MONEY.

Money ^[1. Etymologists differ respecting the derivation of the word money. Some contend that it comes from monere, (quia nota inscripta de calore admonet) because the stamp impressed on coined money indicates its weight and fineness (Bouteroue, Recherches sur les Monnayes de France,p. 1.); and others, that it originates in the circumstance of silver being first coined at Rome in the temple of Juno Moneta. (Suidas, in voce Mβ>>ιτα). ] is a term used to designate whatever commodity the inhabitants of any particular country, accept either voluntarily or by compulsion, as an equivalent for their labour, and for whatever else they have to dispose of.

Sect. I.— Circumstances which led to the use of money. Principal properties that every commodity used as such ought to possess. Not a sign or a measure of value, but α real equivalent.

A country in which the division of labour was unknown, and where ever}· individual or family directly produced the commodities necessary for his or their consumption, would have no exchanges, and consequently no money. But, after the division of labour has been established, the introduction of money becomes necessary, or, at least, highly advantageous. A very small part only of a man’s wants is then directly supplied by his own labour. The greater part is indirectly supplied by exchanging that part of the produce of his labour which exceeds his own consumption, for such parts of the produce of other men’s labour as he has occasion for, and they are willing to part with. Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society.

“But when the division of labour first began to take place, this power of exchanging must frequently have been very much clogged and embarrassed in its operations. One man we shall suppose, has more of a certain commodity than he himself has occasion for, while another has less. The former, consequently, would be glad to dispose of, and the latter to purchase, a part of this superfluity. But, if this latter should chance to have nothing that the former stands in need of, no exchange can be made between them. The butcher has more meat in his shop than he himself can consume, and the brewer and the baker would each be willing to purchase a part of it; but they have nothing to offer in exchange except the different productions of their respective trades, and the butcher is already provided with all the bread and beer which he has immediate occasion for. No exchange can, in this case, be made between them. He cannot be their merchant, nor they his customers; and they are all of them thus mutually less serviceable to one another. To avoid the inconveniency of such situations, every prudent man, in every period of society, after the establishment of the division of labour, must naturally have endeavoured to manage his affairs in such a manner as to have at all times by him, besides the peculiar produce of his own industry, a certain quantity of some one commodity or another, such as he imagined few people would be likely to refuse in exchange for the produce of their industry.” (Wealth of Nations, vol. i. p. 43. M‘Culloch’s ed.)

This commodity, whatever it may be, is money.

An infinite variety of commodities have been used as money in different countries and states of society. Those nations who chiefly subsist by the chace, such as the ancient Russians, and the greater part of the Indians who now occupy the uncultivated portion of America, use the skins of wild animals as money. ^[2. Storch, Traité d’Economic Politique, tome iii. p. 16.; and Ulloa, Mémoires Philosophiques sur lAmérique, tome ii. p. 100. ] In a pastoral state of society cattle are most commonly used for that purpose. Homer tells us, that the armour of Diomede cost only nine oxen, whilst that of Glaucus cost one hundred. (Ilias, lib. 6, lin. 235.) The etymology of the Latin word (pecunia), signifying money, and of all its derivatives, proves that cattle (pecus) had been the primitive money of the Romans. ^[3. Morellet, Prospectus d’un Nouveau Dictionnaire de Commerce, p. 115. ] They had also been used as such by the ancient Germans; for their laws uniformly fix the amount of the penalties to be paid for particular offences in cattle. (Storch, in loco citato?) In remoter ages corn was very generally used, in agricultural countries, as money; and even now, it is by no means uncommon to stipulate for corn rents and wages. Other commodities have been used in different countries. Salt is said to be the common money of Abyssinia (Wealth of Nations, i. p. 45.); a species of shells, called cowries, gathered on the shores of the Maldive Islands, are used in smaller payments throughout Hindustan, and form the only money of extensive districts in Africa. ^[4. “Dans les pays ou le cuivre a trop de valeur pour pouvoir représenter celle des plus menues denrées, on est encore obligé de lui substituer quelque autre matière plus commune. C’est cette circonstance qui a fait adopter aux Indiens l’usage des cauris en guise des petite monnaie. Cet usage pourrait paraitre étrange dans les pays aussi riches et d’une civilisation aussi ancienne que le Bengale et l’Indoustan: mais le cuivre y est si rare, et les vivres y sont à si bon marché, qu’une pièce de la valeur de 1 cop. et ⅜ [about a halfpenny English] peut V acheter one quantité des. denrées suffisante pour la subsistence journalière d’un homme du peuple. On est done obligé de deviser la plus petite monnoie de cuivre en plusieurs fractions; et comme one monnoie d’aussi peu de valeur coûterait plus à fabriquer qu’elle ne pourrait valoir, on la remplace par un coquillage dont la nature fait presque tous les fraix. Quelque mince que soit la valeur d’un cauris, elle suffit dans ces contrées fertiles pour acheter one piece des bananes ou quelque autre fruit commun.” (Le Goux de Flaix, Essai sur Undoustan, tom. i. pp. 143—226, quoted by Storch, Economic Politique, tom. iii. p. 133.) ] Dried fish forms the money of Iceland and Newfoundland; ^[5. Smith, ubi supra ; and Horrebow, Description de l’Islande, tome ii. p. 90. ] sugar of some of the West India islands; and Dr. Smith mentions that there was, at the period of the publication of the Wealth of Nations, a village in Scotland where it was customary for a workman to carry nails, as money, to the baker’s shop or the alehouse. (Wealth of Nations, i. p. 45.)

But these commodities are universally deficient in some of the principal requisites which every commodity used as money ought to possess. Products must frequently be brought to market worth only half an ox, or half a skin; but as an ox could not be divided, and as the division of a skin would most probably deprive it of the greater part of its value, it would be impossible to exchange them for such money. Divisibility is not, however, the only indispensable requisite in a commodity used as a medium of exchange. It is necessary that it should admit of being kept for an indefinite period without deteriorating; that it should, by possessing great value in small bulk, be easily transported; and that one piece of money, of a certain denomination, should always be precisely equivalent to every other piece of money of the same denomination. But none of the commodities above named as having been used as money possesses these properties. Though cattle had been sufficiently [7:15:384] divisable, they could neither be preserved, nor transported from one place to another, without a great deal of trouble and expence; while, owing to the difference in their qualities, one ox might be worth two or three oxen of an inferior species. It is plain, therefore, that they could not serve as money except in a very rude state of society, when the arts were almost unknown, and when the rearing of cattle formed the principal employment. Corn was sufficiently divisible; but its bulk was far too great in proportion to its value to admit of its easy transportation, and it also was of very different and not. easily appreciated qualities. Salt, sugar, shells, and fish, are all liable to insuperable objections. The values of equal quantities of all of them differ very greatly; some of them cannot be divided, and others cannot be preserved or transported without great loss.

But the commodities in question were deficient in a still more important particular. Their value was not sufficiently invariable to permit of their being advantageously used as money. They were not durable commodities, nor was it possible to adjust their supply so as to avoid sudden fluctuations of price. The occasional abundance and scarcity of pasture has a powerful influence on the price of cattle, which is still more seriously affected by the prevalence of epidemical diseases, and other contingencies. The fluctuations in the price of corn, arising from the variations of the seasons, are too striking and obvious to require to be pointed out. And in the islands where cowries are picked up, a strong gale from a particular point of the compass has frequently, in a few hours, sunk their value considerably. It was impossible, therefore, that such commodities could ever be either generally or permanently used as money in civilized societies. No person would willingly exchange the produce of his industry for a commodity which might, in a few weeks, or even days, lose a third, or a half, of its value.

The desire of uniting the different qualities of invariability of value, divisibility, durability, facility of transportation, and perfect sameness, doubtless formed the irresistible reasons which have induced mankind, in every civilized society, to employ gold and silver as money. The value of these metals is certainly not invariable, but it changes only by slow degrees; they are divisible into any number of parts, and have the singular property of being easily reunited, by means of fusion, without loss; they do not deteriorate by being kept; and, from their firm and compact texture, they are very difficult to wear; their cost of production, especially of gold, is so considerable, that they possess great value in small bulk, and can, of course, be transported with comparative facility; and an ounce of pure gold and silver, taken from the mines in one quarter of the world, is precisely identical with an ounce of pure gold or silver dug from the mines in any other quarter. No wonder, therefore, when almost all the qualities necessary to constitute money are possessed in so eminent a degree by the precious metals, that they have been used as such, in civilized societies, from a very remote era. They became universal money, as Μ. Turgot has observed, “not in consequence of any arbitrary agreement among men, or of the intervention of any law, but by the nature and force of things.”

A considerable period must, however, have elapsed after the introduction of the precious metals into commerce, before they were generally used as money. But, by degrees, the various qualities, which so peculiarly fit them for this purpose, would become obvious; and every individual, in consulting his own advantage, would endeavour to exchange a part, at least, of the produce of his industry for commodities which could be easily concealed or carried about, which did not deteriorate by being kept, and of which he could give a portion equal in value to the value of any other commodity he might afterwards wish to obtain. When first brought to market, gold and silver, like copper, iron, or any other metal, were in an unfashioned state, in bars or ingots. A sheep, an ox, a bushel of wheat, &c. was then bartered for a piece of gold or silver, exactly as it would have been bartered for iron, copper, cloth, or any other commodity. The parties first agreed upon the quality of the metal to be given for the goods, and the quantity, which the possessor of the metal had bound himself to pay, was next ascertained by weight. Nor is this a mere conjectural statement, advanced in a later age to explain appearances, and resting on probability only. Aristotle (Polit, lib. i. cap. 9∙) and Pliny (Hist. Nat. lib. 33, cap. 3.) tells us, that such was, in fact, the original method by which the precious metals were exchanged in Greece and Italy; and the sacred writings present us with a striking and remarkable example of the prevalence of the same primitive practice in the East. We are there told that Abraham weighed four hundred shekels of silver, and gave them in exchange for a piece of ground he had purchased from the sons of Heth, (Genesis, chap, xxiii. ver. 16.) It is also mentioned, that this silver was “current money with the merchant? an expression which evidently refers to its quality only. For, had it been coined, or marked with a stamp, indicating its weight and fineness, it would have been unnecessary to have weighed it. These ancient practices still subsist in various countries. In many parts of China, gold and silver do not circulate as coin under the authority of a public stamp, but their value is always ascertained by weight. When exchanged, they are cut into pieces, supposed to be nearly proportioned to the value of the commodity they are to be given for; and the pieces are then weighed to ascertain their precise value. This practice is also prevalent in Abyssinia and Tonquin.^[6. Goguet, De l’Origine des Loix, &c. tom. i. p. 268, 4to edit. See also Park’s Travels, vol. i. p. 464, 8vo edit. ]

Before the art of metallurgy was well understood, the baser metals were frequently used as money. Iron was the pimitive money of the Lacedemonians, and copper of the Romans. But both iron and copper deteriorate by being kept; and, besides this defect, the rapid improvement of the arts, and the consequent reduction of their price, speedily rendered their bulk in proportion to their value too great to permit of their continuing to be used as money. Copper, however, is still advantageously used in the form of tokens, convertible into silver in very small payments. In Great Britain, copper pence and halfpence are at present rated at about seventy-two per cent, above their real value; but as the issue of them is exclusively in the hands of government, and as they are legal tender to the extent of one shilling only, in any one payment, this over-valuation has not, for reasons which we shall afterwards explain, had any bad effect.^[7. See Memorandum on the Silver Coinage of 1817, by the Master of the Mint, p. 378 of the Appendix to the Lord’s Report on the Resumption of Cash Payments by the Bank. ]

The trouble and inconvenience attending the weighing of the quantity of metal in every exchange of gold and silver for commodities must have been early experienced. But the greatest obstacle to the use of unfashioned metals as money, would undoubtedly be found in the difficulty of determining their quality, or the degree of their purity, with sufficient facility and accuracy. The operation of assaying, is one of great nicety and delicacy; and, notwithstanding all the assistance derived from modern art, it is still no easy matter to ascertain the precise degree of purity of a particular piece of metal. In early ages, such an operation must have been performed in a very clumsy and bungling manner. It is most probable, indeed, that whén the precious metals were first used as money, their quality was appreciated only by their weight and colour. A very short experience[7:15:385] would, however, be sufficient to show the extreme inexactness of conclusions derived from such loose and unsatisfactory criteria; and the devising of some method by which the fineness of the metal might be easily and correctly ascertained, would very soon be felt as indispensable to the général use of gold and silver as money. Such a method was not long in presenting itself. It was early discovered, that, to ascertain the purity of the metal, and also to avoid the trouble and expense of weighing it, no more was necessary than to mark each piece with a stamp, declaring its weight and fineness. Such seem to have been the various steps which led the ancients to the introduction of coined money (Goguet, De Z , Origine des Loix, &c. tom. i. p. 269,); an invention of the very greatest utility, and which has, perhaps, contributed more than any other, to facilitate commerce, and to accelerate the progress of civilization and the arts.

“Without some article of known exchangeable value, such as coin, readily received as an equivalent for other things, the interchange of commodities must have been very limited, and consequently the divisions of labour very imperfectly established. Now, money obviates these evils, and by a twofold operation, augments production. In the first place, it saves all that time and labour which, while the intercourse between man and man is carried on by barter, must frequently intervene before a person can be supplied with the quantity of the commodity which he wants. In the second place, and in consequence of its saving the time and labour which must otherwise be spent in effecting exchanges, it multiplies the transactions of mercantile industry, and thus allows the divisions of employment to be more thoroughly established. By the first operation, it disengages a very considerable portion of labour from an unproductive occupation, and enables it to receive a more useful direction. By the second operation, it increases in a very high degree the productive powers of the labour already usefully employed. It assists every man in availing himself of the skill and dexterity which he may have acquired in any particular calling, and promotes cultivation in a manner suitable to the climate and soil of different districts, and of different countries. And by both these operations, coined money increases to an extent, not easy to be calculated, the wealth of civilized communities.” (Torrens on the Production of Wealth, p. 305.)

But, whatever may be the advantages attending the use of coined money, and they are great and obvious, it is necessary to observe, that its introduction does not affect the nature of exchanges. Equivalents are still given for equivalents. The exchange of a quarter of corn for an ounce of pure unfashioned gold bullion, is undeniably as much a real barter, as if it had been exchanged for an ox, or a barrel of beer. But supposing the metal to have been formed into a coin, that is, marked with a stamp indicating its weight and fineness, it is plain that circumstance could have made no change in the terms of the barter. The coinage saves the trouble of weighing and assaying the bullion, but it does nothing more. A coin is merely a piece of metal of a known weight and fineness ; and the commodities exchanged for it are always held to be of equal value. And yet these obvious considerations have been very generally Overlooked. Coined money, instead of being viewed in the same light as other commodities, has been looked upon as something quite mysterious. It was said to be both a sign and a measure of value. In truth, however, it is neither the one nor the other. A sovereign is not a sign, ’ it is the thing signified. A promissory note, payable at some stated period, may not improperly be considered as the sign of the specie to be paid for it; but that specie is itself a commodity possessed of real exchangeable worth. It is equally incorrect to call money a measure of value. Gold and sil ver do not measure the value of commodities, more than the latter measure the value of gold and silver. Every thing possessed of value may either measure, or be measured by, every thing else possessed of value. When one’ commodity is exchanged for another, each measures the value of the other. If the quartern loaf were sold for a shilling, it would be quite as correct to say, that a quartern loaf measured the value of a shilling, as that a shilling measured the value of a quartern loaf.

The quality of serving as a measure of value is, therefore, equally inherent in every commodity. But the slow' degrees by which the precious metals change their value, renders them peculiarly well fitted for forming a standard, by which to compare the values of other and more variable commodities. To this standard reference is almost always made in estimating the value of the products of every civilized country. We do not say, that one man is worth a thousand acres of land, and that another is worth a thousand sheep; but we ascertain for how much gold or silver the land and the sheep would exchange, and then say, that their proprietors are worth so much money. In this, however, there is certainly nothing mysterious. We merely compare the value of one commodity with the value of another; and as coin or money has been found to be the most convenient standard of comparison, the value of all other commodities is usually estimated in it.

