is the representative of the value of things: but money is a commodity, a metal, whose value is represented by the commodity for which it is exchanged; and the, property of representing value is common to any other merchandize.

"Others think money is a pledge, an instrument to obtain merchandize: but merchandize is likewise a pledge, an instrument to obtain money; and any merchandize is also a pledge, an instrument to obtain any other merchandize.

"Others still define money the common measure of things; they forget that money is a value, and the raw material of many manufactures, and that whatever has a value is measured by the value of other commodities.

"These definitions, therefore, do not particularly agree with money and do not comprise all its attributes. The error arises from the anxiety of considering money as something more than a simple metal. Money has a stamp, but receives no value from this stamp.

Money is the universal merchan dize, that is, the merchandize which, on account of the smallness of its volume, which renders its transport easy, and on account of its divisibility and incorruptibility, is universally acceptable and taken in exchange for any other merchandize. I therefore think that considering

money in this point of view, is attaching to it the idea which corresponds with all its functions.”*

The definition which Adam Smith gives of money,

Della Econ. Polit. § ?.

though less circumstantial than that of Count Verri, is

precisely the same.

"In all civilized nations," says Adam Smith,

money has become the universal instrument of commerce, by the intervention of which goods of all kinds are bought and sold, or exchanged for one another."*

Reduced to its true nature, that is, considered as a preferred commodity, and, as such, as a general instrument of commerce, money has been released from that dependent and arbitrary state to which it had been too frequently exposed, and henceforward it is safe against all financial or fiscal operations.

As a produce of labour, money has an exchangeable value, which is determined by the demand for it, and by its abundance, or scarcity. As a preferred commodity, it has a higher exchangeable value: but for this increased value it is indebted merely to the nature of the metals of which it is composed. Public authority, which by its stamp confers upon it the character of legal money, adds nothing either to those metals or to their exchangeable value, and therefore cannot give it any other value than what commerce confers upon those metals. The monetary law is simply declaratory of the fact, and can neither change nor modify this fact; it never can be arbitrary.

Should modern sovereigns assign to money a value in exchange superior to what general commerce assigns to it, either by the alteration of the standard of the metal, the diminution of its weight, or the raising of

*Wealth of Nations, 1805, vol. i. page 44.

its price or exchangeable value, they would be the victins of their error, and would entail upon their subjects immense losses, which would soon have a powerful re-action upon themselves. The prosperity of nations, it seems, has nothing more to dread from adulterations of coin, and this is an essential service derived from the progress of political economy.

upon

But although all good writers are now agreed, that the law cannot confer upon money any other value than that of the metals of which it is composed; there are some very enlightened authors who think that a small addition to that value might be of use to prevent the exportation of money, and that a slight duty its coinage would accomplish this salutary end. "A small seignorage, or duty," says Adam Smith, upon the coinage of both gold and silver would probably increase still more the superiority of those metals in coin above an equal quantity of them in bullion. The coinage would in this case increase the value of the metal coined, in proportion to the extent of this small duty; for the same reason that the fashion increases the value of plate in proportion to the price of that fashion. The superiority of coin above bullion would prevent the melting down of the coin, and would discourage its exportation. If, upon any public exigency, it should become necessary to export the coin, the greater part of it would soon return again of its own accord. Abroad, it could sell only for its weight in bullion. At home, it would buy more than that weight. There would be a profit, therefore, in bringing it home again. In France a seignorage of about eight per cent. is imposed upon the coinage, and

the French coin, when exported, is said to return home again of its own accord.”*

Several distinguished writers are of an opinion directly opposite to that of Adam Smith. They think that all duties on money are bad, and that the expence of coining ought to form part of the public expences. Mr. Henry Thornton's opinion on this point is entitled to particular attention.

But I shall not quote his opinion, because the motives on which he builds it are grounded upon the nature and principles of a combined circulation of paper and metallic currency: and the investigation of these motives might betray me into an unavoidable confusion that would require extensive developements. My regret at being obliged to omit the opinion of that distinguished writer is, however, lessened by the hope of refuting Adam Smith even without his assistance.

When a country cannot pay with the produce of her labour for the value of the foreign produce which she consumes, she has no other means of acquitting herself, than by exporting her metallic money; and whatever value she may have set upon her coin, it obtains no other value with the foreign creditor than that of the metal of which it is composed, and is received in payment only up to that value. The seignorage or duty on coinage is reckoned for nothing and does not prevent the money being exported.

Wealth of Nations, vol. i. page 70.

+ Henry Thornton's Inquiry into the Nature and Effects of Paper Credit, page 205.

When circumstances change, and the country, on re-establishing her affairs, instead of being indebted to a foreign country, becomes her creditor, the balance is then paid to her in her own coin, but not according to its metallic value, as she has paid it, and as Adam Smith seems to suppose, but according to its numeric value; so that the foreign country benefits the value of the coinage superadded to its metallic value.

The surcharge of a duty on coinage or seignorage, far from being advantageous, is extremely detrimental to nations; it aggravates the distress of their situation when they are obliged to export their money, and impedes the re-establishment of their affairs when they begin to take a favourable turn.

In fine, if money be nothing but a preferred commodity, as I think I have shewa; a commodity for which every one readily consents to exchange any other produce; its exchangeable value is determined by the exchangeable value of the metal of which it is composed, or, in other words, by the proportion of the demand for it to its abundance or scarcity; and as the duty on coinage or seignorage adds nothing either to the demand for it, or to its abundance or scarcity, it has no influence whatever upon its exchangeable value.

Not only does such a duty on coinage afford none of the advantages that Adam Smith has ascribed to it, but, in my opinion, it is liable to very great inconveniencies.

1. It augments the charges of the circulation of commodities, and of course raises their price; and though this increase of price be not considerable, it