The sun., 1908-02-28
THE GOLDEN sOYEREION.
A MoSt Enllghtcning Review sf the Func.
tiNn and Movements pf Gold Coin And
It's Tokens IN Paper. Silver and Bronze.
From he FOrtNiOAtlv Rsvisv.

responsible for such manufactured anxiety
| as there may be In the public mind anent the
recent heavy shipments Of sOvereigns from
! this country abroad.
| Indeed. it has been suggested that owing
TO possible shortcomings In our fiscal ar
rangements these and like disbursements
involve a serious national loss and Q conse-
ouent diminution Of gold finding Its way into
the pockets Of the British wOrkinEmAn. A
detailed account Of these and other move
ments Of coin and bullion win. it 10 hoped.
throw light on the actual facts. and thereby
allay any and all anxiety on the subject. II
Is no doubt surprising to the uninitiated to
learn that the annual absorption Of gold In
Egypt 10 out OF all proportion to It's population
and poverty. As compared with this country
/ 1t is enormous although we maintain our
paupers In a state Of luxury undreamed OF by
the simple fellahin OF the Nile. But kindred
comparison may be made as between this
, country and Russia. The one with no gold or
silver mines. and the other with some OF the
richest in the world; the one phenomenGlly
| opulent, the other miserably poor.
Such comparisons at once suggest that
gold resources and gold reserves are not
quite so essential to commercial prosperity
as is commonly believed. We shall sndeavor
to show that before the organized forces OF
modern banking the more clumsy methods
J OF barter employed by our forefatherS must
/ yield and that the Importance OF precious
metal as a means OF currency must wane. the
quantity employed FOR the purpose forming
an ever decreasing fraction OF total trade
turnover.
The transfer OF metallic disks is a mode OF
! barter which Is no doubt less cumbersome
than the primitive methods It has superseded.
but It Is far too cumbersome for the vast
transactions OF modern merchants and their
bankers, who employ the cheaper. quicker
and IN every way more valuable system OF
currency OF promises.
II 10 customary to make these promises in
terms OF coin OF the realm, but II they were
made in terms OF r the great principle OF
credit would not be affected. 1t Is clear that
two men constantly exchanging cargoes OF
goods might credit and debit each other In
any symbol they chose. so long as they were
agreed as to the purchasing power OF that
symbol.
The State, however. stipulates, for con-
venence, that in the event Of a dispute aris-
ing and their Jurisdiction being required.
the symbols shall be in a particular set OF
teTms-i. e.. terms OF coin of the realm. II
for any good reason II were decided to make
these promises in other terms the business
OF banking could be equally well conducted
under the new conditions. Gold at the pres
ent moment Is. however. the most convenient
commodity for the purpose.
So much. and so much only, has gold to
do with banking.
IN dealing with the question OF current
coin Of the realm" We are approaching a
subject over which many clever men, states
men and economists. have admittedly STUN
bled. They have blundered not through any
lack of mental power but because in form
ing their conclusions from. as IL were. birds
eye point OF view. they have dwarfed matters
OF detail which had they been observed from
lower planes would have at once revealed
anIa
present writer once asked an Australian cow
boy why he rooted his house with corrugated
iron instead Of thatch. urging that the CORFU
gated iron was cold. ugly and expensive, and
that the thatch was warm. pretty and cheap.
But" said the cowboy. insects get into
the thatch. frogs come after the insects and
snakes come after the frogs
We propose TO consider the question OF the
function Of the coin and its tokens not from
the exalted position OF a Chancellor Of the
Excheauer. but from the point Of view Of a
bankers clerk. To make any safe progress
to an understanding Of the matter. we must
be careful to avoid any vague language. For
instance. the words money" and cash" are
responsible for much hopeless bewilderment:
both these words may mean coin. tokens Of
coin. instruments Of credit or purchasing
power In any form.
In speaking Of coin Of the realm las between
the wears 1917 and 1907 We must be taken to
mean the sovereign" and half sovereign
Of legal tender weight.
The sovereign Is a coin struck at the Mint:
il is composed OF eleven-twe!fths OF pure gold
and an alloy OF one-twe!fth copper. the alloy
being added to make 1t harder and thus
render il more durable. Il is the standard
Of value of the empire. When quite new II
weighs 1913 27447 grains, but In the early days
Of It's existence the contact OF it's sharply
milled edges with the sharp and harder steel
edged shovel OF the bankers cashier soon
clips 1t Of its decimal points. To meet this
difficulty OF wear and tear and to allow it a
sufficient length OF legal life q sovereign
remains a legal sovereign until IL is worn
down in weight to l22,5 grains. It then be-
comes standard gold,- and the Bank OF
England is under statutory obligations to
buy it at E3 I7s. sd. an ounce.
The value Of an ounce OF standard gold 10
e3 lis. IOI1d.. quoting it in terms Of itself.
BY tokens OF coin we mean all silver and
bronze pieces struck at the Mint and recoR-
nizable as having been so struck. Tokens
differ from coins in having face value in no
way related TO their intrinsic value-e. e., q
new ham crown is OF no greater value tcOn-
sidered as a tOken) than an old half crown
which Is worn down to two-thirds OF its orig
inal weight. Both old and new half crowns
are worth on their face value one-eighth OF a
sovereign The value of the metal contained
value Of the metal contained in an old half
crown Is about lOd.
By the words instrument OF credit" we
mean pieces OF paper such as bank notes.
bills Of exchange or checks. all Of which In
their present form are abridg gments OF more
elabOrately worded letters from one man to
another making some kind Of definite prom
Use.
For convenience the kind OF promise is now
confined to terms OF coin OF this or some
other realm.
It will be seen from the foregoing definition
of a sovereign that its wastRge during It's
legal life is a little more than three-fourths
OF a grain. about nd. and that the wastage
Of a half sovereign ls q little more than one
half OF a grain. about Id. These differences
in value are so small where the use Of one
or q dozen or so OF coins is involved as to
pass unrecognized by the general public and
unheeded by those who are fully alive TO the
fact It 10 partly due to non-recognitiOn Of
the varying intrinsic values Of gold coin and
partly due to non-recognition OF the oumber-
Someness Of large masses Of metal that much
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