It is obvious, from this statement, that the terms of the exchange of one commodity, or set of commodities, for another, may be adjusted, with reference to money, without any money being actually in the possession of either of the parties making the exchange. If a horse, for example, had commonly sold for ten pieces of silver, an ox for five pieces, and a sheep for one piece, it would mark their relative values to each other, and the animals might be exchanged on this footing without the intervention of money. The frequent recurrence of transactions of this kind seems to have given rise to the notion of an abstract or ideal standard of value. Thus, instead of saying that a horse is worth ten pieces of silver, an ox five pieces, and a sheep one piece, it has been contended that it might equally have been said that they were respectively worth ten points or units, five points or units, and one point or unit; and that, as the proportional values of commodities might be as clearly expressed in these arbitrary terms as in money, or any commodity possessed of real value, the use of the latter, as a standard, might be advantageously dispensed with, and a set of abstract terms adopted in its stead. This, however, is completely mistaking the nature and object of a standard. A standard is not intended to mark the known relations between different commodities, but to enable us easily to discover those which are unknown. Now, although the series of arbitrary terms may serve extremely well for the first of these purposes, it is utterly impossible that they can ever serve for the second. This, however, is exclusively the object of a standard; and it is quite plain that nothing can be used as such which is not possessed of the same properties as the things with which it is to be compared. To measure length, a standard must have length; to measure value, it must have value. The value of commodities is ascertained by separately comparing their cost with the cost of money, and we express their relation to each other by simply stating the result of our inquiries; that is, by mentioning the number of livres, of pounds, or of fractions of a pound, they are respectively worth. And, when any new commodity is offered for sale, or when any change is made in the cost of an old one, we ascertain their relation to the rest, by merely comparing them with a livre or a pound. It is plainly impossible, however, that we could have done this, had the terms livre, or pound, been purely arbitrary, and referable to no really valuable article. We might as well try to estimate distances by an imaginary inch, or an imaginary foot, as to estimate prices or values by an imaginary shilling, or an imaginary sovereign. When we say [7:15:386] that an ox is worth five pounds, and a sheep only one, we really mean no more than that, when an ox and a sheep are compared together, that is, when the one serves as a standard by which to estimate the value of the other, one ox is found to be worth five sheep. But, suppose that we wish to ascertain what is the relative value of some other commodity; of a pound of tea, for example; to oxen or sheep, of what use would it be to be told that one ox was worth five sheep, or that, when the value of an ox was represented by the imaginary term “five pounds,” the value of a sheep was represented by the imaginary term “one pound?” It is not the relation between oxen and sheep, but the relation between these animals and tea, that we are desirous of learning. And, although this relation may be learned by comparing the cost of producing oxen and sheep with the cost of producing tea, or by ascertaining for how much of some other commodity an ox, a sheep, and a pound of tea, will respectively exchange, it is obvious it could never be learned by comparing them with a set of arbitrary terms or symbols! It would not, in truth, be more absurd to attempt to ascertain it by comparing them with the hieroglyphics on an Egyptian sarcophagus. Nothing that will not exchange for something else, can ever be a standard, or measure of value. Commodities are always compared with commodities and not wich abstract terms. Men go to market with real values, and not with the signs of values in their pockets. And it is to something possessed of real worth, to the gold contained in a sovereign and not in the word sovereign, that they always have referred, and must continue to refer, in estimating value.^[8. The following passage of Montesquieu has often been referred to in proof of the existence of an ideal standard :—“Les noirs de la cote d’Afrique ont un signe des valeurs sans monnoie; c’est un signe purement idéal fondé sur le degré d’estime qu’ils mettent dans leur esprit à chaque marchandise, à proportion du besoin qu’ils en ont; one certaine denrée, ou marchandise, vaut trois macutes; one autre, six macutes; one autre, dix macutes; c’est comme s’ils disoient simplement trois, six, dix. Le prix se forme parla comparaison qu’ilsfont de toutes les marchandises entre elles: pour lors, il n’y a point de monnoie particulière, mais chaque portion de marchandise est monnoie de l’autre·" (Esprit des Loix, livre xxii. cap. 8.) But, instead of giving any support to the notion of an abstract standard, this passage might be confidently referred to in proof of its nonexistence. Had Montesquieu said that the blacks determined the values, or prices, of commodities, by comparing them with the arbitrary term macute, the statement, though false, would have been at least in point. But he says no such thing. On the contrary, he states distinctly, that the relative values of commodities (marchandises) are ascertained by comparing them with each other (entre elles), and that it is merely the result of the comparison that is expressed in arbitrary terms. So much for the weight to be attached to this statement, supposing it to be well-founded. The truth is, however, that the term macule is not really arbitrary, and employed only to mark an ascertained proportion, but that it has a reference to, and is, in fact, the name of an intrinsically valuable commodity, “On a bien dit,” says l’Abbé Morellet, “que ce mot macute étoit une expression abstraite et générale de la valeur, et cela est vrai au sens où nous l’expliquerons plus bas; mais on n’a pas remarqué que cette abstraction a été consequente et postérieure à l’emploi du mot macute pour signifier one marchandise, one denrée réelle à laquelle on avait longtmns comparé toutes les autres· “Macute en plusieurs lieux de la côte d’Afrique, est encore le nom d’une certaine étoffe: i Chez les negres de la cite d’Angola,’ dit le voyageur Angelo, ‘ les macutes sont des pièces de nattes d’une aune de long; Jobson dit aussi que les macutes sont une espèce d’etoffe· “Les étoffes ont toujours été l’objet d’un besoin tres-pressant chez des peuples aussi barbares, dépourvus de toute espèce d’industrie.— Les nattes en particulier leur sont de la plus grande nécessité. Elles sont divisées en morceaux peu considerables et d’une petite valeur; elles sont très-uniformes dans leurs parties, et les premières qu’on a faites auront pu être semblables les unes aux autres, et d’une bonté égale, sous la même dénomination; toutes ces qualités les ont rendu propres à devenir la mésure commune des valeurs.”—(Prospectus d’un Nouveau Dictionnaire de Commerce, p. 121.) The following extract from Park’s Travels gives an example of a similar kind: “In the early intercourse of the Mandingoes with the Europeans, the article that attracted most notice was iron. Its utility in forming the instruments of war and husbandry made it preferable to all others; and iron soon became the measure (standard) by which the value of all other commodities was ascertained. Thus a certain quantity of goods, of whatever denomination, appearing to be equal to a bar of iron, constituted, in the trader’s phraseology, a bar of that particular merchandise. Twenty leaves of tobacco, for instance, were considered as a bar of tobacco; and a gallon of spirits (or rather half spirits and half water) as a bar of rum; a bar of one commodity being reckoned equal in value to a bar of another commodity. As, however, it must unavoidably happen, that, according to the plenty or scarcity of goods at market, in proportion to the demand, the relative value would be subject to continual fluctuation, greater precision has been found necessary; and, at this time, the current value of a single bar of any kind is fixed by the whites at two shillings sterling. Thus, a slave, whose price is L15, is said to be worth 150 bars.” {Travels in the Interior of Africa, 8vo edit. vol. i. p. 39.) ]

In common mercantile language, the giving of money for a commodity is termed buying, and the giving of a commodity for money, selling. Price, unless when the contrary is particularly mentioned, always means the value of a commodity rated in money.

FIaving thus endeavoured to explain the circumstances which led to the introduction of money, and to shew wl at it really is, and what it is not, we shall now proceed to investigate the laws by which its value is regulated. It is chiefly from the prevalence of erroneous opinions on this subject, that the theory of money has been so much misunderstood.

Sect. II.— Circumstances which Regulate the Exchangeable Value of Money.

This branch of our subject naturally divides itself into two parts: 1 st, an inquiry into the principles which regulate the exchangeable value of money when the power to supply is not monopolised; and, 2d, an inquiry how far these principles are liable to be affected by the operation of mono-po!y.

I. There does not now seem to be much room for difference of opinion respecting the circumstances that regulate the value of the precious metals, and their distribution throughout the various countries of the globe. Bullion is a commodity, on the production of which competition operates without restraint. It is not subjected to any species of monopoly, and its value in exchange must, therefore, be entirely regulated by the cost of its production, that is, by the quantity of labour required to bring a given quantity of it to market.

If, in every stage of society, it required precisely the same quantity of labour to produce a given quantity of bullion, its value would be invariable ; and it would constitute a standard by which the variations in the exchangeable value of all other commodities could be correctly ascertained. But this is not the case either with bullion or any thing else. And its value fluctuates in the same way as that of other commodities, not only according to the greater or less productiveness of the mines from which it is extracted, but also according to the comparative skill of the miners, and the improvements of machinery.

Μ. Say has, in his work on Political Economy, a chapter “De la valeur que la qualité d’être monnoie ajouté à one marchandise.” But a little reflection will convince us, that Μ. Say is mistaken, and that the circumstance of the precious metals being used as money cannot affect their value. Μ. Say reasons on the common hypothesis, that an increase of demand is always productive of an increase of value, an assumption totally at variance with principle and fact. Value depends upon the cost of production; and it is obvious that the cost of producing a commodity may be diminished, whilst the demand for it is increasing. This is so plain a proposition, as hardly to require to be substantiated by argument.
[7:15:387]

And a reference to the case of cotton goods, the price of which has, notwithstanding the vast increase of demand, been constantly on the decline during the last half century, is enough to convince the most sceptical of the extreme erroneousness of Μ. Say’s conclusion. But, with regard to the particular case of the precious metals, it is clear the capital devoted to the production of gold and silver must yield the common and ordinary rate of profit; for, if it yielded more than that rate, there would be an influx of capital to the mining business; and, if it yielded less, it would be withdrawn, and vested in some more lucrative employment. And hence, though the demand for gold and silver should, from the adoption of some other commodity as an instrument of exchange, gradually become less, the value of the precious metals would not, on that account, be reduced. A smaller supply would, indeed, be annually brought to market, and a portion of the capital formerly engaged in the mining, refining, and preparing of the metals, would be disengaged; but as the whole stock thus employed yielded only the average rate of profit, the portion which is not withdrawn must continue to do so; or, which is the same thing, gold and silver must still continue to sell for the same price. It is no doubt true, that where mines are, as they almost always are, of different degrees of productiveness, any great falling off in the demand for bullion might, by rendering it unnecessary to work the inferior mines, enable the proprietors of the richer mines to continue their work, and to obtain the ordinary rate of profit on their capitals, by selling bullion at a reduced price. In this case the value of bullion would be really diminished; but it would be diminished, not because there was a falling off in the demand, but because there was a greater facility of production. On the other hand, an increased demand for bullion, whether it arose from the general suppression of paper money, or from a greater consumption of gold and silver in the arts, or from any other cause, would not, unless it were necessary, in order to procure the increased supply, to have recourse to less productive mines, be accompanied by any rise of price. If the mines from which the additional supplies were drawn were less productive than those already wrought, more labour would be necessary to procure the same quantity of bullion, and, of course, its price would rise. But, if no such increase of labour was required, its price would remain stationary, though a thousand times the quantity formerly required should be demanded.

After gold and silver have been brought to market, their conversion into coin or manufactured articles, depends entirely on a comparison of the profits that may be derived from each operation. No bullion would be taken to the mint if it would yield a greater profit by sending it to a silversmith; and no silversmith would work up bullion into plate, if he could turn it to greater account by converting it into coin. The value of bullion and coin must, therefore, in countries where the expenses of coinage are defrayed by the state, nearly correspond. When there is any unusual demand for bullion in the arts, coin is melted down; and when, on the contrary, there is any unusual demand for coin, plate is sent to the mint, and the equilibrium of value maintained by its fusion.

It appears, therefore, that whilst competition operates without restraint on the production of gold and silver, they are, like all other things, produced under similar circumstances, valuable only in proportion to the cost of their production; that is, in proportion to the quantity of labour necessarily expended in bringing them to market. And hence, while they constitute the currency of the commercial world, the price of commodities, or their value compared with gold or silver, will vary, not only according to the variations in the exchangeable value of the commodities themselves, but also according to the variations in the value of the gold or silver with which they are compared.

II. But if competition were not allowed to operate on the production of the precious metals, if they could be monopolised and limited in their quantity, their exchangeable value would no longer be regulated by the same principles. If, after the limitation, they still continued to be used as money, and if, in consequence of the improvement of society, manufactured commodities and valuable products should be very much multiplied, the exchanges which this limited amount of money would have to perform would be proportionably increased; and, of course, a proportionably smaller sum would be appropriated to each particular transaction; or, which is the same thing, money prices would be diminished. Whenever the supply of money is fixed, the amount of it, given in exchange for commodities, must vary inversely as the demand, and can be affected by nothing else. If double the usual supply of commodities be brought to market in a country with a limited currency, their money price will be reduced a half; and if only half the usual supply be brought to market, it will be doubled; and this, whether the cost of their production be increased or diminished. Produce is not then exchanged for money, on the ground that it is a commodity capable of being advantageously used in the arts, or that an equal quantity of labour has been expended on its production; but because it is the universal equivalent used by the society, and that, as such, it will be willingly received for the produce belonging to others. The remark of Anacharsis, the Scythian, that gold and silver coins seemed to be of no use but to assist in numeration and arithmetic, (Hume’s Essay on Money), would, if confined to a strictly limited currency, be as just as it is ingenious. Sovereigns, livres, dollars, &c., would then really constitute mere tickets or counters, for computing the value of property, and transferring it from one individual to another. And as small tickets or counters, would serve for this purpose quite as well as large ones, it is unquestionably true, that a debased currency may, by first reducing, and then limiting its quantity, be made to circulate at the value it would bear if the power to supply it were unrestricted, and if it were possessed of the legal weight and fineness; and, by still further limiting its quantity, it might be made to pass at any higher value.

Thus it appears, that whatever may be the material of the money of any country, whether it consist of gold, silver, copper, iron, leather, salt, cowries, or paper, and however destitute it may be of all intrinsic value, it is yet possible, by sufficiently limiting its quantity, to raise its value in exchange to any conceivable extent.

Suppose the money of Great Britain consists of50,000,000 or 60,000,000 of one pound notes, and that we are prevented from increasing or diminishing this sum, either by issuing additional notes or coins, or by withdrawing the notes already in circulation; it is obvious that the quantity of commodities for which such notes would exchange, would increase or diminish precisely according to the increase or diminution of the commodities brought to market. If we suppose that ten times the amount of products that were offered for sale when the limitation of the currency took place, are offered for sale ten or twenty years afterwards, and that the rapidity of circulation has continued the same, prices will have fallen to one-tenth of their former amount; or, which is the same thing, the exchangeable value of the paper money will have increased in a tenfold proportion; and, on the other hand, if the products brought to market had diminished in the same proportion, the exchangeable value of the paper money will have been equally reduced.

The principles we have now stated are of the utmost importance to a right understanding of the real nature of money. Previously to the publication of Mr. Ricardo’s Principles of Political Economy, every writer of authority maintained, that the value of money depended entirely on the relation between its amount and the demand. But this is [7:15:388] true only of a gold or silver currency when its quantity is limited, and of a currency formed of materials having little intrinsic worth, as paper, when its quantity is limited, and it is not made convertible, at the pleasure of the holder, into some more valuable commodity, the production of which is under no restraint. It is obvious, indeed, without any reasoning on the subject, that the value of a currency that costs little or nothing, can only depend on the proportion which its amount bears to the commodities brought to market, or to the business it has to perform. And wherever a currency of this kind, or a limited gold currency, is in circulation, the common opinion, that the prices of commodities arc regulated exclusively by the proportion between the quantity of them brought to market, and the supply of money, and that any considerable increase or diminution of either will proportionally affect prices, is quite correct. It is altogether different, however, with a currency consisting of gold or silver, or of any other commodity possessed of considerable value, and the supply of which may be increased to an unlimited extent by the operation of unrestricted competition.

The fluctuations in the supply of, and demand for, such money, have no permanent effect on its exchangeable value; this depends exclusively on the comparative cost of its production. If a sovereign commonly exchanges for a couple of bushels of wheat, or a hat, it is because the same labour is required for its production as for that of either of these commodities; while, if with a limited and inconvertible paper money, they exchange for a one pound note, it would be because such was the proportion which, as a part of the mass of commodities offered for sale, they bore to the supply of paper or money in the market. This proportion would, it is evident, be not only immediately, but permanently, affected by an increase or diminution either of paper or commodities. But the relation which commodities bear to a freely supplied metallic currency, could not be permanently changed, except by a change in the cost of producing the commodities or the metals.

