that would be current only for its intrinsic value. Lord King has, in the tables before mentioned, given the rate of exchange between London and Paris for some years: the French money was silver crowns of 3 livres, and the par is stated to be about 29 pence to the crown. The bill would have been drawn in this silver money, and Adam Smith should have drawn his illustration from this silver money, and not from the gold money; the silver money being the legal tender. Lord King has given the monthly variations from 1789 to 1793. I take the month of April from each year; and it is curious to observe how the rate of exchange varied with the depreciation of the French money, in consequence of "the enormous issue of Assignats during the French Revolution." when all commercial intercourse was prevented by the war. The only manner in which a seignorage can be charged is either by the Mint retaining a certain portion of the gold or silver bullion delivered to be coined, and returning in coin the same weight, containing a less quantity of pure silver or gold, adding a worthless alloy, to make up the weight: or by returning the same quantity of gold and silver in coin, as was received in bullion, and charging a per-centage for the coinage. Bazinghen, in his preface, p. 11., states that he has extracted from a book entitled "Essai sur les Monnoies," by M. Dupré de St. Maur, the analysis of the coins fabricated by the Edict of January, 1726. † It appears from Bazinghen, in his calculation of the seignorage (v. ii. p. 589.), that by the Edict of January, * See Appendix. Extracted from Lloyd's Lists. 1726 the marc of fine gold of twenty-four carats was fixed at 740 livres 9 sols 1 denier one-eleventh, and the marc of coined gold or louis-d'or was issued May 26. 1726, at 720 livres, which was intrinsically worth only 671 livres 10 deniers, being of the standard of 21 fine (here the alloy made up the weight of the marc of 8 Paris ounces, and constituted the duty of seignorage and the charge of coinage). The mode adopted respecting the silver crowns was similar, and is thus calculated. The last valuation of the marc of fine silver,-that is, of 12 deniers, was 51 livres 3 sols and 3 deniers, and the intrinsic value of the silver crowns was 46 livres 14 sols 5 deniers; and in order to raise them to 49 livres 16 sols, which is the value which it has pleased the king to give them, there must be added 3 livres 5 sols 6 deniers, and half, which is the duty that the king takes upon the mare of crowns, as well for the expense of coinage, as for his duty of seignorage (the alloy making up the weight). The seignorage on the gold coin is about 71⁄2 per cent., and on the silver coin about 7 per cent. Adam Smith takes notice only of the gold coin. If the same, or nearly the same, seignorage, was levied on the gold and on the silver coin, it would not affect my reasoning respecting the gold coin being an ancillary coin, if rated in its exchange with the silver coin 7 or 8 per cent. higher than its marketable value as gold bullion. I have reasoned upon Adam Smith's own illustration of his theory and upon his own premises. The arguments I have adduced are of general application; any opinion of so celebrated an author as Adam Smith is entitled to the strictest investigation with all respect for so high an authority, I conclude that the coin which exchanges with coin, and which is coined by the State, with due limitation of the amount for which it shall be legal tender in its exchange with the legal tender coin, may be subject to a seignorage, but that the legal tender coin, the measure of value, the money of the country, which exchanges with commodities, cannot be subject to any duty of seignorage or expense of coinage, as adding to its value: the person who brings the bullion to be coined into the legal tender coin, whether gold or silver, may pay a small duty for the convenience of having coin for his bullion: this small duty he pays, and the loss is his, and the coin is only worth its intrinsic value in circulation as coin at home, or as bullion abroad. In a note in Mr. M'Culloch's edition of Adam Smith's "Wealth of Nations," I find the following remark, p. 21.: "This is an error into which Dr. Smith was betrayed by trusting to the "Dictionnaire des Monnoies" of Bazinghen. In 1771, the seignorage on gold in France was fixed at 1 per cent., and on silver at 14 per cent. At this moment it is so low as hardly to cover the expense of coinage, being about per cent. on gold and 13 per cent. on silver.