94 



Coin and Currency in 



[No. 9, NEW SEKIES. 



difference, however, that the " fashion" of the plate will probably 

 enhance the value of the constituent metal in other countries be- 

 sides the place of manufacture ; while the coin of any country is 

 abroad, only equal to its weight of bullion. 



So early as 1691, the question of a seignorage seems to have 

 attracted some attention. In that year a pamphlet appeared from 

 the pen of Sir Dudley North, containing some very sound views 

 upon this and other politico-economical subjects. This Tract, 

 notwithstanding its intrinsic merits, was never very widely circu- 

 lated and was soon suppressed. The author says that " the free 

 coynage [in England] is a perpetual motion found out, whereby 

 to melt and coyn without ceasing, and so to feed goldsmiths 

 and coyners at the public charge." Many years after this Adam 

 Smith recommended the imposition of a seignorage as the best 

 means of preventing the melting down of coin and of ensuring its 

 return to the country if exported. It is clear that if gold coin 

 were dearer than the same weight of bullion of standard purity, 

 there would be no temptation to melt it down. Again, being 

 money at home only, abroad it would be as completely bullion as 

 in a goldsmith's crucible. He remarks that even without a seig- 

 norage, gold coin is a little dearer than gold bullion, because 

 thrown into a more convenient form, and on account of the delay 

 in the Mint — the interval between bringing the metal to be con- 

 verted into coin and receiving it transformed. But this enhance- 

 ment of value is very trifling, and necessarily fluctuates with the 

 amount of business waiting to be transacted in the Mint. He 

 states that if gold coin ever cease to be payable by weight — a 

 system from its inconvenience likely to be abandoned — a 

 seignorage is the only means of preventing the destruction 

 and exportation of the best and heaviest coins. Previously to 

 what he calls the " late reformation" of the currency, the gold 

 coin was more than two per cent, below standard weight. Con- 

 sequently the current market price of gold bullion instead of being 

 £46-14-6 — the mint price — was £47-14-0 and sometimes £48. 

 Newly made coins would not purchase more of anything than the 

 old worn coins — the former were therefore melted down and sold 

 to the Bank as bullion, at a considerable profit to the melters and 

 a considerable loss to the Bank, who could not understand the 