Our readers must not conceive from what is now stated, that we mean to contend that the value of gold or silver is never affected by variations of supply and demand. Such an opinion would be altogether erroneous. At the same time it must be admitted, that their value is much less affected by such variations, than that of almost any other commodity. Their great durability precludes the possibility of any sudden diminution of their quantity, while the immense surface over which they are spread, and the various purposes to which they are applied, prevent any unusual productiveness of the mines from speedily lowering their value. An extraordinary event, such as the discovery of America, or the establishment of an intercourse between a country where bullion bore a high value, and one where its value, from the greater facility of its production, was comparatively low, would, by causing a sudden exportation and importation, raise its value in the one country, and sink it in the other. But such events must necessarily be of very rare occurrence. And although the different productiveness of the mines, to which, in the progress of society, recourse must be had, and the successive improvements in the art of mining and working metals, must render the value of gold and silver very different at distant periods, it is abundantly uniform to secure us against all risk of sudden and injurious fluctuations.

Such are the circumstances which regulate the value of money; first, when the power to supply it is not subjected to any species of monoply; and, second, when it is monopolised and limited. In the former case, its value depends, like that of all other commodities, on the cost of its production; while, in the latter case, its value is totally unaffected by that circumstance, and depends entirely on the extent to which it has been issued, compared with the demand.

The conclusions deducible from the fundamental principle we have thus endeavoured to establish, are of the utmost importance. A metallic currency, on the coinage of which a high seignorage or duty was charged, and a paper currency not convertible into the precious metals, were occasionally seen to circulate at the same value with a metallic currency of full weight, and which had been coined at the expence of the state. But no rational or consistent explanation of these apparently anomalous results could be given until the effects produced by limiting the supply of money had been accurately appreciated. Now, however, that this has been done, all these difficulties have disappeared. The theory of money has been perfected, and we are enabled to shew what, under any given circumstances, would be the effect of imposing a seignorage, or of issuing an inconvertible paper currency.

Sect. III.— A moderate Seignorage on Coined Money shewn to be advantageous. Principles which should regulate its amount. ^[9. Seignorage, strictly speaking, means only the clear revenue derived by the state from the coinage; but it is now commonlyused to express every deduction made from the bullion brought to the mint to be coined, whether on account of duty to the state, or of the expence of coinage (properly brassage). We always use the phrase in its more enlarged sense. ]

The government of almost every country has retained the power of coining exclusively in its own hands. In antiquity this privilege was reserved merely to prevent the confusion that must attend the circulation of coins of different denominations were individuals permitted to issue them at pleasure, and to give the public greater security, that the stamp should truly indicate the weight and fineness of the metal.^[10. Le Blanc, Traité Historique des Monnayes de France, p. 90, ed. Amst. 1692. ] But in more modern times it has been used not only as a means of affording a better guarantee to the public, but also of increasing the revenues of the state. As to the expediency of this, however, much difference of opinion has existed. It has been contended that the state ought in no circumstances to charge any duty on coined money; and that the expences of the mint should always be defrayed by the public. In this opinion we cannot concur; and it appears to us that the reasoning of Dr. Smith, in favour of a moderate seignorage, is quite unanswerable. No good reason has yet been given why those who want coins should not have to pay the expences of manufacturing them. Coinage, by saving the trouble and expence attending the weighing and assaying of bullion, indisputably adds to the value of the precious metals. It renders them fitter to perform the functions of a circulating medium. A sovereign is of greater value than a piece of pure unfashioned gold bullion of the same weight; and for this plain reason, that while it is equally well adapted with the bullion for being used in the arts, it is better adapted for being used as money, or in the exchange of commodities. Why τ then should government be prevented from charging a seignorage, or duty on coins, equal to the expences of the coinage, or, which is the same thing, to the value which ic adds to the bullion? Those who contend that the state ought to defray the expence of the coinage, might, with equal cogency of reasoning, contend that it ought to defray the expence of manufacturing gold and silver tea-pots, vases, &c. In both cases the value of the raw material, or bullion, is increased by the cost of workmanship. And it is only fair and reasonable, that those who carry bullion to the mint as well as those who carry it to the jewellers, should have to pay the expences necessarily attending its conversion into coin.

But there are other reasons why a seignorage, to this extent at least, ought to be exacted. Wherever the expences [7:15:389] of coinage are defrayed by the state, an ounce of coined gold or silver, and an ounce of gold or silver bullion, must be very nearly of the same value. And, hence, whenever it becomes profitable to export the precious metals, coins, in the manufacture of which a considerable expence has been incurred, are sent abroad indifferently with bullion. It has indeed been attempted, by prohibiting the exportation of coins, to prevent the loss that may thus be occasioned; but these efforts have proved singularly ineffectual, and have, indeed, been abandoned in this and most other countries. Admitting, however, that it were possible, which most certainly it is not, to prevent, or at least, materially limit, the-clandestine exportation of coins, it is conceded on all hands to be quite nugatory to attempt to prevent their conversion into bullion. In this there is almost no risk. And the security with which their fusion can be effected, and the trifling expences attending it, will always enable them to be melted down and sent abroad whenever there is any unusual foreign demand for the precious metals. This exportation would, however, be either prevented or materially diminished by the imposition of a seignorage or duty, equal to the expence of the coinage. The coins being, by this means, rendered more valuable than bullion, would be kept at home in preference: and if, as Dr. Smith has observed, it became necessary on any emergency to export coins, they would, most likely, be reimported. Abroad they would be only worth so much bullion, while at home they would be worth this much, and the expence of coinage besides. There would, therefore, be an obvious inducement to bring them back, and the supply of currency would be maintained at its proper level, without its being necessary for the mint to issue fresh coins.

Besides relieving the country from the useless expences attending the coinage of the money exported to other countries as an article of commerce, the imposition of a moderate seignorage would either totally prevent, or at least lessen that fusion of the heavier coins, which always takes place whenever a currency becomes degraded or deficient in weight Previously to the great recoinage in 1773, the quantity of bullion contained in the greater number of the gold coins in circulation was reduced nearly two per cent, below the mint standard; and, of course, the price of gold bullion, estimated in this degraded currency, rose two per cent, or from £3, 17s. and 10½d., its mint price, to £4. This, however, was too minute a difference to be taken into account in the ordinary business of buying and selling. And the possessors of coins fresh from the mint, or of full weight, not obtaining more produce in exchange for them than for the lighter coins, sent the former to the melting pot and then sold them as bullion. But it is easy to see that this fusion would have been effectually prevented had the coins been loaded with a seignorage of two per cent. The heavy coins could not then have been melted without losing the value given them by the seignorage; and this being equal to the excess of the market price of bullion above the mint price, nothing would have been gained by the melters. Had the seignorage been less than the average degradation of the coin, or two per cent.; had it, for example, been only one per cent, all those coins whose value was not more than one per cent, degraded below their mint standard, might have been melted; but if the seignorage had exceeded two per cent, no coins whatever could have been melted until the degradation had increased to the same or a greater extent.

This reasoning proceeds throughout on the supposition that the coins on which the seignorage is charged are not issued in excess. If they were, the above mentioned consequences would not follow. Their too great multiplication might sink them even below their value as bullion, and occasion their immediate fusion or exportation. So long, however, as the state only coins the bullion brought to the mint by individuals, there is no risk of this happening. No one, we may depend upon it, will ever carry bullion to that establishment, and pay the expences of its coinage, unless the coins be thereby rendered so much more valuable than the unfashioned metal.

Should the government choose to buy bullion, and coin money on its own account, it might, by a little attention, easily avoid all over-issue. Suppose the seignorage were two per cent., then any given weight of coins of the mint standard ought, provided the currency be not redundant, to purchase two per cent, more than the same weight of bullion. So long, therefore, as this proportion is preserved between coined money and bullion, it shews that the proper supply of currency has been issued. If the value of the coins decline below this limit, too many of them must have got into circulation; and, if, on the contrary, their value increase, the supply is too limited, and an additional quantity may be advantageously issued.

It is easily seen, from the principles already established, that it is not necessary that the charge for seignorage should be limited to the mere expences of coinage. It may, without injury to any individual, be carried considerably farther. Provided the amount of the coins on which a seignorage is imposed, be limited to the amount that previously circulated in the country, its imposition, to whatever height it might be carried, would not affect their exchangeable value. The state having the exclusive privilege of coining, no additional supply of money could be brought to market. And supposing the business of the society to continue the same; that is, supposing the same quantity of commodities are brought to market, and exchanged for the same amount of coins of the same denomination, it is clear prices could not be in any way affected. Invariability of value is the great desideratum in money; and provided this be maintained, as it always may be, by properly limiting the quantity in circulation, it is of no consequence whether the weight of the coins be increased or diminished. A hat that had previously to the imposition of the seignorage sold for a sovereign would still fetch one. The sovereign, it is true, has been diminished in size; but as its value is increased in proportion to this diminution, and as small coins are equally well adapted to serve every purpose of a circulating medium as those that are larger, the society would not suffer any inconvenience from that circumstance. It is certain, indeed, that if the monopoly were not rigorously enforced, or if individuals were permitted to issue supplies of money from private mints, free from the charge of seignorage, the increase of quantity would speedily sink the value of the whole coins in circulation to a level with the cost of those produced on the lowest terms; so that the coins on which a high seignorage had been charged, would not be more valuable than those exempted from that charge. But, wherever the supply of money is limited, and competition excluded, this principle ceases to operate, and its value is then dependent upon the proportion which the total quantity in circulation bears to the total demand. This principle is farther elucidated in a very able article on seignorage, by Mr. Tooke, printed in the Appendix (p. 180) To the Lords' Report of 1819∙

It must not, however, be concealed, that if it were attempted to charge a very high seignorage, it would be extremely difficult to limit the supply of coins. The inducement to counterfeit money would, under such circumstances, be very greatly increased, while the chances of detection would be very much diminished. It would not then be necessary, in order to derive a profit from counterfeit coins, that they should be manufactured of a baser metal. The saving of a heavy charge on account of seignorage might of itself afford a sufficient profit; and this could be derived, though the metal contained in the forged coins were of the standard purity. But, though it might, for this reason, and most probably would, be quite impossible to [7:15:390] limit the supply of currency, and consequently to sustain its value, were an exorbitant seignorage charged, the same difficulty would not stand in the way of a moderate one. The nefarious business of counterfeiting could not be carried on did it not yield a sufficient premium to the forgers to indemnify them for the risks and odium to which they are exposed. A seignorage less than this would be no encouragement to the issue of counterfeit coins. And though it might be difficult to form any very precise estimate of what this premium might be, it is pretty certain it would not be under from four to five per cent.

It appears from an account inserted in the appendix to the Report drawn up by the Lords in 1819, that new gold coins, of the value of £74,501,586, had been issued by the mint between the lst January 1760, and the 13th April 1819· To this sum we have to add nearly fifty millions since issued, making in all an issue of about one hundred and twenty-four or one hundred and twenty-five millions of gold coins since the accession of George III. But the seignorage was remitted in the reign of Charles II.; and it appears from the accounts published by Mr. Ruding and others that £28,172,149 of new gold coins were issued in the period between the accession of James II. (1685) and the demise of George II.; so that, in all, upwards of one hundred and fifty-two millions of gold coins have been coined at the expence of the state, and issued since the remission of the seignorage. We shall be considerably within the mark, if we estimate the average annual expence attending this coinage at L.l 2,000,^[11. Lord Liverpool states, that the entire expences of the mint, from 1777 to 1803, amounted to L∙488,441, which gives an average expenditure of L.18,786 a-year. (Liverpool οη Coins, p. 1Õ6.) ] and, on this supposition, it will be found that the expence of the coinage of gold only has amounted, during the one hundred and fifty-two years which have elapsed since the accession of James II., to £1,824,000. But, if a low seignorage of no more than three or four per cent, had been charged on the gold coins, it would have produced four and a half or six millions; a sum which might have been collected without injury to any individual, and which, besides defraying the entire expences of the coinage, would have left a considerable surplus revenue.

In his evidence before the Lords’ Committee in 1819, Mr. Mushet stated, that, with the improved machinery now in use in the mint, gold coin could be manufactured for about 10s. per cent. (Minutes of Evidence, p. 207.) And the expence of the manufacture of the silver coin may, we believe, be taken at about three times as much, or one and a half per cent. In France the coinage of gold costs 0∙29 per cent., and silver l , 50 per cent.; in Russia the gold costs 0∙85, and the silver 2 ’ 95 per cent. (Storch, tom. vi. p. 74.)

The precise period when a seignorage began to be charged upon English silver coins has not been ascertained. It must, however, have been very early. Mr. Ruding mentions, that in a mint account of the 6th Henry III., one of the earliest he had met with, the profit on £3,898, 0s. 4d. of silver coined at Canterbury, is stated to be £97, 9s∙, being exactly 6d. a-pound, of which the king had £60, 18s. 3½d., and the bishop the residue. (Annals of the British Coinage, vol. i. p. 179, 4to. ed.) In the 28th Edward I. the seignorage amounted to Is. 2½d. per pound, 5½d. being allowed to the master of the mint, to indemnify him for the expences of coinage, and 9d. to the crown as its profit. Henry VI. increased the master’s allowance to 10d. and ls. 2d., and the king’s to ls. and2s. In the reign of Edward IV. the seignorage varied from 4s. 6d. to Is. 6d. It was reduced to Is. in the reign of Henry VII.; but was prodigiously augmented in the reigns of his successors, Henry VIII. and Edward VI., whose wildand arbitrary measures produced, as will be afterwards shewn, the greatest derangement of the currency. During the lengthened reign of Elizabeth, the seignorage varied from Is. 6d. to 2s. per pound; at which sum it continued, with very little variation, until the 18th of Charles II. (1666), when it was totally remitted.

From this period down to 1817, no seignorage was charged on the silver coin; but a new system was then adopted. Silver having been underrated in relation to gold in the mint proportion of the two metals fixed in 1718, heavy silver coins were withdrawn from circulation, and gold only being used in all the larger payments, it became, in effect, what silver had formerly been, the standard of the currency. The act 56th Geo. HL, regulating the present silver coinage, was framed not to interfere with this arrangement, but so as to render silver entirely subsidiary to gold. For this purpose it is made legal tender only to the extent of 40s.; and 66s. instead of 62s∙ are coined out of a pound of troy, the 4s. being retained as a seignorage, which, therefore, amounts to 6½⅜ per cent. The power to issue silver is vested exclusively in the hands of government; who have it, therefore, in their power to avoid throwing too much of it into circulation, and consequently to prevent its fusion, until the market price of silver shall have risen to above 5s. 6d. an ounce.

This arrangement was censured in the debates on the question of returning to cash payments in 1819- It was contended that the overvaluation of silver with respect to gold would render it the interest of every debtor to discharge his debts with silver, and that the gold coins would in consequence be driven from circulation, and exported to other countries. The result has shewn that this opinion was altogether erroneous. Debtors cannot discharge their debts by silver payments, for it is only legal tender to the extent of 40s.; and no creditor can be compelled, or would be disposed to take it in payment of a larger debt, except at its real value.^[12. Those who wish for a further elucidation of this subject, may refer to Air. Mushet’s evidence in the Appendix to the Lords' Report “ n n the Expediency of the Banks resuming Cash Payments," where it is discussed at great length, and in the most able manner. ]

In the 18th of Edward HL, the period when we begin to have authentic accounts of the gold coinage, a pound troy of gold bullion was coined into florins, of the value of L.15: Of this sum only L.l 3, 16s∙ 6d. were given to the person who brought the bullion to be coined, L.l, 3s. 6d. being retained as seignorage, of which 3s. 6d. went to the Master, and L.l, to the King: But it appears, from the mint indentures, that the seignorage on the coinage of nobles for the same year amounted to only 8s. 4d. And, from this remote period to the accession of the Stuarts, with the exception of the coins issued in the 4th and 5th Edward IV. and the 34th, 36th, and 37th Henry VIIL, the total charge of coining a pound weight of gold bullion seldom exceeded 7s. or 8s. money of the time. In the 2d James I., a pound weight of gold bullion was coined into L.40, 10s; a seignorage of L.l, 10s. being deducted, 6s. 5d. of which went to the Master, and L.l, 3s. 7d. to the Crown. The seignorage on gold was remitted at the same time (18th Charles II.) with the seignorage on silver, and has not since been revived.^[13. In the tables annexed to this article, the reader will find a detailed account of the amount of the seignorage and its fluctuations in different periods. ]

As the regulation of the seignorage depended entirely on the w ill of the sovereigns, we need not be surprised at the variations in its amount at different periods, or that it should have fluctuated according to their necessities and caprices. It was, indeed, hardly possible that it should have been otherwise. Our ancestors were totally ignorant of the prin [7:15:391] ciple, by a strict adherence to which the imposition of a seignorage can alone be rendered advantageous. They considered it as a tax which might be increased and diminished at pleasure. And, far from taking any steps to limit the quantity of coin in circulation, so as to maintain its value, they frequently granted, to corporate bodies, and even to individuals,^[14. Ruding’s Annals of the Coinage, vol. i∙ p. 185. When the right of seignorage was abolished, there was a pension, payable out of the profits derived from it, granted under the great seal, for twenty-one years, to Dame Barbara Villiers, which the legislature ordered to be made good out of the coinage duties imposed by that act. (See Ruding, in loco citato, and Leake’s Historical Account of English Money, 2d ed p. 356.) ] the privilege of issuing coins, not subjected to a seignorage. No wonder, therefore, that it should have been considered as a most unjust and oppressive tax, and that its abolition should have been regarded as a very advantageous measure.

