its price of exchangeable value, they would be the victims of their error, and would entail upon their subjects immense losses, which would soon have been 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.

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 upon 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; forthe 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 exportion, 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,

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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.t

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 ihat 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.


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 shewn; 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 may yet be prejudicial to their being sold abroad, restrict their consumption at home, and even insure to foreign commodities, which are not liable to it, a preference over those which are burthened with this duty.

2. It keeps bullion from the countries where it is deprived of the facility of being converted into mo ney, or where, at least, that faculty is burthened with a duty; and consequently it must render coin scarcer than in countries where bullion is converted into money without paying any duty or seignorage.

Every thing therefore tends to shew, that even the smallest duty upon coinage is of no avail to keep me tallic

money in the country, that it alters its destination and its functions, and injures the general circulation of the produce of labour.

Another question, originating in the very nature of money, has occupied the attention of governments and philosophical inquirers, and has not yet beer generally answered ; that is, whether either gold or silver alone ought to be admitted as money, or whether equal favour ought to be shewn to both these metals.

The doubts on this question arise from the circumstance, that if it be difficult to fix the fluctuating exchangeable value of money, the inconvenience is still more serious when the exchangeable value of two metals is to be fixed, which, varying in their value, render commercial exchanges unequal, and subject them to chances which carry confusion into mercantile operations.

Şuppose a person sells four quarters of wheat for ten


guineas. : If gold and silver perform alike the functions of money, the purchaser may pay the ten guineas either in gold or in silver : yet it may not be immaterial to the vender, whether he be paid in gold or in silver.

If the proportion between the two metals be not accurate; if gold, which, according to its marketprice, should be fixed in the proportion of fifteen to one, be only fourteen and a half, the buyer will pay in silver, and the seller, instead of receiving ten guineas, or ten pounds ten shillings, willactually get but about ten pounds two shillings. Should the contrary happen, should gold be rated fifteen and a half, when its market-price is fifteen ; then the buyer will pay in gold, and the vender again will only receive about ten pounds two shillings instead of ten pounds ten shillings.

This fact may appear of small importance at first sight, because individuals become alternately venders and purchasers ; and what they lose in one transaction, they regain in the other. But this view of the matter is evidently erroneous and defective.

Most commodities are exchanged by the intervention of merchants, who, when they make their purchases, pay in the least advantageous coin; and when they sell, they take care to fix the prices as if they were to be paid in the least favourable coin : so that the fluctuation in the value of gold and silver coin gives the trading class, in every instance, an infallible advantage over the labouring and productive classes.

The inconvenience of two metallic currencies was early observed by the best understandings. Locke

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