-See Necker, Administration des Finances, tome 3, p. 8." Bazinghen states the seignorage in 1726; it is possible that some alteration may have taken place between that date and 1771; Adam Smith wrote in 1775. The opinion of Adam Smith was adopted by Mr. Foster, and rejected by Mr. Thornton. Mr. Thornton, "Essay on Paper Credit,” p. 208. : "Guineas not only circulate at home, but are liable to be sent abroad in the event of any unfavourable balance of trade: they are worth, in that case, just as much as the foreign country will give for them; and the foreign country, in estimating their value, since it means to melt them, does not at all take into its calculation the expense of the coinage of the piece of metal: it acts like the buyer not of new but of old plate, who destines it to the meltingpot and therefore refuses to allow anything for the fashion." Upon which Mr. Foster observes, "Essay on the Principle of Commercial Exchanges," p. 89.: "Now if this reasoning be just, it would appear equally to follow, that an unfavourable exchange might occasion the melting of gold watchwork, in order to be exported in the shape of bullion; but the value of the watchwork is resolvable into two parts; first, the price of the gold, and secondly, the price of the labour employed in converting it into watchwork; and this latter part of the price must ever countervail any possible encouragement to the exportation of bullion. In the same manner it seems that if a seignorage of 5 per cent. was paid on our coinage, one hundred guineas would then cost the original Mint price of the bullion, and also five guineas, as the expense of having been converted from bullion into guineas; the first purchaser must evidently give this value for it, and he would never part with it, except for an equivalent consideration so that, however unwilling the foreign country might be to "take into calculation the expense of the coinage of the piece of metal," it would find it impossible to obtain the piece on any other terms; the foreign nation could then obtain neither our guineas nor our watchwork, without paying, first, the value of the materials, and secondly, the price of the labour exerted in giving them their form." Mr. Foster supposes that, as the first purchaser of the hundred guineas must pay five guineas for the coinage, he would never part with the one hundred guineas for less than the expense of the coinage, in addition to the hundred guineas: and that the foreigner must pay this, or he could not obtain the guineas: but the person who owes the debt must pay it to the foreigner with the same quantity of gold or silver as other nations, or he would not be able to purchase the goods; and the person who sells the goods must sell them at the same price as other nations, or he could not sell them; the foreigner would decline purchasing both the guineas and the watchwork, if five per cent. dearer in England than in other countries: it is the bullion, the intrinsic value, which is the money among nations-a value determined by the competition of all countries, perfectly distinct from the monopoly of the Mint and the monopoly of the home market, by which the rated coins only are protected; the legal tender coin which exchanges with commodities is valued according to the weight and fineness of the precious metal, whether that be gold or silver; the ancillary coin which exchanges with coin may be raised in value in the national circulation by a seignorage, as its market is confined to coins, and has no relation to commodities. CHAP. V. A MODE OF CHANGING THE GOLD TO A SILVER MANY years ago, some years before the introduction of Sir Robert Peel's Bill, I was deeply impressed with the opinion that it would be advantageous to this country to change the standard from gold to silver. Since that time great changes have taken place with respect to the supply of the precious metals: the gold from the Ural Mountains in Russia, and the recent discoveries of gold in California and Australia, render the policy of any change at present more than doubtful; and it would be prudent to wait to see how other nations may act; and without presuming to recommend any change, I submit the present plan-valeat quantum the principle is the same, whether the change be from the gold standard to the silver standard, or from the silver standard to the gold standard. I may, perhaps, be allowed to say, that when I conceived this mode of changing the standard, I was not aware that the word token had ever been applied to the silver coins in our currency. We have seen that by making the gold money, or the sovereign, the legal tender of value to any amount, and by coining the silver and copper coins at a less intrinsic value than their exchangeable value with the sovereign, or legal tender coin, we confine the circulation of the silver and copper coins to the national or domestic use; we procure for these coins in the |