Besides the revenue arising from the seignorage, our kings formerly derived a small revenue from the remedy or shere. It having been found impossible to coin money corresponding in every particular, of weight and purity, with a given standard, a small allowance is always made to the master of the mint, whose coins are held to be properly executed, provided their imperfections, whether on the one side or the other, do not exceed this allowance, or remedy. Its amount has varied very little since the reign of Edward HL; having, during this long period, generally been one-eighth part of a carat, or 30 grains of pure gold per pound of gold bullion, and two penny weight of pure silver per pound of standard silver bullion. By the law of 1816, the remedy for gold coins is fixed at 12 grains per lb. in the weight, and one-sixteenth part of a carat in the fineness. The remedy for silver is the same as before.

It does not appear that our princes derived any considerable advantage from the remedy previously to the reign of Elizabeth. But she, by reducing the master’s allowance for the expence of coinage from Is. 2d. to 8d. obliged him to come as near as possible to the lowest limit allowed by the remedy. Had the coins been delivered to those who brought bullion to the mint by τveight, the queen, it is plain, would have gained nothing by this device; but, in the latter part of her reign, and the first seventeen years of that of her successor, James I., they were delivered by tale, so that the crown saved, in this way, whatever additional sum it might otherwise have been necessary to pay the master for the expences of coinage. In the great recoinage in the reign of William III., the profit arising from the remedy amounted to only 8s. on every hundred pounds weight of bullion; and the coinage is now conducted with so much precision, and the coins issued so near to their just weight, that no revenue is derived from this source.

The continental princes have, we believe, without any exception, charged a seignorage on the coinage of money. In France, this duty was levied at a very early period. By an ordonnance of Pepin, dated in 755, a pound of silver bullion is ordered to be coined into twenty-two pieces, of which the master of the mint was to retain one, and the remaining twenty-one were to be delivered to the merchant bringing the bullion to the mint. (Le Blanc, p. 87.) There are no means of ascertaining the amount of the seignorage taken by the successors of Pepin, until the reign of Saint Louis (1226—1270), who coined the marc of silver into 58 sols, while he only delivered 54 sols, 7 deniers, to the merchant; at this period, therefore, the seignorage amounted to a sixteenth part of the marc, or to 6f τ per cent. It was subsequently increased or diminished without regard to any fixed principle. In the great recoinage in 1726, it amounted, on the gold coin, to 7 1 ⅝ per cent., and to 5 ® per cent, on silver. In 1729, the mint price, both of gold and silver, were augmented, and the seignorage on the former reduced to 5∣⅜ per cent., and on the latter to 4⅜ per cent. A farther reduction took place in 1755 and 1771, when the seignorage on gold was fixed at l τ L percent., and on silver at l½ξ r per cent. At this moment, the seignorage in France hardly covers the expence of coinage, being only about ⅜ per cent, on gold, and 1∣ per cent, on silver.^[15. Necker, Administration des Finances, (tom. iii. p. 8.)—Dr. Smith has stated (vol. ii. p. 438), on the authority of the “Dictionnaire des Mommies, par Abot de Bazinghen,” that the seignorage on French silver coins, in 1775, amounted to about eight per cent. The error of Bazinghen has been pointed out by Garnier, in his translation of the Wealth of Nations. ] Sect. IV.— Expence of a Currency consisting of the Precious Metals.

The imposition of a moderate seignorage has, however, but a very inconsiderable effect in reducing the expence of a metallic currency. This, which is much greater than is generally imagined, does not consist in the coinage, which is comparatively trifling, but in the great amount of gold and silver required for the purpose. If, for example, the currency of Great Britain consisted wholly of gold, it would amount to at least fifty millions of sovereigns; and if the customary rate of profit were six per cent., it would cost three millions a-year: For had this fifty millions not been employed as money, it would have been vested in branches of industry in which, besides affording employment to thousands of individuals, it would have yielded six per cent, or three millions a-year, of nett profit to its possessors. But this is not the only loss. The fifty millions would not merely be withheld from the great work of production, and the country deprived of the revenue derived from its employment, but it would be perpetually diminished. The wear and tear of the coins is by no means inconsiderable; and supposing the expences of the coinage were defrayed by a moderate seignorage, the deficiency in the weight of the old worn coins must, on their being called in to be recoined, be made up by the public. There is, besides, a constant loss from shipwrecks, fire, and other accidents. When due allowance is made for these causes of waste, it would not, perhaps, be too much to suppose, that a country , which had fifty millions of gold coins in circulation, would have annually to import the hundredth part of this sum, or half a million of coins to maintain its currencv at its proper level.

Thus it appears, that w ere the customary rate of profit in Great Britain six per cent., it would cost 3½ millions a-year to maintain fifty millions of gold coins in circulation. It is indeed true, that a reduction of the rate of profit would proportionally reduce the amount of this expence, though as the reduced expence would still bear the same proportion to the total income of the country that the higher expence did, the real cost of the currency would not be at all diminished. The case of France furnishes a still more striking example of the heavy charges attending the general use of a metallic currency. The amount of the gold and silver currency of that kingdom has been estimated by Necker at 2,200 millions of francs, and by Peuchet at 1,850 millions. (Statistique Elémentaire de la France, ρ. 473.) Now, supposing the lowest estimate to be the most correct, and taking the rate of profit at six per cent., this currency must cost France an hundred and eleven millions of francs a-year, exclusive of the wear and tear and loss of the coins, which being taken, as before, at the hundredth part of the entire mass, will make the whole annual expence amount to the sum of an hundred and twenty-two millions of francs, or to nearly five millions sterling. This heavy expence certainly forms a very material deduction from the advantages resulting from the use of a currency consisting entirely of the precious metals, and has doubtless been the chief [7:15:392] cause why all civilized and highly commercial countries have endeavoured to fabricate a portion of their money of less valuable materials. It has not, however, been the only cause. It is obvious, that were there nothing but coins in circulation, the conveyance of large sums from place to place to discharge accounts, would be a very laborious process; and that even small sums could not be conveyed without considerable difficulty. Of the substitutes calculated alike to save expence and to lessen the cost of carriage, paper is in every respect the most eligible, and has been by far the most generally adopted. By using it instead of gold, we substitute the cheapest in the place of the most expensive currency; and enable the society to exchange all the coins which the use of paper renders superfluous, for raw materials, or manufactured goods, by the use of which both its wealth and enjoyments are increased. It is also transferred with the utmost facility. Hence since the introduction of bills of exchange, most great commercial transactions have been adjusted by means of paper only; and has also been used to a very great extent in carrying on the ordinary business of society.

Sect. V.— Paper Money. Principle on which its Value is maintained.

In the earliest periods, subsequent to the invention of writing and paper, the pecuniary engagements of individuals would be committed to the latter. This gives security to the creditor, that he shall be able to claim the full amount of his debts, and to the debtor, that he shall not be liable to any overcharge; and avoids the differences which are sure to arise where the terms of contracts are not distinctly specified. But a very short time only would elapse before individuals, having written obligations from others, would begin to transfer them to their debtors; and after the advantages derivable from employing them in this way had been ascertained, it was an obvious source of emolument for persons in whose wealth and discretion the public had confidence to issue their obligations to pay certain sums, in such a form as might fit them for performing the functions of a circulating medium in the ordinary transactions of life. No one would refuse to accept as money the promissory note or obligation of an individual of large fortune, and of whose solvency no doubt could be entertained. But as full value must have been originally given for the promissory note, it is clear that whilst its continuance in circulation could be no loss to the public, it would be a very great source of profit to the issuer.

Suppose, for example, that a merchant issues a promissory note for L.l 0,000, he must, previously to putting it in circulation, either have received an equivalent sum of money, or of some sort of produce possessed of real value, or, which is by far the most common case, he must have advanced it to an individual who has given him security for its repayment with interest. In point of fact, therefore, the issuer has exchanged his promise to pay L.l 0,000 for the profits to be derived from the employment of a real capital of that amount; and as long as the promissory note, the intrinsic worth of which cannot well exceed a sixpence, remains in circulation, he will, supposing profits to be five per cent., receive from it a revenue of Lu500 a-year. It is on this principle that the business of banking is conducted. A banker could make no profit were he obliged to keep dead stock or bullion in his coffers, equal to the amount of his notes in circulation. But if he be in good credit, a fourth or a fifth part of this sum will perhaps be sufficient; and his profits, after the expenses of the establishment, and of the manufacture of his notes, are deducted, will be measured by the excess of the profit derived from his notes in circulation, over that which he might have realised by employing the stock kept in his coffers to meet the demands of the public. “A bank would never be established, if it obtained no other profits but those derived from the employment of its own capital: its real advantage commences only when it employs the capital of others.” (Proposals for an Economical and Secure Currency, p. 87.)

As no means have been devised to limit the supply of the promissory notes issued by private individuals, their value, it is plain, could not be maintained were the issuers to fall into discredit, or relieved from their promise to pay them. But it is otherwise with the promissory notes issued" by the state, or by a company acting under its control. The quantity of such notes may be effectually limited; and we have seen that, when this is the case, intrinsic worth is not necessary to a currency, and that, by properly regulating the supply of paper declared to be legal tender, its value may be sustained on a par with gold, or any other commodity. It was by acting on this principle of limitation, that the value of the paper of the bank of England was maintained in the interval between the passing of the restriction act in 1797, and the commencement of bullion payments in 1820. No rational explanation of this circumstance, so much at variance with all the old theories of paper money, can be deduced from any other principle. The fact of their being depreciated never creates any indisposition on the part of the public to apply for accommodation to a bank whose notes are legal tender. The presenter of a bill for discount is indifferent whether the notes given in exchange for it are pavable in specie or not. His object, in resorting to the bank, is to exchange his promissory note for money; that is, for paper that will be received in payment of his debts, or of whatever he may wish to purchase. It is, therefore, of no consequence to him, whether the issuers of paper, have, by issuing in excess depressed its value relatively to gold, or whether they have so restricted their issues as to sustain its value on a level with the value of that metal. These circumstances, it is true, affect the interests of all those classes whose incomes do not vary with the variations in the value of money; but, in as much as the prices of goods rise and fall with the increase or diminution of paper, merchants, who are the principal demanders of discounts, are comparatively but little affected by its fluctuations. The presenter of a bill for L.500 or L.l 000 to a bank, has received it. if it have arisen out of a real commercial transaction, in lieu of a certain quantity of goods, which, at the then value of money, were worth L.500 or L.1000; and it is this sum which, by presenting the bill to the bank, he wishes to obtain. If the value of money had been different, the price of the goods, and consequently the sum for which the bill was drawn, would also have been different. It is to this market value of money at the time that attention is exclusively paid in commercial transactions. When, in 1809, 1810, 1811, 1812, 1813, and 1814, Bank of England paper was depressed from excess from ten to twenty-five per cent, below the value of bullion, the circumstance of an act of Parliament having declared, that it should be paid in cash at the restoration of peace, had as little effect in raising its value, as its depreciation had in diminishing the applicants for discounts. The truth is, that individuals never resort to a bank for paper money, unless they have immediate occasion for it. As soon as it has been obtained, they throw it upon the market, for whatever it will bring; and as they purchased it on the same terms, (for it is seldom that the value of money is materially affected in the short interval between the time when a bill is discounted and becomes due,) they generally get as much for it, and perhaps more, than it cost. We shall immediately explain what constitutes the natural limit to the applications for discounts; but we have said enough to show, that it has nothing to do with the convertibility of notes into cash.

Those who have recourse to a bank to obtain discounts [7:15:393] of accommodation bills, consider like the presenters of real bills, only the present value of money. Accommodation bills are never discounted, excepting in the view of immediately employing the money, either in the purchase of commodities, or of labour, or in the payment of debts; and, whether one pound notes be of the value of 1 Os. or 20s. is obviously of no consequence; in as much as the amount of the bill presented for discount is regulated accordingly.

The circumstance that country bank notes cease to circulate as soon as any suspicion is entertained of the solvency of their issuers, is nowise inconsistent with this principle. Country bank notes are exchangeable, at the pleasure of the holder, for Bank of England notes; but from the restriction in 1797 down to 1820, the latter not being exchangeable for any thing else, constituted the real standard of value. Hence when a country bank lost credit, the circulation of its notes was stopped, from its being believed that it would be impossible to obtain Bank of England paper in their stead; or, in other words, that they would not exchange for that description of paper which constituted the real medium of exchange. But, it is impossible to imagine, that this paper should itself be affected by a want of credit. Every one knew that it had no intrinsic worth; and as already shown, its value was regulated, (and must, whenever it is not rendered exchangeable for a given quantity of some other commodity, continue to be exclusively regulated,) by the amount in circulation compared with the demand.

It appears, therefore, that if there were perfect security, that the power of issuing paper money would not be abused; that is, if there were perfect security for its being issued in such quantities, as to preserve its value relatively to the mass of circulating commodities nearly equal, the precious metals might be entirely dispensed with, not only as a circulating medium, but also as a standard to which to refer the value of paper.

Unfortunately, however, no such security can be given. This is a point, respecting which there can be no difference of opinion. We have it in our power to appeal to a widely extended and uniform course of experience; to the history of Great Britain, and of every other country in Europe, and to that of the United States; to show that no man, or set of men, have ever been invested with the power of making unrestricted issues of paper money without abusing it; or, which is the same thing, without issuing it in inordinate quantities. If the power to supply the state with paper money be vested in a private banking company, then to suppose that they should, by limiting their issues, endeavour constantly to sustain the value of paper, would be to suppose that they should be attentive only to the public interest, and neglect their own private interest. The re-enactment of the restriction act, would not have the least effect on the value of paper, provided its quantity were not at the same time increased. But who can doubt that, in such circumstances, it would be increased? Such a measure would enable the Bank of England to exchange bits of engraved paper, not worth perhaps five shillings a quire, for as many, or the value of as many hundreds of thousands of pounds. And is it to be supposed, that the directors and proprietors of the bank should not avail themselves of such an opportunity to amass wealth and riches? If government enable a private gentleman to exchange a bit of paper for an estate, will he be deterred from doing so by any considerations about its effect in sinking the value of the currency? In Loo Choo we might perhaps meet with such an individual, but if we expect to find him in Europe, we shall most likely be disappointed. Here we are much too eager in the pursuit of fortune to be at all influenced by such scruples. It is essential, therefore, that the issuers of paper money should be placed under some check or control; and the comparatively steady value of the precious metals, at once suggests that none can be so effectual as to lay them under the obligation of exchanging their notes, at the pleasure of the holder, for a given and unvarying quantity of gold or silver.

It has, however, been contended, that there is a material difference between paper issued by government in payment of its debts, and that issued by a private banking company in discount of good bills. In regard to the former, it is admitted on all hands that it may be issued in excess; but in regard to the latter, it has been strenuously urged, that “notes issued only in proportion to the demand, in exchange for good and convertible securities, payable at specific periods, cannot occasion any excess in the circulation, or any depreciation.” As all the arguments advanced by those who contended that the paper of Great Britain was not depreciated between 1797 and 1819, involve this principle, it may be worth while to examine it a little minutely.

