202 REPORT— 1870. 



lowed to remain in circulation) may be anywhere between these two limits, and in 

 fact diifers in different transactions. 



To make this clear, consider the case of a shopkeeper who receives a certain 

 quantity of light gold in the year. This occasions him a certain loss, which he 

 looks upon as one of the expenses of carrj'ing on his business, and he recoups him- 

 self for it by charging somewhere higher prices for his goods than would otherwise 

 be necessary. In other words, the pm'chasing-power of money has been lessened. 



The effect of taking the seven centigrams of gold out of the sovereign and im- 

 posing an equivalent mint charge will now be evident. It would leave the upper 

 limit of the value of a sovereign almost the same as it now is, but depress the lower 

 limit two-pence further down. It would thus produce two highly mischievous 

 effects : it would increase the range of fluctuation from three-halfpence to three- 

 pence halfj)enny ; and it would lower the averaf/e pm-chasing-power of a sovereign 

 by about one pennJ^ Neither of these effects could be tolerated : the increase of 

 the range of fluctuations of purchasing-power is one of the worst defects which 

 coidd be imparted to that commodity which is used to measm-e the values of other 

 commodities, and the decrease of the average pm'chasing-power of the sovereign 

 would cause it to cease to be a pound sterling. 



We may learn two practical lessons from this discussion, — 1st, that the practice 

 of the mints of Great Britain, Russia, and Spain, of coinrng gold without charge, 

 is very much to be preferred to the practice of other countries in which a mintage 

 is charged, since the imposition of a mint charge increases the range of fluctuation 

 of the purchasing-power of coins : 2nd, that a nation which aims at honesty ought 

 to take effectual means to prevent light gold remaining in circidation; for when 

 light coins circulate it is easy to see that the same two mischievous effects ensue : 

 the range of fluctuation of the purchasing-power of coins is increased, and their 

 average purchasing-power is lowered. 



To keep our ideas clear, we should carefully distinguish between three different 

 values of fine gold : 1st, the value of each centigram of gold in uncoined bar gold; 

 2nd, the value of each centigram of gold in new sovereigns ; 3rd, the value of each 

 centigram of gold in the sovereign just before ceasing to be lawfully in circulation. 

 These values are in the ratio of the following sums of money, viz. Ist, £3 17s. Qd., 

 which is the price the Bank gives for \^* oz. of gold in an ingot ; 2nd, £3 17s. lO^fZ., 

 which is the sum into which -J-J, oz. of gold is coined ; 3rd, £3 18s. 4j(/., which is 

 the sum into which \^ oz. of gold would coin if the coins were made of the lightest 

 weight which is legally current. 



Until lately the Bank gave only £3 17s. M. for ||^ oz. of fine gold in light coins. 

 Recently the price has been raised, and the Bank now gives £3 17s. Orf., the same 

 price as for bar gold. But there is no reason why the gold of light sovereigns 

 should be treated as uncoined gold. It would be barely just to the holders of light 

 coin that the State should purchase it at £3 17s. lOUl. ; audit would be consistent 

 with justice for the State to give for it any sum between this and £3 18s. 4:\d. It 

 is clearly for the interest of the community that as large a price as is practicable 

 should be offered, because this will tend both to withdraw light gold from circula- 

 tion, and to diminish that range of fluctuation of purchasing-power to which money 

 is subject even when no light gold is allowed to remain in circulation. It may 

 be objected that there is a practical impediment to carrying the price beyond 

 £3 17s. \Ohd., as to do so tends to render the practice of sweating gold profitable ; 

 but the oppoi-tunity for this nefarious business would not be much greater than 

 at present. 



Another consideration offers itself which is deserving of attention, since it points 

 out a way bj^ which foreign transactions may be facilitated. It will be apparent 

 from the foregoing discussion that one effect of the imposition of a mintage is to 

 increase the average purchasing-power of each centigi-am of gold in a coin. Hence 

 a centigram of gold in one of our corns has a somewhat less purchasing-power than 

 a centigram of gold in the coinage of a country which nuikes a mint charge. 

 Hence it woidd be a safe transaction for us to issue our own coins in exchange for 

 such of the coins of foreign covmtries as may be brought to England in the course 

 of trade, making the weights of fine gold thej' contain the basis of the exchange. 

 * In an ounce of the alloy called Standard gold there are \^ oz. of fine gold. 



