delay in doing it, no obstruction, in short, of any sort to changing the metal from one form to another.

If in any particular cases obstructions should occur, the necessary corrections must be made throughout the course of the following reasonings.

Upon the assumptions, then, above stated, we have this fundamental principle of the coinage:

Any quantity of metal in the form of Bullion must be exactly of the same value as the same quantity of metal in the form of

coin.

On the meaning of the MINT PRICE and MARKET PRICE

of Gold and Silver.

10. As the very purpose of coining is to certify that the pieces of bullion are of a certain definite weight and fineness, it is evident that any fixed quantity of bullion, as a pound weight, must always be divided into a fixed number of coins.

The number of coins into which a given quantity of bullion is divided, is called the MINT PRICE of that quantity of bullion. It is perfectly clear, then, that the Mint Price of Bullion is a fixed quantity; it can by no possibility vary, until the same quantity of bullion is coined into a different number of coins.

To alter the Mint Price of Bullion is merely an expression which means an alteration in the standard weight of the Coinage.

To suppose that the Mint Price of Bullion could vary is manifestly as great an error as to suppose that a hundred-weight of sugar can be a different weight from 112 separate pounds weight of sugar: or that any quantity of wine in a hogshead could be different in quantity from the same quantity of wine in bottles: or that a loaf of bread could alter its weight by being cut up into slices.

Until recent times, when more attention has been paid to the state of the coinage, these coins might circulate for a considerable time in a country, and lose much of their weight, without losing their value. People were so accustomed to attach a certain value to the sight of a particular coin that, unless they were money dealers, they did not stop to inquire too curiously whether it was of exactly of the proper weight or not. In fact, when a coinage has been some time in use, few people know what

371 the legal weights of the coins are. Many, for instance, do not associate the idea of a pound with any particular weight of bullion, and thus, in exchange for commodities and services, coins may pass at their nominal value for a considerable time after they have lost much of their weight. Thus Shakespeare says ' ""Tween man and man, they weigh not every stamp,

Though light, take pieces for the figure's sake."

When coin has been some time in circulation, it must necessarily lose much of its weight from the wear and tear of circulation, even if it be not subjected to any bad practices, such as clipping, which used to proceed to a great extent in this country formerly, as will be shewn a little further on. So late as 1816, when the last great reformation of the coinage took place in England, the greater part of the metallic circulating medium was nothing but a thin wafer of silver, from which all traces of an impression had long since vanished, and it was reduced to scarcely more than half its legal weight.

Coins might circulate in a country for some time after they had lost some of their weight, without any perceptible change in their value with respect to ordinary commerce, but when they were given in exchange for bullion the case would be different. As the value of bullion is measured weight for weight with the coins, it is clear that if the coins have lost their weight, a greater number of them must be given to purchase any amount of bullion than if they are of full weight. Thus, if the Mint Price of silver bullion be 5s. 2d. per ounce, or if that be the quantity of coin into which an ounce of silver bullion is cut, then, if the coins have lost their proper weight from any cause, it is clear that more than 5s. 2d. must be given to purchase an ounce of bullion. It may perhaps require 6s., or even more, to buy an ounce of bullion.

Now, the quantity of coin at its full legal weight, which is t equal to a given weight of bullion, is called its MINT PRICE, but the quantity of the current coin which is equal to it in weight is called the MARKET PRICE; and as if the coins are diminished in weight, more of them must be given than if they are of full weight, the Market Price will apparently be higher than the Mint Price, and this is called a rise of the Market Price above the Mint Price.

Cymbeline, Act v., Sc. iv.

This expression, however, has given rise to much error. The plain meaning of it clearly is, that six of the current coins are only equal to what 5s. 2d. ought to be, which merely means, that the current coinage is deficient by 1-6th of its legal weight. Thus, in reality, we see that it is perfectly clear that the rise of the Market Price is due to the DEPRECIATION of the coinage. Hence we obtain this fundamental law of the coinage— When the Market Price of Bullion rises above the Mint Price, the excess is the proof and the measure of the depreciation of the coinage.

In fact, this apparent rise of the Market Price is due to just the same cause as has made the Mint Price of Silver bullion apparently rise from £1 in the days of William the Conqueror, to £3 2s. in the present day. It is merely that the same quantity of bullion is cut into a greater number of pieces, and, consequently, each piece must be proportionally diminished in weight, or depreciated.

The Market price of bullion could never fall below the Mint Price, unless there was more bullion in the coins than there ought to be, and, of course, in such a case, the difference in the Market price below the Mint Price would be the proof and the measure of the excess of the coins above their legal weight.