In the first place, it may be observed, that the demand for discounts does not depend on the nature of the security required for their repayment, but on the rate of interest for which they may be obtained, compared with the ordinary rate of profit made by their employment. If an individual can borrow £10,000, £100,000, or any greater sum, at 4, 5, or 6 per cent., and if he can realise 7, 8, or 10 per cent, by its employment, it is evidently for his interest, and it would be for the interest of every other person similarly situated, to borrow to an unlimited extent. But a banking company, relieved of all obligation to pay its notes in ca*h, and not, of course, obliged to keep any unproductive stock or bullion in its coffers, would be able to issue its notes at the lowest possible rate of interest; and the demand for its paper would therefore be proportionally great.

“The interest of money,” says Mr. Ricardo, “is not regulated by the rate at which the bank will lend, whether it be 5, 4, or 3 per cent., but by the rate of profit which can be made by the employment of capital, and which is totally independent of the quantity or of the value of money. Whether the bank lent one million, ten millions, or a hundred millions, they would not permanently alter the market rate of interest; they would alter only the value of the money which they thus issued. In one case, ten or twenty times more money might be required to carry on the same business than what might be required in the other. The applications to the bank for money, then, depend on the comparison between the rate of profit that may be made by the employment of it, and the rate at which they are willing to lend it. If they charge less than the market rate of interest, there is no amount of money which they might not lend; if they charge more than that rate, none but prodigals and spendthrifts would be found to borrow of them. We accordingly find that when the market rate of interest exceeds the rate of five per cent., at which the bank uniformly lends, the discount office is besieged with applicants for money; and, on the contrary, when the market rate is even temporarily under five per cent., the clerks of that office have no employment.” (Principles of Political Economy, p. 511.)

From 1809 to 1815 inclusive, the period in which the value of our paper currency relatively to gold was lowest, the market rate of interest considerablv exceeded the rate' (five per cent.) at which the Bank of England and most or the country banks invariably lent. Although, therefore, the amount of paper currency had, in that interval, been very much increased, the applicants for fresh discounts continued as numerous as ever. And there seems no reason to doubt, had the directors not been apprehensive that, ultimately, they might have to pay their notes in specie, that the amount in circulation would have been very much increased; at least, such would certainly have been the case, had they acted to the full extent of their avowed opinion, that it was impossible to issue too much paper, or to reduce its value, by engrossing into the circulation such quantities as were issued in discount of good bills. The wants of commerce are altogether insatiable. Inconvertible paper money, provided [7:15:394] the rate of interest at which bills are discounted be less than the market rate, can never be too abundant. As long as this is the case, million after million may be thrown upon the market. The value of the currency may be so reduced as to require a one pound note to purchase a quartern loaf; but the circumstance of its value being diminished in proportion to the increase of its quantity, would render the demand for additional supplies as great as ever.

Were the Bank of England to discover a process whereby sovereigns could be manufactured with the same facility as notes, it could not be disputed that it would be in her power to depreciate the value of gold, by making large issues of what bad been produced at so very little cost. Now, in what respect would this fictitious case differ from the actual situation of the Bank, were the restriction act renewed and. made perpetual? The Bank would then be able, without check or control, to exchange her paper for landed property, manufactured goods, government securities, &c. But we have seen, that the value of this paper, like the value of gold, in the hypothetical case, depends entirely on the proportion which the supply bears to the demand; and, as the demand is not affected by an increase of quantity, for that increase, by diminishing its value, renders the larger quantity of as little efficacy as the smaller quantity, it is abundantly clear, that if the Bank lent at a sufficiently low rate of interest, there could be no limit to her issues.

On the whole, therefore, it is plain, whether the power of issuing paper be vested in the hands of a private banking company, or of government, that it must be placed under some efficient control, such as the obligation to pay in gold or silver. It is easy to discover the manner in which a check of this kind limits the issue of paper, and sustains its value. Whenever the Bank has issued so much paper as to sink its value relatively to bullion, its notes begin to return upon it, to have them exchanged for a higher value; and the Bank is, in consequence, obliged, to prevent the exhaustion of its coffers, to contract its issues, and raise its paper to a level with gold. An extremely small profit, or an extremely small depreciation of paper, as compared with gold or silver, is sufficient to make the holders of bank paper send it to be exchanged for those metals; and hence the value of bank notes convertible at pleasure into a given and unvarying quantity of gold or silver, can never differ considerably from its value. The issues of the Bank of England were for more than a century previously to 1797, limited in the manner now explained, and during that whole period they were hardly ever depreciated ½ per cent·, and never more than two per cent., and that but for a few days only.

But though it be thus necessary, in order to avoid all sudden and injurious fluctuations in the value of paper, that it should be made exchangeable at the pleasure of the holder for gold or silver, and it is not essential to this end that it should be made exchangeable for gold or silver coins. Previously to the resumption of specie payments by the Bank of England in 1821, she was obliged to give bars of assayed bullion in exchange for her notes, according to a plan suggested by the late Mr. Ricardo; and there can be no doubt that this obligation would have sustained the value of paper quite as effectually as it is sustained by the obligation to pay in coin of the legal weight and purity, at the same time that it would have saved the greater part of the heavy expense occasioned by the use of metallic money. But, how important soever, these were not the only considerations that had to be attended to. The discovery of means for the prevention, or at least diminution, of the forgery to which the substitution of notes in the place of guineas had given rise, was indispensably necessary to the maintenance of Mr. Ricardo’s plan; and notwithstanding all the efforts that have been made, this desideratum has not yet been supplied. Forgery in the larger description of notes, or in those for £5 and upwards, may with du¢ precaution be prevented from becoming injuriously prevalent. But low notes, or those of the value of £1 or £2, having to circulate amongst the labouring classes, and in immense numbers, present facilities for the issue of spurious paper, which it has been found impossible materially to diminish. Hence, in 1821, the plan of paying in bars of bullion was abandoned, and the‘Bank of England recommended paying in specie.^[16. It was intended to have given in this place some account of the Bank of England, and of the provincial banks; but as inquiries are at present (February 1837) in progress, which may throw considerable light on these establishments, and measures are believed to be in contemplation by which they may be materially affected, it has been judged better to postpone all notice of them to the article Paper Money. ] Sect. VI.— Whether Gold or Silver should be adopted as the Standard of the Currency, or whether it should consist of both.

As the value of gold and silver, or the cost of their production, is perpetually varying, not only relatively to other commodities, but also relatively to each other, it is impossible arbitrarily to fix their comparative value. Gold may now, or at any given period, be to silver as 14 or 15 is to 1; but w ere sovereigns and shillings coined in that proportion, the discovery of a gold or silver mine of more than the ordinary degree of productiveness, or the discovery of any abridged process, by which labour might be saved in the production of one of the metals, would derange this proportion. As soon, however, as the mint proportion between the different metals ceases to be the same with that which they bear to each other in the market, then it becomes Aie obvious interest of every debtor to pay his debts in the metal whose mint valuation is highest.

In 1718, in pursuance of the advice of Sir Isaac Newton, the value of the guinea was reduced from twenty-one shillings and sixpence to twenty-one shillings; the value of fine gold to fine silver was consequently rated, in our mint, at 1 5 t ⅞ 8 b ⅞ to 1, and both metals were declared to be legal tender in that proportion. But, notwithstanding this reduction, the guinea was still rated at a higher value, compared with silver, than it ought to have been. This higher value was estimated, by Lord Liverpool, to have been, at the time, equal to fourpence on the guinea, or to l⅜f per cent.; and as the value of silver compared with gold, continued to increase during the greater part of last century, it afterwards became considerably greater. The over-valuation of gold, by making it for the interest of every one to pay his debts in it rather than in silver, made gold be used in all considerable payments, and was the cause that, during the long period from 1718 down to the late recoinage, no silver coins of the legal weight and fineness would remain in circulation. The silver currency consisted entirely of light, worn coins; and when, in 1797, the further coinage of silver was forbidden, the silver currency was very much debased. But, as it existed only in a limited quantity, it did not, according to the principle already explained, sink in its current value. Though debased, it was still the interest of debtors to pay in gold, If, indeed, the quantity of debased silver had been very great, or if the mint had issued such debased pieces, it might have been the interest of debtors to pay in such debased money. But its quantity being limited, it sustained its value; and gold was practically the real standard of the currency.

The act of 1774, declaring that silver should not be legal tender for any debt exceeding £25, unless by weight according to the mint standard·, had not, as has been supposed, any effect in causing the general employment of gold as money, in preference to silver. For, to use the words of Mr. Ricardo, “this law did not prevent any debtor from paying any debt, however large its amount, in silver currency fresh [7:15:395] from the mint. That the debtor did not pay in this metal was not a matter of chance, nor a matter of compulsion, but wholly the effect of choice. It did not suit him to take silver to the mint, but it did suit him to take gold hither. It is probable that if the quantity of this debased silver in circulation had been enormously great, and also a legal tender, that a guinea would have been, as in the reign of William III., worth thirty shillings; but it would have been the debased shilling that had fallen in value, and not the guinea that had risen.” (Principles of Political Economy, p. 520).

In France a different valuation of the precious metalshad a different effect. The louis d’or, which, previously to the recoinage of 1785, was rated in the mint valuation at 24 livres, was really worth 25 livres 10 sols. Those, therefore, who chose to discharge the obligations they had contracted, by payments of gold rather than of silver, plainly lost 1 Iiv. 10 sols on every sum of 24 livres. In consequence very few such payments were made, gold was nearly banished from circulation, and the currency of France became almost exclusively silver. (Say, tom. i. p. 393.) In 1785, a sixteenth part was deducted from the weight of the louis d’or, and since that period the value of the precious metals, as fixed in the French mint, has more nearly corresponded with the proportion which they bear to each other in the market. Indeed, it was stated, in evidence before the Committee of the House of Commons in 1819 {Report, p. 192), that the difference between the mint and market proportions of gold and silver at Paris in 1817 and 1818, had not exceeded from one-tenth to one-fourth per cent. There is, however, no reason to presume that this coincidence, which must have been in a great degree accidental, can be maintained under any arbitrary system. To ensure the indifferent use of gold and silver coins in countries where they are both legal tender, their mint values would require to be every now and then adjusted, so as to correspond with their real values. But as this would obviously be productive of much trouble and inconvenience, the preferable plan undoubtedly is to make only one metal legal tender, and to allow the worth of the other to be adjusted by the competition of the sellers and buyers.

The absurdity of employing two metals as legal tender, or as a standard of value, was unanswerably demonstrated by Mr. Locke and Mr. Hams, and has been noticed by every subsequent writer; but so slow is the progress of improvement, that it was not till the year 1816 that it was enacted that gold only should be legal tender for all sums exceeding 40s.

Whether, however, gold should have been adopted as the standard of exchangeable value, in preference to silver, is a question not so easy of solution, and on which there is a great diversity of opinion. Mr. Locke, Mr. Harris, and Mr. Ricardo, are of opinion that silver is better fitted than gold for a standard; whilst Dr. Smith, although he has not explicitly expressed himself, appears to think that gold ought to be adopted in preference. This opinion has been very ably supported by Lord Liverpool, in his valuable work On the Coins of the Realm ; and his reasonings having received the approbation of parliament, and gold having been made legal tender, all attempts to alter this arrangement ought to be opposed.

Whether gold or silver be adopted as the standard of the currency, does not affect its total cost or value; for, the quantity of metal employed as money, or the quantity of metal for which paper is the substitute, is always inversely as the value or cost of such metal. When gold is the standard, fourteen or fifteen times less of it than of silver is required; or, which is the same thing, if the denomination of a pound be given to any specific weight of gold or silver, fifteen times more of such silver pounds will be required to serve as currency, fifteen to one being about the proportion which gold bears in value to silver. Hence the expence of a gold or silver currency is identical. Gold being too valuable in proportion to its bulk, to be coined into pieces of the value of a shilling or a sixpence, the subsidiary currency necessary in small payments, should be overvalued, and issued only in limited quantities, as is the case with the present silver coinage.

Were a seignorage charged on the gold coins, paper, it is obvious, might be depreciated to the full extent of that seignorage, before it would be the interest of the holders to demand coin for the purpose of exportation, and consequently before the check of specie payments could begin to operate. But, even with such a seignorage, the risk of paper being depreciated, might be obviated, by making it obligatory on the Bank to pay their notes, either in bullion, at the mint price of L.3, 17s. 10½d. an ounce, or coin, at the pleasure of the holder. A regulation of this kind could not be justly considered as imposing any hardship on the Bank; for it is plain, that no bullion would be demanded from her, except when, by the issue of too much paper, its value had been sunk below the standard.

Sect. VII— Standard of Money. Degradation of the Standard in Italy, France, Great Britain, and other countries. Pernicious effects of this degradation.

By the standard of money is meant the degree of the purity or fineness of the metal of which coins are made, and the quantity or weight of such metal contained in these coins. Twelve ounces of the metal, of which standard English silver coins are made, contains 11 ounces 2 dwts. fine, and 18 dwts. alloy; and a pound troy of this standard silver, or pound sterling, contains 66 shillings, or fg parts of ⅜⅛ of a pound troy of fine silver, that is, 1614gg grains.
From the 43 of Elizabeth down to 1816, when the act 56th Geo. III. cap. 68, imposing a seignorage of about six per cent, on the silver coin, was passed, the pound weight of standard silver bullion was coined into 62 shillings. All the English silver coins have been coined out of silver of 11 oz. 2 dwts. fine, from the Conquest to this moment, excepting for a period of sixteen years, from 34th Henry VIII. to the 2d Elizabeth.

The purity of gold is not estimated either in Great Britain, or in most other European countries, by the weights commonly in use, but by an Abyssinian weight, called a carati ^[17. The carat is a bean, the fruit of an Abyssinian tree, called Kuara. This bean, from the time of its being gathered, varies very little in its weight, and seems to have been in the earliest ages, a weight for gold in Africa. In India it is used as a weight for diamonds, &c. (Bruce’s Travels, vol. v. p. 66) ] . The carats are subdivided into four parts, called grains, and these again into quarters; so that a carat grain, with respect to the common divisions of a pound troy, is equivalent to 2½ penny-weights. Gold of the highest degree of fineness, or pure, is said to be 24 carats fine. When gold coins were first made at the English mint, the standard of the gold put in them was of 23 carats 3½ grains fine, and ½ grain of alloy; and so it continued without any variation to the 18th Henry VIII., when a new standard of gold of 22 carats fine, and two carats alloy was introduced. The first of these was called the old standard; the second the new standard, or crown gold, because crowns, or pieces of the value of five shillings, were first coined of this new standard. Henry VIII. made his gold coins of both these standards under different denominations; and this practice was continued by his successors until theyear1633. From that period to the present, gold coins have been invariably made of the new standard, or crown gold; although some of the [7:15:396] coins made of the old standard previously to 1633 continued to circulate till 1732, when they were forbidden to be any longer current. (Liverpool on Coms, p. 27.)

The standard of our present gold coins is, therefore, eleven parts of fine gold, and one part of alloy. The pound troy of such gold is divided into 4689 /129 sovereigns, each of which ought, consequently, when fresh from the mint, to weigh ξgτ¾¾ of twelve ounces, or five dwts. 3⅞J⅜ grains of standard gold, or four dwts. 1718 ∕ 11214 grains of pure gold.

The alloy in coins is reckoned of no value. It is allowed, in order to save the trouble and expence that would be incurred in refining the metals, so as to bring them to the highest degree of purity; and because, when its quantity is small, it has a tendency to render the coins harder, and less liable to be worn or rubbed. If the quantity of alloy were considerable, it would lessen the splendour and the ductility of the metals, and would add too much to the weight of the coins.

Having thus ascertained what the standard of money really is, we shall now proceed to examine the effects produced by variations in the standard. This is, both in a practical and historical point of view, a very important inquiry.

