of Production can have any influence on Value unless they produce a change in the relation of Supply and Demand By this means we are enabled to create a rigorously exact Theory of Economics: and by reverently following the precepts of the mighty prophet of Inductive Philosophy, and the examples of the immortal creators of the various Inductive Sciences, it is seen that Economics as a Moral Science is fitted to take rank by the side of Mechanics and Optics as a great Positive Inductive Physico-Moral Science CHAPTER III THE THEORY OF THE COINAGE 1. Having in the preceding chapters investigated the fundamental Concepts of the Science of Economics, which are necessary to understand the subject of Credit and Banking: and ascertained the General Law which governs the varying relations of Economic Quantities: our next step is to investigate the Theory of the Coinage. Economics is the Theory of Value in general; but universal custom has found the convenience of expressing Value in one medium; viz., Money, or Credit. These are the sole Economic Quantities with which Banking deals. We shall, therefore, in this chapter investigate the Theory of the Coinage and in the following one the Theory of Credit 2. We have in the first chapter explained the circumstances out of which the necessity for Money arose, and shown that many substances have been used by different nations for this purpose: but that Metal has advantages superior to any other substance; and of Metals, Gold, Silver, and Copper have been chiefly preferred. Gold and Silver in a perfectly pure state, however, are far too soft to be used for this purpose: and it is necessary to mix some other metal with them to harden them, which is called Alloy. By a chemical law, when two metals are mixed together, the mixture is harder than either of the metals in a pure state Gold and Silver in the mass are called Bullion; but as the laws of all countries which use Gold and Silver as Money define the quantity of alloy which is to be used with the pure metal, we shall henceforth use the word Bullion to mean gold or silver in the mass mixed with such a proportion of alloy as is ordered by law, so as to be fit to be made into Money 3. The purity of Gold is measured by 24th parts, termed Carats; and ever since the 6th Edward VI. (1553) the Bullion used for the gold coinage has been 22 carats of pure gold and 2 carats of alloy. This is called Crown Gold. The standard of Silver Bullion was fixed by William the Conqueror at 11 ozs. 2 dwts. fine: or 222 dwts. of pure silver, to 18 dwts. of alloy and except during a short period of confusion, from the 34th Henry VIII. (1543) to Elizabeth, has never been departed from. It is called the "Old right standard of England," or "Sterling; and as the Sovereigns of England, though they reduced the weight of the Coin, never, with the slight exception just mentioned, tampered with the purity of the metal, Sterling came to signify honest and true, or to be depended upon In France, and those countries which have adopted decimal coinage, Bullion is made of 9 parts fine metal and 1 part alloy: but it is found in practice that the English proportion gives greater durability to the metal, and, therefore, is better for a coinage 4. Some nations have used simple Bullion as money: but the merchants of those nations were obliged to carry about with them scales and weights to weigh out the Bullion on each occasion. This was usual among the Jews. In some countries it was necessary both to weigh and assay the Bullion at each operation, which was, of course, a great impediment to commerce. Other nations adopt a more convenient practice. They cut the Bullion into pieces of a certain definite weight, and affix a public stamp upon it, to certify to the public that these pieces of Bullion are of a certain weight and fineness. These pieces of Bullion with a public stamp upon them, to certify their weight and fineness, and called by a publicly recognised name, and intended to be used in commerce without further examination, are called Coins 5. The inconvenience of using masses of Bullion as money is so obvious, and the expedient of cutting it into pieces of definite weight and fineness, seems so simple, that we should naturally have expected that it must have been quickly invented by those nations who first began to use Gold and Silver Bullion as money. This, however, was certainly not the case. Silver and Gold were used as money for ages before coining was thought of: and there is every reason to believe that coining was invented by a people who, before the invention, did not use gold and silver as money; and coining was practised by them for centuries before it was adopted by nations who had used these metals as money for ages This stamp or certificate, of course, in no way affects the Value of the metal, or the Quantity of things it will exchange for. Its only object is to save the trouble of weighing and assaying the Bullion in commercial transactions. Nor can the Name of the Coin in any way affect its Value. Values, it is true, are estimated in the number of these pieces of Bullion, or Coins but it is necessarily implied in the bargain that these Coins contain a definite quantity of Bullion : It is also perfectly evident that if this process of stamping Bullion, and so turning it into Coin, is done free of all expense: at the will of any one who chooses to present Bullion and demand to have it stamped: and also without any delay: the Value of metal as Bullion must be exactly the same as the Value of the metal as Coin If, however, a charge is made for the workmanship; or if any tax is levied on changing the metal from one form into the other; or if any delay takes place in doing so, there will be a difference between the Value of the metal as Bullion and as Coin, equal to the charge for workmanship, the tax, and the amount of interest accruing during the period of delay These, however, are all fixed or constant quantities, which may be ascertained, and they form the limits of the variation of the Value of the metal in one form from its Value in the other form In the following remarks we shall assume that there is no charge for the workmanship, no tax, and no delay in doing it no obstruction, in short, of any form to changing the metal from one form to the other Upon these assumptions, then, we have this fundamental principle of the Coinage Any quantity of Metal in the form of Bullion must be of exactly the same Value as the same quantity of Metal in the form of Coin In the case of the Coinage of England, no charge of any sort is made for coining Gold Bullion: but as a considerable delay may take place before any one who brings Bullion to the Mint can have it coined, the 7 & 8 Vict. (1844), c. 32, s. 4, enacts that every person may take standard Bullion to the Bank of England, and that the Bank shall be obliged to give him Notes to the amount of £3 17s. 9d. for every ounce of such Bullion. And as the holder of Notes may demand legal coin for them, at the rate of £3 178. 10d. per ounce, there is thus practically a difference of 14d. per ounce between Gold Bullion and Gold Coin 6. In the times of the Homeric poems there was certainly no money in use. And the words significative of wealth in Homer give no preference to gold and silver above other things. On the contrary, they are comparatively seldom mentioned. The Homeric words expressive of wealth more frequently refer to cattle, or horses, or agriculture. Thus we have woλúppηv, πoλvßoúтns, πολύιππος, φιλοκτέανος, πολυπάμων, ἄφνειος, πολυκτήμων, πολυλήϊος. In Iliad vii. 180, and xi. 46, are almost the only instances in which gold is especially alluded to as Wealth, πολυχρύσοιο Μυκήνης. When the Greek and Trojan leaders send spies to discover the plans of the enemy, neither of them promises money as a reward. Nestor, Iliad x. 215, promises the successful spy a black ewe with its young, a matchless gift; and Hector, x. 35, promises on his side a chariot and a pair of horses Most authorities consider that the Homeric poems were written about the ninth century B.C.; though many would place their origin, at least, at a much more remote date. At that period, therefore, there was no money of any sort in Greece, nor were gold and silver ever referred to as measures of value; when the convenience of referring things to a common measure of value was first thought of, oxen were used for that purpose, as we have seen in the previous chapter. But some time after the Homeric poems, though we have no means of conjecturing when, a money of a curious nature came into general use throughout Greece. Large iron or copper nails, called oẞéλoko, of such a size that six of them constituted a handful, were used as money In the eighth century B.C. Argos was the most powerful State in Greece, and was the metropolis both of the Pelopennesian and Asiatic Dorians. At this period Pheidon of Argos was the most powerful sovereign of Greece, and held the iland of Egina in his L |