11. If the coinage of a country fall into a degraded state, from long wear and tear, and a new coinage of full weight be issued, and allowed to circulate along with it, one of two effects must inevitably follow. Either those persons who have commodities to sell will make a difference in the nominal price of articles, according as they are paid in the full weighted or the degraded coin; that is, the degraded coin will be at a discount as compared to the heavy coin; or, if there be a law to prevent this, and to make both pass at the same value, bullion dealers will immediately collect all the full-weighted coins they can, and melt them down into bullion, or export them; so that the new coinage will quickly disappear from circulation.

If persons, in selling their goods, are paid in light coin, as they wish to secure a certain weight of bullion in exchange for them, they would, of course, require a larger number of the light pieces than of the heavy ones, so that prices would apparently rise if paid in light money. In such a state of things,

the prices of goods are, in a certain sense fictitious-a number of light pieces are presumed to have the same value as the same number of heavy ones. The weight of bullion given in exchange for commodities, is expressed in a greater number of figures than it ought to be, and, if the law prevents any dif ference being made between heavy and light pieces, the same number of heavy pieces will purchase no more. This is as great an anomaly in commerce, as it would be to say in arithmetic that three were equal to four. But the consequence is very plain. If four pieces of coin will only purchase as many commodities as three ought to do, no one will turn bullion into coin at so great a disadvantage. On the contrary, as bullion would diminish so much in value, it would be sent to other countries, where it would purchase a greater amount of commodities. During the degraded state of the coinage during the last century, the Market Price of silver always considerably exceeded the Mint Price. Adam Smith says that the Market Price of silver ranged from 5s. 4d. to 5s. 8d. an ounce before the re-coinage. And we find it stated in the second Report of the Lords' Committee of Secrecy in 1797, p. 257:-But as the Mint Price of silver bullion has been, during nearly the whole of the present century, considerably less that the Market Price of this precious metal, the silver bullion imported could not be converted in coin, but, having left a quantity sufficient for the use of our manufacturers, must have again been exported, and did not contribute in the smallest degree to augment the coin of this kingdom." Moreover, as every one would try to pay his debts in the cheapest medium, or at the least expense to himself, it is evident that he would always try to pay them in the worst coins in circulation, and he would either hoard the good coins, or send them to foreign countries.

If, while the Bank of England were subject to their present law of being compellable to pay notes in exchange for bullion, at their present rate, the Market Price of bullion were to rise above the Mint Price, it would, in a short time, be fatal to the Bank; for while their notes, which represent coin, would only buy a diminished quantity of bullion, they would be compellable to pay full weight for them, a process which would evidently exhaust their bullion, for nobody would be content to have Bank notes in his possession which would only pass for 15s. in the open market, when he could compel the Bank to give 20s. for it.

Such a state of things would, therefore, necessarily cause a run upon the Bank, which would not stop while any of its notes remained out, or until the value of the note was restored to par. It was such a state of things which compelled the Bank to stop payment in 1697, three years after it was founded. The Bank received all the worn and clipped coins at their full nominal value, and gave their notes in exchange for them; when the new coinage came out, they were called upon to pay these notes in the new coinage, which, of course, produced a great demand upon them, which compelled them to stop. And the same state of things was grievously felt about 1774, and is the true explanation of the difficulties mentioned by Adam Smith, which he attributes to over-issues by the Bank.

During Sir Robert Peel's administration, in 1844, the currency was beginning to exhibit symptoms of depreciation from its wear and tear. Owing to the effective measures taken by him, it is now almost universally of full weight, and the deficiency in most cases is so slight, that it is not observable in ordinary transactions. The Bank of England, however, warned by experience, weighs rigidly every single sovereign paid into by its customers, and does not credit them with more than its value as bullion. Other banks in London find it impossible to maintain the same strictness with their customers, so that, if they pay the money they receive in the course of their business into their account with the Bank of England, they generally incur some loss.

12. These considerations lead us to a fundamental and universal law in Economics, which has been found to be true in all countries and ages-That bad money drives out good money from circulation; or, as it is expressed in an anonymous pamphlet, A reply to the Defence of the Bank, setting forth the unreasonableness of their slow payments. LONDON, 1696.

"When two sorts of coin are current in the same nation of like value by denomination, but not intrinsically, that which has the least value will be current, and the other as much as possible will be hoarded," or exported, we may add.

The fact of the disappearance of good coin in the presence of bad, was noticed by Aristophanes; and was long the puzzle of financiers and statesmen, who continued to issue good coin