Royal Academy of Sciences, to know whether it was possible to give to coined metals a monetary value and an invariable fineness always equivalent to their intrinsic value. Five academicians," who were named commissioners for this purpose, demonstrated by different experiences, that it was not possible to fix with strict accuracy the relation of two representative and intrinsic values, both because it is impossible to determine the quantity of alloy to be added to the

precious metals for the purpose of giving the coin

that resistance and incorruptibility which form one of its essential properties, and because it is extremely difficult to render perfectly homogeneous a mixture of metals which prevents the precise quantity of each being ascertained, as the alteration which the action of the fire may produce upon them cannot be foreseen.t This defect, peculiar to the converting of gold and silver into money, was, however, neither the most disagreeable nor the most prejudicial to the general circulation of commodities. An onlightened govern1ment might wish to make it disappear, and to give its coin the highest attainable degree of perfection: but this praiseworthy attempt could not remedy the original defect inherent in metallic money; that is, it could not confer upon gold and silver coin a positive and absolute exchangeable value, when that value is and can be but relative to the demand for coin and to the quantity in circulation. It is this defect which

+ Borde, Condorcet, La Grange, Lavoisier, and Tillet. + Histoire de l'Académie des Sciences, année 1788.


has given rise to the frequent alterations of the monetary system, to the numerous errors with which these alterations have been attended, and the countless systems invented to correct or prevent them. The first difficulty on this subject is to know what is meant by money, what is its nature, and wherein it consists. Several writers, and among them the celebrated Montesquieu, consider money as an ideal and arbitrary sign of value; and it will easily be credited that a doctrine, so favourable to the supreme authority, was immediately adopted by all governments. They have alternately raised or sunk the nominal value of money according to their wants and temporary interests; and what is not less strange is, that when this injury was done to public and private property, governments were ignorant of the nature and extent of the evil which they brought upon individuals and mations. The most intelligent men of all nations have been obliged to devote their studies to elucidate this important part of the science; and it is now demonstrated that the value of money can only be raised or sunk in three different ways: Either by altering its fineness and standard; Or by diminishing its weight; Or by giving it a value superior to the exchangeable value of the metals of which it is composed. When governments alter the fineness or standard of money, and yet retain its nominal value; if the alteration amounts to 1-20th, the state loses 1-20th of what is due to it from abroad; or, if the state is

indebted to foreign countries, it pays 1-20th more, - - *

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because the foreigner is paid in merchandize, and gets 1-20th more than he would have got had not the standard of money been altered. Foreigners even do not confine themselves to this benefit; they introduce counterfeit money into the country, and gain the difference between the nominal value of the new and the real value of the ancient coin. The advantages which foreigners derive from the altered standard of money, influence the exchange, turn it against the state, and in a short time exhaust the country of its wealth. An alteration in the weight of coin, without meddling with its standard and its nominal value, is liable to less inconveniencies, because the nation immediately perceives this alteration, and guards against it by raising the price of the produce of labour. But this raising of prices in proportion to the diminution in the weight of money, does not either prevent or stop the evil. The heavy coin is exported or melted ; the active debts which the state has outstanding abroad, are reduced by the whole amount of this diminution in the weight of the coin ; which reduction occasions incalculable losses in trade. Finally, the raising the value of money without altering either its standard or its weight, furnishes foreigners with the means of liquidating their debts with a smaller quantity of the precious metals, or getting paid for what is due to them by requiring a more considerable value; of purchasing the national produce cheaper, and selling their own at the same price as before; of introducing counterfeit money into the state, and of profiting by the difference

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between this counterfeit coin and the real price of the precious metals. - This occasions the same disadvantages in the exchange, which have been observed with regard to the alteration of the fineness or standard of money. Independently of the losses which the alteration of money brings upon nations in their commercial dealings with other nations, its effects are not less disastrous in their interior, civil, and domestic concerns. 1. It causes money to be hoarded, which obstructs payments, multiplies failures, impairs credit, diminishes and interrupts labour, reduces the labourers to misery, and occasions universal despair. 2. It alters the price of wages and of personal services, and the stipulations of contracts, deprives labourers, servants, pensioners, and creditors, of part of what is due to them, encourages bad faith, and inflicts a fatal blow to morals. 3. It deprives the sovereign of part of his revenue, forces him to disastrous measures, exposes the state and the subjects to violent commotions, and carries disorder and confusion into every department of civil society. Not only ought money not to undergo any alteration in its standard or fineness, or in its weight and exchangeable value ; but if it be composed of different metals, the proportion of their exchangeable value must also be strictly preserved; so that if the exchangeable value of gold is to that of silver as one to fifteen, that proportion must be accurately observed between the two metals; else the coin, the exchangeable value of which is superior to its nominal value, would


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immediately be exported or melted, whilst that of which the exchangeable value is inferior to its nomimal value, would occasion an importation of counterfeit coin, which would bring a double loss upon the state and injure internal circulation. Lastly, the coin of a country ought not only to preserve the proportion of its exchangeable value ; that proportion ought also to be observed in the fractions of coin, else the nation is again exposed to have its over-heavy fractional pieces of coin exported or melted, and the lighter ones counterfeited. These inconveniencies of the monetary system, which have been so well developed by celebrated writers,” overturned the opinion which had at first been formed of money, and it was no longer considered as an ideal and arbitrary sign of value. It was supposed that the share which money has in the interchange of commodities consists in fixing the value of each produce. Accordingly, the most enlightened writers, among whom ranks David Hume, taught that money is “nothing but the representation of labour and commodities, and serves only as a method for rating or estimating them.” “Money,” says Hume, “is not, properly speaking, one of the subjects of commerce; but only the instrument which men have agreed upon to facilitate the exchange of one commodity for another. It is not one of the wheels of trade; it is the oil which

* In England, by Locke; ifi France, by Dutot ; in Italy, by Dat vanzati, Broggia, Galiani, Carli, Neri, and Beccaria.

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