authors examine the most important theoretical contributions that were put forward with the purpose of explaining the Milanese monetary disturbance. In particular, they consider the contributions by Cesare Beccaria and Pietro Verri, and illustrate the general principles that Beccaria and Verri were led to discover through the analysis of a specific monetary disturbance. In the concluding section, the authors suggest that the topical character of monetary theory calls attention to the role of imaginary money as an ideal standard against which to explain specific monetary disturbances, and as an heuristic tool for the identification of effective rules in the field of monetary policy.