To make any direct alteration in the terms of the contracts entered into between individuals, would be too barefaced and tyrannical an interference with the rights of property, to be tolerated. Those, therefore, who endeavour to enrich one part of society, at the expence of another, find it necessary to act with great caution and reserve, and to substitute artifice for open and avowed injustice. Instead of directly altering the stipulations in contracts, they have ingeniously bethought themselves of altering the standard, by which these stipulations were adjusted. They have not said, in so many words, that ten or twenty per cent, should be added to or deducted from the mutual debts and obligations of society, but they have, nevertheless, effected this by making a proportional change in the value of the currency. Men, in their bargains do not, as has been already seen, stipulate for signs or measures of value, but for real equivalents. Money is not merely the standard by a comparison with which the value of commodities is ascertained; but it is also the equivalent, by the delivery of a fixed amount of which the stipulations in most contracts and engagements may be discharged. It is plain, therefore, that no variation can take place in its value, without affecting all these stipulations. Every addition to the value of money makes a corresponding addition to the debts of the state, and of every individual; and every diminution of its value makes a corresponding diminution of those debts. Suppose that, owing to an increase in the difficulty of producing gold and silver, or in the quantity of bullion contained in coins of the same denomination, the value of money is raised twenty per cent., it is plain that this will add twenty per cent, to the various sums which one part of society owes to another. Though the nominal rent of the farmer, for example, continue stationary, his real rent is increased. He continues to pay the same number of pounds or livres as formerly; but these have become more valuable, and require to obtain them the sacrifice of a fifth part more corn, labour, or other things the value of which has remained stationary. On the other hand, had the value of money fallen twenty per cent., the advantage, it is plain, would have been all on the side of the farmer, who would have been entitled to a discharge from his landlord, when he had paid him only four-fifths of the rent really bargained for.

But, notwithstanding it is thus obviously necessary, in order to prevent a pernicious subversion of private fortunes, and the falsifying of all precedent contracts, that the standard of money, when once fixed, should be maintained inviolate, there is nothing that has been so frequently changed. We do not here allude to variations affecting the value of the bullion of which the standard is composed, and against which it is impossible to guard, but to variations in the quantity of bullion contained in the same nominal sum of money. In almost every country, debtors have been enriched at the expence of their creditors. The necessities, or the extravagance of governments, have forced them to borrow; and to relieve themselves of their incumbrances, they have almost universally had recourse to the disgraceful expedient of degrading the coin; that is, of cheating those who had lent them money, and of enabling every other debtor in their dominions to do the same.

The ignorance of the public in remote ages greatly facilitated this species of fraud. Had the names of the coins been changed when the quantity of metal contained in them was diminished, there would have been no room for misapprehension. But, though the weight of the coins was undergoing perpetual, and their þurity occasional reductions, their ancient denominations were almost uniformly preserved: and those people who saw the same names still remaining after the substance was diminished; who saw coins of a certain weight and fineness circulate under the names of florins, livres, and pounds, and who saw them continue to circulate as such, after both their weight and the degree of their fineness had been lessened, began to think that they derived their value more from the stamp affixed to them, by authority of government, than from the quantity of the precious metals they contained. This was long a very prevalent opinion. But the rise of prices which invariably followed every reduction of the standard, and the derangement which was thereby occasioned in every pecuniary transaction, undeceived the public, and taught them, though it may not yet have taught their rulers, the expediency of preserving the standard of money inviolate.

Before proceeding to notice the changes made in the currency of this and other countries, it may be proper to observe, that the standard is generally debased in one or other of the undermentioned ways.

First, by simply altering the denominations of the coins, without making any alteration in their weight or purity. Thus, suppose sixpence, or as much silver as there is in a sixpence, were called a shilling, then a shilling would be two shillings, and twenty of these shillings, or ten of our present shillings, would constitute a pound sterling. This would be a reduction of fifty per cent, in the standard.

Secondly, the standard may be reduced, by continuing to issue coins of the same weight, but making them baser, or with less pure metal and more alloy.

Thirdly, it may be reduced, by making the coins of the same degree of purity, but of diminished weight, or with less pure metal; or it may be reduced partly by one of these methods, and partly by another.

The first of these methods of degrading the standard was recommended by Mr. Lowndes in 1695, and if injustice is to be done, it is certainly, on the whole, the least mischievous mode by which it can be perpetrated. It saves all the trouble and expence of a recoinage; but as it renders the fraud too obvious, it has been but seldom resorted to. In inquiries of this kind, however, it is rarely necessary to investigate the manner in which the standard has been degraded. And by its reduction or degradation, we uniformly mean, unless when the contrary is distinctly expressed, a diminution of the quantity of pure metal contained in coins of the same denomination without regard to the particular mode in which such diminution may have been effected.

In conformity with what has been observed in the first section of this article, relative to the universality of the ancient practice of weighing the precious metals in every exchange, it is found that the coins of most countries have the same names as the weights commonly used in them. To [7:15:397] these weights the coins at first exactly correspond. Thus the talent was a weight used in the earliest periods*by the Greeks, the as or pondo by the Romans, the livre by the French, and the pound by the English, Scotch, &c.; and the coins originally in use in Greece, in Italy, in France, and in England, received the same denominations, and weighed precisely a talent, a pondo, a livre, and a pound. The standard has not, however, been preserved inviolate, either in ancient or in modern times. But the limits within which an article of this kind must be confined, prevents us from tracing the various changes in the money of this and other countries, with the minuteness which the importance of the subject deserves, and obliges us to notice only those which were most prominent.^[18. ' It is impossible in this place to enter into any discussion relative to the value of Grecian money. It is, however, a subject of no little interest and curiosity. Μ. Rome de l ’ Isle, in his Traité de Métrologie, published in 1789, has given an account of the weight and fineness of an immense number of Attic drachmas and tetradrachmas. But he does not seem to have been more fortunate than his predecessors in deducing the value of the talent from the weight of the drachmas. The errors and absurdities into which modern critics and commentators have fallen, in estimating the value of the sums mentioned in ancient authors, is indeed astonishing. They are ably pointed out in a short essay, De la Monnaie des Peuples Anciens, in one of the supplemental volumes added by Gamier to his translation of the Wealth of Nations. ] Roman Money. —We learn from Pliny, that the first Roman coinage took place in the reign of Servius Tullius, that is, according to the common chronology, about 550 years before Christ. The as, or pondo, of this early period, contained a Roman pound of copper, the metal then exclusively used in the Roman coinage, and was divided into twelve parts or unciae. If we may rely on Pliny, this simple and natural system was maintained until 250 years before our era, or until the first Punic war, when the revenues of the state being insufficient, government attempted to supply the deficiency, by reducing the weight of the as from twelve to two ounces. But it is extremely improbable that a government, which had maintained its standard inviolate for 300 years, should have commenced the work of degradation, by at once reducing it to a sixth part of its former amount; and it is equally improbable that so sudden and excessive a reduction should have been made in the value of the current money of the state, and, consequently, in the debts due by individuals to each other, without occasioning the most violent commotions. Nothing, however, is said in any ancient writer, to entitle us to infer that such commotions actually took place; and we, therefore, concur with those who think that the weight of the as had been previously reduced, and that its diminution, which, it is most probable, would be gradual and progressive, had merely been carried to the extent mentioned by Pliny during the first Punic war. In the second Punic war, or 215 years before Christ, a further degradation took place, and the weight of the as was reduced from two ounces to one ounce. And by the Papyrian law, supposed to have passed when Papyrius Turdus was tribune of the people, or 175 years before Christ, the weight of the as was reduced to half an ounce, or to ^ 1 5 th of its ancient weight, at which it continued till Pliny’s time and long afterwards.^[19. “Servius rex primus signavit aes. Antea rudi usos Romae Remeus tradit. Signatum est nota pecudum unde et pecunia appellata. . . . Argentum signatum est anno urbis DLXXX V· Q. Fabio Cos. quinque annos ante primum bellum Punicum. Et placuit denarius pro X. libris seris, quinarius pro quinque, sestertium pro dipondio ac semisse. Librae autem pondus aeris imminutum bello Punicoprimo cum impensis resp. non sufficeret, constitutumque ut asses sextentario pondere ferirentur. Ita quinque partes factae lucri, dissolutumque aes alienum. . . . Postea, Annibale urgente, Q. Fabio Maximo Dictatore, asses unciales facti: placuitque denarium xvi. assibus permutari, quinarium octonis, sestertium quaternis. Ita resp. dimidium lucrata est. Mox lege Papyria semunciales asses facti.” (Plinii, Hist. Nat-lib. xxxiij, cap. 3. Lugd. Bat. 1669.) ]

The denarius, the principal silver coin in use amongst the Romans, for a period of600 years, was coined five years before the first Punic war, and was, as its name imports, rated in the mint valuation at ten asses. Mr. Greaves, whose dissertation on the denarius has been deservedly eulogised by Gibbon, (Decline and Fall, vol. iii. p. 89), shews that the denarius weighed at first only one-seventh part of a Roman ounce,^[20. This is. indeed, decisively proved by a passage in Celsus: “Sed et antea sciri volo in uncia pondus denariorum esse septem.” (Ceis, lib. XV, cap. 17.) ] which, if Pliny’s account of the period when the weight of the as was first reduced be correct, would give the value of silver to copper in the Roman mint as 840 to 1, which Mr. Greaves very truly calls a “most unadvised proportion.” But if we suppose, with Mr. Pinkerton, (Essay on Medals, vol. i. p. 132, edit. 1789), that when the denarius was first issued, the as only weighed three ounces, the proportion of silver to copper w ould be as 252 to 1, a proportion which, when the as was soon afterwards reduced to two ounces, would be as 168 to 1, or about a third more than in the British mint. When, in the second Punic war, the as was reduced from two ounces to one, the denarius was rated at sixteen asses.

During his stay in Italy, Mr. Greaves weighed many of the consular denarii, that is, as he explains himself, of the denarii that were struck after the second Punic war, and previously to the government of the Caesars; and he found, by frequent and exact trials, the best and most perfect of them that weighed 62 grains English troy weight. (Greaves’ Works, vol. i. p. 262). Now, as the English shilling (new coinage) contains very nearly 87½ grains standard silver, this would give 8½d. for the value of the consular denarius. We should, however, fall into the grossest mistakes, if we indiscriminately converted the sums mentioned in the Latin authors by this or any other fixed proportion. It is not enough to determine the real value of a coin, to know its weight; the degree of its purity or the fineness of the metal of which it is made, must also be known. But Mr. Greaves did not assay any of the denarii weighed by him. And though it were true, as most probably it is, that, from the first coinage of silver in the 485th year of the city to the reign of Augustus, the weight of the denarius remained constant at ⅜th part of a Roman ounce, or about 62 grains; and that, from the reign of Augustus to that of Vespasian, it only declined in weight from ½th to ½th of an ounce;^[21. Greaves, vol i. p. 331. Gibbon’s Miscellaneous Works, vol. v. p 71. ] still it is abundantly certain that its real value had been reduced to a much greater extent. As to this fact the authority of Pliny is decisive; for he expressly states, that Livius Drusns, who was tribune of the people in the 662d year of the city, or 177 years after the first coinage of silver, debased its purity, by alloying it with ½th part of copper, (lib. xxxiij, cap. 3, previously quoted). And in a subsequent chapter (the ninth) of the same book, he informs us that Antony the triumvir mixed iron with the silver of the denarius; and that, to counteract these abuses, a law was afterwards made providing for the assay of the denarii. Some idea of the extent to which the purity of the coins had been debased, and of the disorder which had in consequence been occasioned, may be formed from the circumstance, also mentioned by Pliny, of statues being every where erected in honour of Marius Gratidianus, by whom the law for the assay had been proposed. But this law was not long respected; and many imperial denarii are now in existence, consisting of mere plated copper. (Bazinghen, Dictionnaire des Monnaies Accra. ii. p. 64.)

Gold was first coined at Rome sixty-two years after silver, in the 547th year of the city, and 204 years before [7:15:398] Christ. The aureus originally weighed 5 ½ 5 th part of the pondo or Roman pound; but by successive reductions its weight was reduced, in the reign of Constantine, to only 7 1 2 d part of a pound. The purity, however, as well as the weight of the aureus was diminished. Under Alexander Severus it was alloyed with 1 /5 th part of silver. We learn from Dion Cassius, contemporary with Severus, that the aureus was rated at twenty-five denarii, a proportion which Mr. Pinkerton thinks was always maintained under the emperors. (Essay on Medals, vol. i. p. 148.)

The want of attention to this progressive degradation has led the translators of, and commentators on, ancient writers, to the most extraordinary conclusions. The sestertius, or money unit of the Romans, was precisely the fourth part of a denarius. “Nostri autem,” says Vitruvius, (lib. iii. cap. 1,) “primo decem fecerunt antiquum numerum, et in denario denos aereos asses constituerunt, et ea re compositio nummi ad hodiernum diem denarii nomen retinet; etiamque quartam ejus partem, quod efficiebatur ex duobus assibus et tertio semisse sestertium nominaverunt.” When, therefore, the denarius was worth 8½d∙, the sestertius must have been worth 2½d. But the sestertius being thus plainly a multiple of, and bearing a fixed and determined proportion to the denarius, and consequently to the as, the aureus, and the other coins generally in use, it must have partaken of all their fluctuations. When they were reduced, the sestertius must have been likewise reduced; for if it had not been so reduced, or, if the quantity of degraded denarii and aurei contained in a given sum of sestertii had been increased in proportion to their degradation, nothing, it is obvious, would have been gained by falsifying the standard. But as we know that on one occasion the republic got rid of half of its debts, respublica dimidium lucrata est, by simply reducing the standard of the as, it is certain that the value of the sestertius must have fallen in the same proportion, just as in England we should reduce the pound sterling, our money unit, by reducing the shillings of which it is made up.^[22. Writers on andient coins, with the exception of Mr. Pinkerton, agree in supposing the sestertius to have been originally, and to have always continued to be, a silver coin. Mr. Pinkerton has, however, denied this opinion, and, on the authority of the following passage of Pliny, contends that the sestertius was at the time when Pliny wrote, whatever it might have been before, a brass coin. “Summa gloria aeris nunc in Marianum conversa, quod et Cordubense dicitur-Hoc a Liviano cadmiam maxime sorbet, et orichalci bonitatem imitatur in sestertiis, dupondiariisque, Cyprio suo assibus contentis.” (Lib. xxxxiv. cap. 2.) That is, literally, “The greatest glory of brass is now due to the Marian, also called that of Cordova. This, after the Livian, absorbs the greatest quantity of lapis calaminaris, and imitates the goodness of orichalcum (yellow brass) in our sestertii and dupondiarii, the asses being contented with the Cyprian (brass).” [Pliny had previously observed,-that the Cyprian was the least valuable brass]. This passage is, we think, decisive in favour of Mr. Pinkerton’s hypothesis. But, in the absence of positive testimony, the small value of the sestertius might be relied on as a sufficient proof that it could not be silver. When the denarius weighed 62 grains, the sestertius must have weighed 15⅜, and been worth 2⅛d.; but a coin of so small a size as to be scarcely equal to one-third part of one of our sixpences, would have been extremely apt to be lost; and could not have been struck by the rude methods used in the Roman mint with any thing approaching to even tolerable precision. It is, therefore, much more reasonable to suppose that it was of brass. ]

But though it had not been possible to produce such clear and explicit evidence of the continued degradation of the Roman money, the obvious absurdity of many of the calculations which have been framed, on the supposition of its remaining stationary at the rates fixed in the earlier ages of the commonwealth, would have sufficiently established the fact of its degradation. Dr. Arbuthnot’s Tables of Ancient Coins, which, for nearly a century, have been considered in England, and in the greater part of the Continent, as of the highest authority, are constructed on the hypothesis that the denarii weighed by Mr. Greaves were of equal purity with English standard silver, and that no subsequent diminution had been made either in their weight or fineness. The conclusions derived from such data are precisely such as we should arrive at, if, in estimating the value of a French livre previously to the Revolution, we took for granted that it weighed a pound of pure silver, as in the reign of Charlemagne. Amongst many other things quite as extraordinary, we learn from Arbuthnot, that Julius Caesar, when he set out for Spain, after his praetorship, was £2,018,229 sterling worse than nothing; that Augustus received, in legacies from his friends, £32,291,666; that the estate of Pallas, a freedman of Crassus, was worth £2,421,875, and, which is still better, that he received £121,093 as a reward for his virtues and frugality; that Aesop, the tragedian, had a dish served up at his table which cost £4,843; that Vitellius spent £7,265,625 in twelve months, in eating and drinking; and that Vespasian, at his accession to the empire, declared that an annual revenue of £322,916,666 would be necessary to keep the state machine in motion. It is astonishing that none of our scholars or commentators seem ever to have been struck with the palpable extravagance of such conclusions, which, to use the words of Garnier, “ont mis l’Histoire Ancienne, sous le rapport des valeurs, au même degré de vraisemblance que les contes de Mille et un Nuits.” They have, webelieve, without any exception, slavishly copied the errors of Arbuthnot; and to this hour the computations in the books on Roman antiquities used in our schools and universities are all borrowed from his work. It should be remembered, that from the greater poverty of the mines of the old world, and the comparatively small progress made by the ancients in the art of mining, the value of gold and silver was much greater in ancient times than at present. But, without taking this circumstance into account, the computations referred to are too obviously erroneous to deserve the smallest attention. Vespasian, Ave believe, would have been very well satisfied with a revenue of twenty millions; and there are good grounds for supposing that the Roman revenue, when at the highest, never amounted to so large a sum. (Gibbon, vol. i. p. 260.)

