lion, and therefore would have no influence to preserve it in circulation. It may however be contended, that the exchangeable value of bullion, as an article of commerce, varies in consequence of va riations in the supply and the demand; and that therefore, from an unusual supply, the value of gold in bullion might be dimi nished, and become less than that of the gold in coin: and that on such occasions gold might be purchased, so as to deduct the price of the seignorage. But gold is so universally a marketable com→ modity, that it will seldom happen that it may not be sold for its full value, to some one or other of the neighboring countries. If however it should happen otherwise, that circumstance would equally occur whether the bank paid any seignorage on coining or not. A seignorage therefore of this sort would be useless, and would have no power to create a difference between the value of gold in coin and gold in bullion.

The value of gold then as a commodity or circulating medium, cannot, from its universal currency, be partially regulated or controlled. A seignorage cannot make the standard coin more valuable in foreign countries; it can therefore have no effect to lower the price of bullion. Hence the value of the currency of any particular country depends completely on the value or quantity of the precious metals contained in the standard coin of that country, and no adventitious charge or expense can raise the value of such standard coin, in the bullion market, beyond the value of the same quantity of precious metals in bullion."

'The doctrine maintained by Adam Smith may be thought to contradict the above position; and it is at the risk of being considered presumptuous, that upon a point of political economy, any one can venture to differ in opinion from so great an authority. But this imputation could at any rate, apply only partially; since it is evident that Dr. Smith, in speaking of a seignorage, had not in view the disappearance of the standard coin, under circumstances similar to the present; for after stating that in every country the greater part of the current coin is almost always more or less worn, or otherwise degenerated from its standard, he proceeds to recommend a seignorage because it will diminish the profit of melting down the new coin. "This profit," he says, "always arises from the difference between the quantity of bullion, which the common currency ought to contain, and that which it actually does contain." But in the present day the profit could not arise from a difference of this kind, since there was no coin in circulation but what was new, and actually contained the quantity of bullion which it ought to contain. In the next place, Dr. Smith has not pointed out the great dif ference between the effect of a seignorage on the standard coin, and a seignorage on any other part of the currency; and in the example which he has given of the practice in France, from the Dictionnaire Monnoies, it does not appear that the seignorage was on the standard coin, which in that country is silver, but upon the gold coin; and this seignorage, it seems, arose from coining the mark of standard gold into 30 louis-d'ors of 24 livres each, or into 720 livres, although the value of the mark of standard gold was only 671 livres 10

As the end proposed by a seignorage in the present instance, is to make gold in coin pass at a higher value than it does as bullion, there, is yet another means, by which it might be attempted, and that is to increase the quantity of silver contained in a shilling, so much, that 20s. shall contain more silver than is exchangeable in the bullion market against the quantity of gold contained in a sovereign. In this case it may be said the sovereign would bear a higher value than the same quantity of gold in bullion, because more silver in the shape of shillings could be bought with it than could be procured for the same quantity of gold in bullion. But the consequence of this would be, the disappearance of the silver coin for the sovereign being the standard coin, if shillings be so coined, that the silver in 20s, be more intrinsically valuable than the quantity of gold contained in the sovereign, the latter, as it regulates the value of the currency, will reduce the value of the 20s. as coin to its own value; because as coin, 20s. cannot be worth more than a pound sterling, the value of which is limited and determined by the value of the standard coin, namely, the sovereign; consequently, in the bullion market, the sovereign or pound sterling will not purchase so much silver in the shape of bullion as it will do in the shape of silver coin; therefore whoever chose to speculate, or whoever wanted silver for exportation, or for melting, would purchase shillings for that purpose, in preference to silver, in the bullion market, because he could procure more of it for his pound sterling in the former than in the latter mode. Consequently the. silver coin would disappear.

If then the silver coin would disappear in consequence of shillings being coined of such a size that 20 of them shall contain more silver than is exchangeable in the bullion market against the quantity of gold contained in a sovereign, it would seem at first sight to follow, that the gold coin should at present disappear; because, from the late diminution in the size of the shilling, a sovereign contains more gold than is exchangeable in the bullion market against the quantity of silver contained in 20s. But this does not directly follow; for the sovereign being the standard coin, if the silver in 20s. be not equal in intrinsic value to the quantity of gold in the sovereign, the latter, as it regulates the value of the currency, raises the value of the 20s. to its own value, because it can at any time be procured for the 20s.: therefore 20s. being by this means raised to a value exactly equal deniers. But there is no mention of a seignorage on the silver coin or livre, which was at that time the standard coin of France. Now it is not attempted to be denied, that a seignorage of the kind just described, when applied to any part of the current coin, except the standard coin, will be of use to preserve it in circulation. For these reasons it may be doubtful how far the authority of Dr. Smith does at all militate against the opinion expressed above.

