Anton Savage: Currency of truth being devalued as the bad drives out the good

Originally published in the Business Post.

In the mid 1500s, a man named Sir Thomas Gresham came up with the principle that best defines our current challenge with disinformation. Gresham was a financial agent of the British crown based in Antwerp during a period where devaluation of the crown’s currency was a significant threat.

He wrote to Queen Elizabeth I on her accession to address the ‘Unexampled Badness’ of the state of British currency. This, he explained, was thanks to her predecessors issuing coins that instead of being (let’s say) pure silver, they were 30 per cent tin.

The belief when the debased coins were released was that because relatively few would be in circulation compared to the total coinage, it wouldn’t matter much, and they’d be a lot cheaper to produce.

Gresham pointed out, in what would become known as Gresham’s Law, that if someone has two shillings in his hand - one worth its face value and its actual weight in silver, and one worth only its face value because it’s 30 per cent tin, the person will naturally spend the adulterated one and save the ‘real’ one because the latter had innate material value.

Hence ‘good money drives out bad’ — people save the ‘good’ coins and use the bad, thereby removing all good cash from use, and turning the whole currency into a shadow of its former self.

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