French Money —From about the year 800, in the reign of Charlemagne, to the year 1103, in that of Philip I., the French livre, or money unit, contained exactly a pound weight or twelve ounces (poids de marc) of pure silver. It was divided into twenty sols, each of which, of course, weighed ^ 1 θth part of a pound. This ancient standard was first violated by Philip I., who diminished considerably the quantity of pure silver contained in the sols. The example once set, was so well followed up, that in 1180 the livre was reduced to less than a fourth part of its original weight of pure silver. In almost every succeeding reign there was a fresh diminution. “La monnoye,” says Le Blanc, “qui est la plus précieuse et la plus importante des mesures, a changé en France presque aussi souvent que nos habits ont changé de mode.” And to such an extent had the process of degradation been carried, that, at the epoch of the Revolution, the livre did not contain a seventy-eighth part of the silver contained in the livre of Charlemagne. It would then have required 7,885 livres really to extinguish a debt of 100 livres contracted in the ninth or tenth centuries; and an individual who, in that remote period, had an annual income of 1,000 livres, was as rich, in respect to money, as those who, at the Revolution, enjoyed a revenue of 78,850 livres. (Paucton, Traite des Mesures, Poids, &c., p. 693.)

We subjoin an abridged table, calculated by Μ. Denis, exhibiting the average value of the French livre in different periods, from the year 800 to the Revolution :—
[7:15:399]
[table]

Those who wish for a detailed account of the various changes in the weight and purity of the French coins, may besides the excellent work of Le Blanc, consult the elaborate and very complete tables at page 905 of the Traité des Mesures of Paucton, and at page 197 of the Essqî sur les Monnaies of Ðupré de St. Maur.

It was not to be expected, that degradations originating in the necessities, the ignorance, and the rapacity of a long series of arbitrary princes, should be made according to any fixed principle. They were sometimes the result of an increase in the denomination of the coins, but more frequently of a diminution of the purity of the metal of which they were struck. A degradation of this kind was not so easily detected; and, in order to render its discovery still mere difficult, Philip of Valois, John, and some other kings, obliged the officers of the mint to swear to conceal the fraud, and to endeavour to make the merchants believe that the coins were of full value. (Le Blanc, p. 212.) Sometimes one species of money was reduced, without any alteration being made in the others. No sooner, however, had the people in their dealings manifested a preference, as they uniformly did, for the money which had not been reduced, than its circulation was forbidden, or its value brought down to die same level with the rest. (Id. Introduction, p. 20.) bi order to render the subject more obscure, and the better to conceal their incessant frauds, individuals were at one time compelled to reckon exclusively by livres and sols, at other times by crowns or ecus; and not unfrequently they were obliged to refer in computing to coins which were neither livres, sols, nor crowns, but some multiple or fractional part thereof. The injurious effects of these constant fluctuations in the value of money are forcibly depicted by the French historians; and so insupportable did they become, that in the fourteenth and fifteenth centuries, several cities and provinces were glad to purchase the precarious and little respected privilege of having coins of a fixed standard, by submitting to the imposition of heavy taxes (Le Blanc, p. 93.)

In the duchy of Normandy, when it was governed by the English monarchs, there was a tax upon hearths paid every three years, called monetagium, in return for which the sovereign engaged not to debase his coins. This tax was in troduced into England by our early kings of the Norman race; but Henry I. in the first year of his reign, was induced to abandon it, and it has not since been revived. (Liverpool o?i Coins, p. 107.)

According to the present regulations of the French mint, the coins contain 1 ⅞ths of pure metal, and r 1 σ of alloy. The franc, which is equal to 1 livre, 0 sols, 3 deniers, weighs exactly 5 grammes, or 77∙2205 English Troy grains. The gold piece of 20 francs weighs 102 - 9β English grains. (Peuchet, Statistique Elémentaire de la France, p. 538.)

English Money In England, at the epoch of the Nor man conquest, the silver, or money pound, weighed exactly twelve ounces Tower weight. It was divided into twenty shillings, and each shilling into twelve pence, or sterlings. This system of coinage, which is in every respect the same with that established in France by Charlemagne, had been introduced into England previously to the invasion of William the Conqueror, and was continued, without any alteration, till the year 1300, in the 28th Edward I. when it was for the first time violated, and the value of the pound sterling degraded to the extent of ∣-≡∙ per cent. But, the really pernicious effect of this degradation did not consist so much in the trifling extent to which it was carried by Edward, as in the example which it afforded to his less scrupulous successors, by whom the standard was gradually debased, until, in 1601, in the reign of Queen Elizabeth, 62s. were coined out of a. pound weight of silver. This was a reduction of above two-thirds in the standard; so that all the stipulations in contracts, entered into in the reigns immediately subsequent to the Conquest, might, in 1601, and since, be legally discharged by the payment of less than a third part of the sums really bargained for. And yet the standard has been less degraded in England than in any other country.

The tables annexed to this article give an ample account of these degradations, and also give the weight of the gold coins, and the proportional value of gold to silver, estimated both by the mint regulations, and by the quantity of fine gold and fine silver contained in the different coins.

Scotch Money —In the same manner as the English had derived their system of coinage from the French, the Scotch derived theirs from the English. From 1296 to [7:15:400] 1355, the coins of both divisions of the island were of the same size and purity. But, at the last mentioned period, it was attempted to fill up the void occasioned by the remittance of the ransom of David II. to England, by degrading the coins. Till then the money of Scotland had been current in England, upon the same footing as the money of that country; and the preservation of this equality is assigned by Edward III.as a reason for his degrading the English coins. But this equilibrium was soon afterwards destroyed. In the first year of Robert III. (1390), Scotch coin only passed for half its nominal value in England; and, in 1393, Richard II. ordered that its currency, as money, should entirely cease, and that its value should be made to depend on the weight of the genuine metal contained in it. “To close this point at once,” says Mr. Pinkerton, “the Scottish money, equal in value to the English till 1355, sunk by degrees, reign after reign, owing to succeeding public calamities, and the consequent impoverishment of the kingdom, till, in 1600, it was only a twelfth part of the value of English money of the same denomination, and remained at that point till the union of the kingdoms cancelled the Scottish coinage.”— (Essay on Medals, vol. ii. p. 99∙)

The tables at the end of this article exhibit the successive degradations both of the Scotch silver and gold coins.

At the Union, in 1707, it was ordered that all the silver coins current in Scotland, foreign as well as domestic, except English coins of full weight, should be brought to the Bank of Scotland, to be taken to the mint to be recoined. In compliance with this order, there were brought in,

Of foreign silver money, (Sterling), £132,080 17 9 Milled Scottish coins, . . . 96,856 13 0

Coins struck by hammer, . . 142,180 0 0

English milled coin, . . . 40,000 0 0

Total, £411,117 10 9

Mr. Ruddiman conjectures, apparently with considerable probability, that the value of the Scotch gold coins, and of the silver coins not brought in, amounted to about as much more. Much suspicion was entertained of the measure of a recoinage; and that large proportion of the people who were hostile to the Union, and did not believe that it would be permanent, brought very little money to the bank. A few only of the hoarded coins have been preserved, the far greater part having either been melted by the goldsmiths, or exported to other countries. (Preface to Anderson’s Diplomata, p. 176.)

Irish Money. —The gold and silver coins of Great Britain and Ireland are now the same, and have been so for a considerable period. The rate, however, at which these coins used to circulate in Ireland, or their nominal value as money of account, was 8½ per cent, higher than in Great Britain. This difference of valuation, though attended with considerable inconvenience in adjusting the money transactions between the two countries, subsisted from 1689 till 1825 when it was put an end to. For an account of the various species of metallic money which have at different times been current in Ireland, we must refer our readers to Mr. Simons’ Essay on Irish Coins; ^[23. Originally printed at Dublin in 1749, in 4to, and reprinted with some additons in 1810. ] a work pronounced by Mr. Ruding to be “the most valuable of all the publications on the coinage of any part of the united empire.” (Annals of the Coinage, Preface, vol. i. p. 11.)

Money of Germany, Spain, &c —A similar process of degradation had been universally carried on. “In many parts of Germany, the florin, which is still the integer, or money of account of those countries, was originally a gold coin, of the value of about 10s. of our present money (old coinage.) It is now become a silver coin, of the value of only 20d.; and its present value, therefore, is only equal to a sixth part of what it was formerly. In Spain, the maravedi, which was in its origin a Moorish coin, and is still the money of account of that kingdom, was in ancient times most frequently made of gold. Le Blanc observes, that, in 1220, the maravedi weighed 84 grains of gold, equal in value to about 14s. (old coinage) of our present money. But this maravedi, though its value is not quite the same in all the provinces of Spain, is now become a small copper coin, equal in general to only ½b¾ of an English penny! In Portugal, the re, or reis, is become of no greater value than 3 ⅜ 7 i of an English penny; it is so small, that in estimating its value in other coins, it is reckoned by hundreds and thousands. The itioeda, or moidore, is equal to 4800 reis; and this little coin has now, in fact, no existence but in name. Such has been the fate of all these coins, and such is the present state of their depreciation.” (Liverpool on Coins, p∙ 111.)

Russian Money —The following, according to Μ. Storch, are the fluctuations in the weight and value of the rouble, or money unit of Russia, since 1700.
[table]

The principle of degradation has not, however, been uniformly acted upon. The quantity of bullion contained in coins of the same denomination has sometimes, though rarely, been increased, and creditors enriched at the expence of their debtors. This method of swindling his subjects is said to have been first practised by the profligate Heliogabalus. The Roman citizens being bound to pay into the imperial treasury a certain number of pieces of gold, or αurei, the emperor, whose vices have become proverbial, to increase his means of dissipation, without appearing to add to the weight of the taxes, increased the quantity of metal contained in the aureus ; and thus obtained, by a fradulent trick, what he might not have obtained by a fair and open proceeding.^[24. Lamp Vita Alex. Severi, cap. 39.—Perhaps Heliogabalus took the hint from Licinius, a freedman of Julius Caesar, who, in his government of the Gauls under Augustus, divided the year into fourteen months instead of twelve, because the Gauls paid a certain monthly tribute. Dion Cassius, lib. 72. ] In France, the value of the coins has been frequently raised. During the early part of the reign of Philip le Bel, who ascended the throne in 1285, the value of the coin had been reduced to such an extent as to occasion the most violent complaints on the part of the clergy and landholders, and generally of all that portion of the public whose incomes were not increased proportionably to the reduction in the value of money. To appease this discontent, and in compliance with an injunction of the pope, the king at length consented to issue new coins, of the same denomination with those previously current, but which contained about three times the quantity of silver. This, however, was merely shifting an oppressive burden from the shoulders of one class to those of another, less able to bear it. The degraded money having been in circulation for about sixteen years, by far the largest pro [7:15:401] portion of the existing contracts must have been adjusted with reference to it. No wonder, therefore, that debtors should have felt indignant at the shameful act of injustice done them by this enhancement of the value of money, and have refused to make good their engagements, otherwise than in money of the value of that which had been current when they were entered into. The labouring class, to whom every sudden change in the value of money is injurious, having joined the debtors in their opposition, they broke out into open rebellion. « The people,” says Le Blanc, “being reduced to despair, and having no longer any thing to care for, lost the respect due to the edict of his Majesty; —they pillaged the house of the master of the mint, who was believed to have been the chief adviser of the measure, besieged the temple, in which the king lodged, and did all that an infuriated populace is capable of doing.” (Traité Historique des Monnayes de France, p. 190.) The sedition was ultimately suppressed; but it is not mentioned whether any abatement were made, by authority, from the claims of the creditors, in the contracts entered into when the light money was in circulation. It seems probable, however, from what is elsewhere mentioned by Le Blanc (Introduction, p. 30,) that such was really the case.

The history of the French coinage affords several instances similar to the very remarkable one we have now brought under the notice of our readers; but, in England, the new coinage in the last year of the reign of Edward VI. is the only instance in which the value of money has been augmented by the direct interference of government. Previously to the accession of Henry VIII., the pound of standard silver bullion, containing 11 oz. 2 dwts. of pure silver, and 13 dwts. of alloy, was coined into thirty-seven shillings and sixpence. But Henry not only increased the number of shillings coined out of a pound weight of silver, but also debased its purity. The degradation was increased under his son and successor, Edward VI., in the fifth year of whose reign, seventy-two shillings were coined out of a pound weight of bullion; but as this bullion contained only three ounces of pure silver to nine ounces alloy, twenty of these shillings were only equal to 4s. 7⅞d. of nur present money, including the seignorage. (Folkes’s Table of English Coins, p. 34.) It appears from the proclamations issued at the time, and foom other authentic documents, that this excessive reduction of the value of silver money had been productive of the greatest confusion. A maximum was set on the price of corn and other necessaries; and letters were sent to the gentlemen of the different counties, desiring them to punish those who refused to carry their grain to market. But it was soon found to be quite impossible to remedy these disorders otherwise than by withdrawing the base money from circulation. This was accordingly resolved upon; and, in 1552, new coins were issued, the .silver of which was of the old standard of purity, and which, though less valuable than those in circulation, during the early part of the reign of Henry VIII., were above four times the value of a large proportion of the coins of the same denomination that had been in circulation for some years before.

It is certain, however, that such a rise in the value of money could not have taken place without occasioning the most violent commotions, had all the coins previously in circulation been debased. Equal injustice, it must be remembered, is always done to the poorest, and not least numerous class of society, by increasing the value of money, that is done to the wealthier classes by depressing it. But, though government had been disposed to sanction so enormous an invasion of the right of property, it is altogether impossible that the country could have submitted to have had 400 or 450 per cent, added to its taxes and other public burdens, by a legerdemain trick of this kind, or that individuals would have consented to pay so much more than they had originally bargained for. Instead of deserving praise for accomplishing such a measure, Edward VI., who began the reformation of the coins, and Elizabeth, by whom it was completed, would have justly forfeited the esteem of their subjects, and lost all their popularity. The truth is, however, that little or no change had been made, during all this period, in the value of the gold coins; and there is, besides, abundance of evidence to show, that many of the old silver coins had remained in circulation. Now, as there is no mention made of the issue of the new coins having been attended with any inconvenience, it is nearly certain, as Mr. Harris has remarked, that, during the period of the debasement of the standard, individuals had regulated their contracts chiefly with reference to the gold or old silver coins; or, which is the same thing, that “they had endeavoured, as well as they could, to keep by the standard, as it had been fixed in the preceding times” (Harris on Coins, part ii. p. 3.)

We have been thus particular in examining this measure, because it has been much referred to. It is plain, however, that it can give no support to the arguments of those who appeal to it as affording a striking proof of the benefits which they affirm must always result from restoring a debased or degraded currency to its original purity or weight. Invariability of value is the great desideratum in a currency. To elevate the standard after it has been for a considerable period depressed, is really not a measure of justice, but the giving a new directiori to injustice. It vitiates and falsifies the provisions in one set of contracts, in order properly to adjust those in some other set.

This, however, as already remarked, is the only instance in which the government of England has ever interfered directly to enhance the value of money. In every other case, where they have tampered with the standard, it has been to lower its value, or, which comes to the same thing, to reduce their own debts and those of their subjects.

It is unnecessary to enumerate in detail the various bad consequences that must have resulted from these successive changes in the standard of value. But, it deserves to be remarked, that an arbitraryreduction of the standard does not afford any real relief to the governments by whom it is practised. Their debts are, it is true, reduced proportionally to the reduction in the value of the currency, but their revenues are, at the same time, reduced in the same proportion. A piece of money that has been degraded will not exchange for the same quantity of commodities that it previously did. To whatever extent the standard may be reduced, prices are very soon raised to the same extent. If the degradation be 10 per cent., government, as well as every one else, will, henceforth, be compelled to pay L.110 for commodities previously obtainable for L.100. Hence to bring the same real value into the coffers of the treasury, it is necessary that taxation should be increased whenever the standard is diminished; a measure always odious, and sometimes impracticable.

