april — sept. 1859.] Ancient and Modem times. 95 



constant disappearance of the newest and best part of the cur- 

 rency. A seignorage imposed upon the new coin equal to or 

 greater than the depreciation of the old ones below standard 

 would have equalised their value and prevented the destruction of 

 the former. 



I cannot see, however, how a seignorage would prevent export- 

 ation if there were a demand for gold or silver abroad. I shall 

 not bring forward the present drain of silver from France as an 

 instance of the inefficacy of this duty to retain coin in a country, 

 because in France the seignorage is a mere trifle. But it seems 

 to me that the artificial enhancement of value of the gold cur- 

 rency effected either by seignorage or by direct legislative enact- 

 ment, would only produce a universal rise of (nominal) prices. 

 An ounce of gold — coin or bullion — is now worth £3-17-10j. 

 A seignorage of 5 per cent, (suppose) would raise the value of 

 an ounce of gold coin to about £4. But this £4 would only pur- 

 chase the same quantity of goods — would be equivalent to the 

 same amount of labour only — as the £3-1 7-10| was before. A 

 merchant wishing to supply some foreign demand for gold could 

 purchase as much as he pleased at the same rate as before the 

 imposition of the seignorage. We have an instance which appears 

 to me a parallel case ; and where the ostensible reason for legisla- 

 tive interference in depreciating the value of the metallic cur- 

 rency was the very object we are examining — the prevention of 

 its exportation. The State of Pensylvania ordered by Act of 

 Assembly that 5s. sterling should pass in the colony for 6s. 3d. ; 

 and afterwards for 6s. 8d. It was supposed that this would make 

 the same quantity of metal more valuable in the colony than in 

 England, and so retain it in the former. The only effect was a 

 universal rise of prices proportionate to the nominal rise of the 

 value of the currency. 



One of Adam Smith's arguments in favor of a seignorage is 

 well worthy of attention in these days when so much is said 

 about ' retrenchment' — though so little done. He not only 

 enumerates the coinage amongst those duties of the State 

 which could or should pay their own expenses, but he is of 

 opinion that it should do more ; that in England as in some 