to that of the sovereign, will also purchase as much gold in the bullion market as the sovereign would do, and which, when there are no bank restrictions, is in ordinary cases, a quantity exactly equal to the quantity of gold contained in the sovereign itself: consequently there can exist no reason for purchasing sovereigns with silver coin, in order to melt down the sovereigns or export them, provided the diminution in the quantity of silver contained in the shilling, be effected in the true spirit of a seignorage, (that is) provided every person who brings silver to the mint to be coined, is obliged to pay as the price of coining it, the difference between the value of the silver contained in 20s. and the value of the gold in the sovereign. For if this were not the case, the increased profit to be derived from importing silver, in order to have it coined, would occasion an increased importation of that article, and thus ultimately lead to an unfavorable course of exchange, and the consequent exportation of gold and as the same cause would constantly operate, gold would continue to be exported till the whole was sent abroad. If then any person, upon taking a quantity of silver to the mint to be coined, can have the whole of it coined at the present rate, without paying as a seignorage, the difference between the value of the silver in 20s. and the value of the gold in a sovereign, it seems to follow, that the whole of the gold coin must ultimately disappear. I believe, however, according to the mint regulations, no person is entitled to send silver to the mint to have it coined, ad libitum, in the same manner as he may do gold; but that government takes upon itself to supply the quantity of silver coin that may be required in the circulation: and this has nearly the same effect as if every person who carried silver to the mint to be coined were obliged to pay, as the price of coining it, the difference between the value of the silver contained in 20s. and the value of the gold in the sovereign, since government in purchasing silver for coinage, pays for it of course only according to its market price, and afterwards issues it as coin at a higher rate, and thus in effect deducts a seignorage for coining it. In consequence of this arrangement no unusual profit can be derived by the public at large, from importing silver for the purpose of having it coined; therefore the public can have no inducement to import more than usual; and it is absurd to suppose, that government, for the sake of such a profit, would have recourse to the measure, further than it may be absolutely obliged to do, to procure the required quantity of silver for circulation; particularly since it is manifest that this proceeding, if persisted in to a certain extent, must ultimately be attended with the serious inconvenience of sending abroad the whole of the standard coin. If then I have not mistaken the regulations of the mint, it does not seem likely that

the late diminution in the quantity of silver contained in the silver coin should cause the exportation of gold.

The order which has already appeared in the Gazette that sovereigns shall be current after having undergone a certain diminution of the weight at which they are issued from the mint, will operate virtually as a seignorage; consequently if a seignorage be a remedy for the present disappearance of the gold coins, we shall see them reappear after having either at home or in foreign countries suffered as much sweating as by law they can do, without being rendered too light for currency. However no other effectual and permanent remedy for the disappearance of the standard coin is to be expected, except that of the bank being ready to pay all their notes in specie without any reserve. For a difference between the market and the mint price of gold, so as to make it profitable to melt down or export the standard coin, can at present arise from two causes only, that is, either from a depreciation in the value of bank notes, on account of the bank restrictions, or else because gold, from a really unfavorable course of exchange, has become more in demand as bullion than as currency. In either case it will appear, that the full resumption of cash payments is the only remedy. That the bank restrictions have occasioned the depreciation of bank notes, and consequently are the cause of the disappearance of the standard coin, seems probable from the following considerations. A bank note is only valuable because it is convertible, or expected to be convertible, at the will of the holder, into the quantity of the standard coin, for the payment of which it is an engagement. When it is known that this engagement will be fulfilled immediately at the option of the holder, the value of the bank note will be exactly equal to the value of the standard coin into which it is so convertible; and the value of the standard coin, except in case of an unusual demand for bullion, on account of a really unfavorable course of exchange, is equal to the value in bullion of the quantity of precious metal which it contains. When therefore a bank note can, at the will of the holder, be converted into standard coin, and there is no unusual demand for bullion on account of the real exchange, the bank note will purchase as much gold in bullion as in coin; consequently there will be no difference between the market and the mint price of gold. But when it is necessary that a certain period should elapse or contingency happen before it shall be in the power of the holder to demand payment, the value of the bank note will be diminished in proportion to the degree of doubt that may exist whether it will ever be convertible into cash at the will of the holder. Under these circumstances, whatever depreciation the bank note might suffer would equally affect the standard coin, because it is not lawful to

sell the precious metals in coin for more than their legally esta blished price. A sovereign therefore as coin could not be sold for more than a one pound note, however much the value of that note might be depreciated: consequently the value of the gold in coin would be depreciated equally with the bank note: but the gold in bullion would retain its proper value: as bullion, then, an ounce of gold would be worth more than an ounce of gold in coin; in other words, the market price of gold would be higher than the mint price. The only remedy for a difference between the market and the mint price of gold arising from this cause, would of course be the removal of the cause of depreciation, that is, the removal of the suspension of cash payments. But to diminish by way of seignorage the standard coin, would in this case be useless'; because for the reasons which have been already assigned, the market price of gold would be increased in proportion to the decrease in the quantity of gold contained in the standard coin: because also the value of the bank note would be diminished exactly in proportion as the quantity of gold in the standard coin might be decreased. There would therefore still exist a difference between the value of the bank note and the gold contained in the standard coin in the same proportion as there does at present.

It has been conceived likewise, that the circumstance of a bank being released from any obligation to pay its notes in cash on demand till some future time, may give rise to another species of depreciation, a depreciation proceeding from an over-issue of bank notes. When a bank is liable at any instant to be called upon for gold for its notes, it feels itself obliged to confine the quantity it issues within a certain proportion to the gold it can command. But when the bank is not thus liable to be called upon till some future time, it is not under the same necessity of limiting the quantity of its notes in proportion to the quantity of gold. If then the bank should under these circumstances issue a greater quantity of notes than it would have done had the obligation to pay in cash still existed, and should increase their amount beyond what the circulation requires to maintain it on a level with bullion, or the currencies of surrounding countries, this redundancy of paper could not, like a redundancy of precious metals, be relieved by exportation; it must therefore cause a continued depreciation in the value of bank paper, and consequently of the whole circulating medium, compared with other commodities; compared also with the currencies of surrounding countries, as well as with the legal standard of British currency. But from the principle already so often adverted to, (that is) that the market price of gold is inversely as the quantity of gold contained in the standard coin, it must be evident, that the inconvenience in this instance could not any more than in the last, be removed by diminishing by way of seignorage, the present standard