But a diminution of revenue is not the only bad effect which governments experience from reducing the standard of the currency. A state which has degraded its money, and cheated its creditors, is unable to borrow again on the same favourable terms as if it had acted with good faith. We cannot expect to enjoy the reputation of honesty, at the same time that we are openly pocketing the booty earned by duplicity and fraud. Those who lend money to knaves always stipulate for a proportionally high rate of interest. They must not only obtain as much as may be obtained from the most secure investments, but they must also obtain an additional rate or premium, to cover the risk they run in transacting with those who have given proofs of bad faith, and on whose promises no reliance can be placed. A degradation of the standard of value is, therefore, of all others, the most wretched resource of a bankrupt government[7:15:402]. It will never, indeed, be resorted to, except by those who are alike unprincipled and ignorant. “It occasions,” says Dr. Smith, “a general and most pernicious subversion of the fortunes of private people; enriching, in most cases, the idle and profuse debtor at the expence of the frugal and industrious creditor; and transporting a great part of the national capital from the hands which were likely to increase and improve it, to those which are likely to dissipate and destroy it. When it becomes necessary for a state to declare itself bankrupt, in the same manner as when it becomes necessary for an individual to do so, a fair, open, and avowed bankruptcy, is always the measure which is both least dishonourable to the debtor, and least hurtful to the creditor. The honour of a state is surely very poorly provided for, when, in order to cover the disgrace of a real bankruptcy, it has recourse to a juggling trick of this kind, ι so easily seen through, and at the same time so utterly pernicious.”— (Wealth of Nations, vol. iv. p. 42.)

Some of the bad consequences resulting from a change in the value of money might, indeed, be obviated, by enacting, that the stipulations in all preceding contracts should be made good, not according to the present value of money, but to its value at the time when they were entered into. This principle, which is conformable to the just maxim of the civil law (Valor monetae considerandus atque inspiciendus est, a tempore contractus, non autem a tempore solutionis) was acted upon, to a certain extent, at least, by the kings of France, during the middle ages. Ordonnances of Philip le Bel, Philip of Valois, and Charles VI., issued subsequently to their having increased the value of money, or, as the French historians term it, returned from the foible to the forte monnoie, are still extant, in which it is ordered, that all previous debts and contracts should be settled by reference to the previous standard. But though the same reason existed, it does not appear that any such ordonnances were ever issued when the value of money was degraded. It is obvious, indeed, that no government could derive any advantage whatever from reducing the value of money, were it to order, as it is in justice bound to do, that all existing contracts should be adjusted by the old standard. Such a measure would reduce the revenue without reducing the incumbrances of the state; whilst, by establishing a new standard of value, and unsettling all the notions of the public, it would open a door for the grossest abuses, and be productive of infinite confusion and disorder in the dealings of individuals.

The odium and positive disadvantage attending the degradation of metallic money, appear to have at length induced most governments to abstain from it. But they have only renounced one mode of playing at fast and loose with the property of their subjects, to adopt another and a still more pernicious one. The injustice which was formerly done by diminishing the quantity of bullion contained in the coins of different countries, is now perpetrated with greater ease, and to a still more ruinous extent, by the depreciation of their paper currency.^[25. In the last volume of the Cours d Economic Politique of Μ. Storch, there is a very instructive account of the paper money of the different continental states. We can confidently recommend it as containing much useful information. ]

In the long period from 1601 to 1697, no change was made in the standard of money in this country. A project for enfeebling the standard had indeed been entertained, both in 1626 and 1695; but, in the former instance, it was quashed by the celebrated speech addressed by Sir Robert Cotton to the Lords of the Privy Council, and in the latter by the opposition of Mr. Montague, then Chancellor of the Exchequer, in the House of Commons, and by the impression made by the writings of Mr. Locke, by whom the injustice of the scheme was admirably exposed, out of doors. It was reserved for Mr. Pitt to set aside a standard which had been preserved inviolate for nearly two centuries. The Order in Council of the 25th February 1797, and the acts of Parliament by which it was followed up, effected a total change in our ancient monetary system; and, instead of the old standard, gave us the self interested views and opinions of twenty-four irresponsible individuals. The circulation of Bank of England paper was secured, by its being exclusively issued in payment of the interest of the public debt, and by its also being received as cash in all payments into the exchequer; but no attempt was made to sustain the value of this paper on a par with the value of gold or silver. Full power was given to the directors of the Bank to raise or depress the value of money, as their interest or caprice might suggest. They were enabled to exchange unlimited quantities of scraps of engraved paper, of the intrinsic worth, perhaps, of 5s. a quire, for as many, or the value of as many, hundreds of thousands of pounds. And, in such circumstances, our only wonder is, not that paper money became depreciated, but that its value was not more reduced, and that a still greater quantity of bank-notes were not thrust into circulation.

For the first three or four years after the restriction, the Directors, unaware, perhaps, of the nature of the immense power placed in their hands, seem to have regulated their issues nearly on the same principles that had regulated them, 1 while they were obliged to pay in coin. It appears from i the Tables of the Price of Bullion, published by order of the House of Commons, that until 1801, bank-notes were on a par with gold. In 1801 and 1802, however, they were at a discount of from 8½ to 7⅜ per cent.; but they again recovered their value; and from 1803 to 1809, both inclusive, they were only at a discount of £2, 13s. 2d. per cent. But in 1809 and 1810, the Directorsappear to have totally lost sight of every principle by which their issues had previously been governed. The average amount of bank-notes in circulation, which had never exceeded 17½ millions, nor fallen short of 16½ millions, in any one year, from 1802 to 1808, both inclusive, was in 1809 raised to £18,927,833; and,in 1810, to £22,541,523. The issues of country bank paper were increased in a still greater proportion; and, as there was no corresponding increase in the business of the country, the discount on bank-notes rose from £2, 13s. 2d., in 1809, to £13, 9s. 6d. per cent, in 1810. The recommendation to return to cash payments, contained in the Report of the Bullion Committee, presented to the House of Commons in 1810, appears to have given a slight check to the issues of the Bank. All apprehensions from this quarter were, however, speedily dissipated; for in May 1811, when guineas were notoriously bought at a premium, and banknotes were at an open discount, as compared with gold bullion, of upwards of ten per cent., the House of Commons not only 7 refused to fix any certain period for reverting to cash payments, but actually voted a resolution, declaring that the promissory notes of the Bank of England had hitherto been, and were then, held to be, in public estimation, equivalent to the legal coin of the realm.

This memorable resolution; a resolution which took for granted that a part was equal to a whole; that £90 and £100 were the same thing; relieved the Bank from all urn easiness respecting the interference of Parliament, and tempted the Directors to increase the amount of paper in circulation. The consequence was, that in 1812, it was at an average discount of 20^; in 1813, of 23; and, in 1814, of 25 per cent. This was the maximum of depreciation. The importation of foreign corn, subsequent to the opening of the Dutch ports in 1814, having occasioned a great decline of the price of the principal article of agricultural produce, produced an unprecedented degree of distress, first among the farmers, and latterly among the country 7 bankers. It [7:15:403] is estimated that, in 1814, 1815 and 1816, no fewer than 240 private banking companies either became altogether bankrupt, or, at least, stopped payment; and the reduction that was thus occasioned in the quantity of bank-notes in circulation, raised their value so rapidly, that, in October 1816, the discount was reduced to L.l, 8s. 7d. per cent. In 1817 and 1818, the average discount on bank paper, as compared with gold, did not exceed L.2, 13s. 2d. per cent. In the early part of 1819, it rose to about six per cent., but it very soondeclined; and in 1820andl821paperwasnearlyon a level with gold. (See Table No. V.annexed to this article.)

These fluctuations were exceedingly injurious. From 1809 to 1815, the creditors of every antecedent contract, land-holders whose estates had been let on lease, stock-holders, and annuitants of every description—all, in short, who could not raise the nominal amount of their claims or of their incomes proportionally to the fall in the real value of money, were to this extent losers. The injustice that would have been done to the creditors of the state and of individuals, who had made their loans in gold, or paper equivalent to gold, by raising the denomination of the coin twenty-five per cent., however gross and palpable, would not have been greater than was actually done them in 1814, by compelling them to receive payment of their just debts in paper depreciated to that extent. Circumstances which could neither be controlled by the Bank of England nor the government, put an end, as has been seen, to this system. But we suffered much, and perhaps are still suffering somewhat from the sacrifices imposed by the rise in the value of money.

And yet, strange to say, there is a considerable party amongst us who, are even now, (1837) at the end of eighteen or twenty years, clamouring for a fresh reduction of the standard. It is no doubt true, that after a currency has been for a considerable perio.d depreciated, equal injustice is done by again raising its value, as was done by first depressing it. There is good reason, however, to doubt, whether the depreciation from 1809 to 1815 (for the depreciation of 2½ per cent, during the seven preceding years is too inconsiderable to be taken into account) extended over a sufficiently lengthened period to have warranted the legislature in departing from the old standard. But, without giving any opinion on this point, which is confessedly one of considerable difficulty, it is sufficient to remark, that the value of the currency was raised, independently altogether of the interference of government. The destruction of country bank paper, occasioned by the renewed intercourse with the continent, and the consequent introduction of cheap foreign com, raised the value of paper, in October 1816, to within 1∣ per cent, of par. Now, as the act 59 Geo. III. was not passed until 1819, and as the currency had not been depreciated in the interim, we confess our inability to discover the grounds on which it is affirmed to have been the cause of that rise in the value of money which took place three years before it was in existence. The proceedings in 1819 did not really add three per cent.^[26. At the period when Sir Robert Peel’s bill was passed, bullion was at L∙4 an ounce; consequently, the depreciation was only L∙2, 13s. 2d. per cent. ] to the value of bank paper, nor were they intended to raise it. Their great object was to shut the door against a new depreciation, and to prevent paper, which had for three years been nearly on a level with gold, being again degraded. By maintaining the old standard, or, which is the same thing, by maintaining the currency at a value nearly corresponding to that to which it had attained in 1816, 1817, and 1818, Parliament certainly gave permanence to the injury which the rise in the value of money had occasioned to the debtors in all the contracts entered into between 1810 and 1815; but if, instead of maintaining this old standard, they had raised the mint price of bullion to its market price in 1814, they would have done an equal injury to the far more numerous body of creditors, in all the contracts entered into previously to 1810, and in the three years subsequent to autumn 1816.

Under these circumstances, it was impossible to adopt any measure capable of giving general satisfaction to those whose interests were so widely different; and against which many plausible, and even forcible objections, might not have been stated. We are firmly persuaded, however, that the legislature followed that course which was, on the whole, the wisest, and most advantageous. It must be remembered, that much of that inconvenience and distress, which always result from every sudden rise in the value of money, had been got over in 1817 and 1818. The rents of such farms as had been let during the depreciation had been very generally reduced, a vast number of annuity bonds had been cancelled, and prices and wages had begun to accommodate themselves to the new scale of value. Sir Robert Peel’s bill gave stability to arrangements which had been brought about by the natural course of events; and, by fixing the standard at its former limit, secured us, as long at least as we have good sense and honesty to maintain it inviolate, against the risk of future derangement and fluctuation.

But, even if it could be shewn that the 59 Geo. III. was inexpedient at the time when it was passed, that would add nothing to the plea of those who are now contending for its repeal. All the objections which it was possible to make to the degradation of the standard in 1819, must apply with a thousand times the force to every scheme for degrading it in 1837; while, on the other hand, all the arguments that could have been urged in favour of the measure at the former period are now quite worthless. The restored standard has been maintained for eighteen years: and ninety-nine out of every hundred of the existing contracts have been entered into with reference to it. To tamper with it now would be the extreme of madness. We should again witness the most pernicious subversion of private fortunes. Debtors would be enriched at the expence of their creditors; the ignorant and unwary would become the prey of the cunning and the crafty; and capitalists would be eager to transfer their stock from a country where it was impossible to lend it, except at the risk of getting it repaid in a depreciated currency. “Whatever, therefore,” to avail ourselves of the just and forcible expressions of Mr. Harris, “may be the fate of future times, and whatever the exigency of affairs may require, it is to be hoped that that most awkward, clandestine, and most direful method, of cancelling debts by debasing the standard of money, will be the last that shall be thought of.”— (On Money and Coins, part ii. p. 108.) [7:15:404] TABLES RELATIVE TO THE MONEY OF GREAT BRITAIN AND OTHER COUNTRIES.

No. I.

English Monev .-—Account of the English silver and gold coins; shewing their value ; the seignorage or profit upon t e coinage, and theprice paid, to the public by the mint, for the pound troy of standard gold and silver, from the Conquest to the year 1816. (This and the next table, No. 11., are taken from Part II. of Essays on Money, Exchanges, and Political Economy, by Henry James.)
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[7:15:405]

No. II.

English Money. — Account of the quantity of fine silver coined into 20.y. or the pound sterling ; the quantity of standard silver, οf∖∖oz.2 drvts. fine, and 18 dwts. alloy, contained in 2Oi. or the pound sterling·, and the quantity of standard silver which was delivered to the mint, by the public, for 2(L. of silver money, in the different reigns, from the time of Edward I. to the reign of George III. A similar account with respect to gold. And an account of the proportionate value of fine gold to fine silver, according to the number of grains contained in the coins ; and the proportionate value of fine gold to fine silver, according to the price paid by the mint to the public. Calculated in grains and 1000 parts troy-weight.
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[7:15:406]

No. HI— Scots Money — Account of the Number of Pounds, Shillings, and Pennies Scots, which hove been coined out of One Pound Weight of Silver, at different times ; with the degree of Purity of such Silver, or its Fineness, from the gear 1107 to the year 1601. (From Cardonnell’s Numismata Scotiae, p. 24.)
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*''°' — Scots Money. — Account of the Number of Pounds, Shillings, and Pennies Scots, which have been coined out 0 J Onx Pound Weight ofGold ; with the degree of their Purity, and theproportionthat the Goldboretothe Silver. (Ib p.⅛5.)
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θl V∙— English Papek Money. — Account of the Average Market Price of Eullion in every year, from 1800 to 1821, (taken from paperslaid before the House of Commons^, of the average value per cent, of the Paper Currency, estimated J ∣ om the marked price of Gold for the same period, and of the average depreciation of the Paper Currency.
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[7:15:407]

Νo VI.—Gold Coins of Different Countries.— A Table containing the Assays, Weights, and Values of the principal Gold Coins of all Countries, computed according to the Mint Price of Gold in England, and from Assays made both at London and Paris, which have been found to verify each other. ^[31. The London Assays in this Table have been made by Robert Bingley, Esq., the King’s Assay Master of the Mint, and those at Paris by Pierre Frederic Bonneville, Essayeur du Commerce, as published in his elaborate work on the coins of all nations. Specimens of all the foreign coins brought to London for commercial purposes have been supplied for this Table from the Bullion Office, Bank of England, by order of the Bank Directors, and have been selected by John Humble, Esq., the chief of that office, who also examined the Tables in their progress. It may likewise be added, that the Mint Reports of these commercial coins are chiefly from average assays; and that all the computations have been carefully verified by different calculators. (Note by Dr. Kelly to the second edition of the Cambist, published in 1821.) ]

N.B. The Publishers of this Work have purchased, at a very considerable expense, the right to publish this Table fiom the Proprietors of the Second Edition of Hr. Kelly’s Cambist, where it originally appeared.
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[7:15:408]
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[7:15:409]

No. VII—Silver Coins of different Countries. —A Table containing the Assays, Weights, and Values of the principal Silver Coins of all Countries, computed at the rate of 5s. 2d. per Ounce Standard, from Assays made both at the London and Paris Mints.
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[7:15:410]
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[7:15:411]
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[7:15:412]
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No. VIII.— Account of the Relative value of Gold and Silver in the principal Trading Places of the World, computed from the proportional Quantity of Pure Metal, in their principal Coins, and the legal or current Price of those Coins respectively. Given in by Dr. Kelly to the Committee of the House of Lords, appointed, 1819, to inquire into the Expediency of the Bank’s resinning Cash Payments.
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[7:15:413]