“And such fixed value does not always agree, I suppose, with its natural value. It may sometimes cost more to obtain gold, and sometimes silver; and then it is either impossible or injurious to make them keep the value originally fixed. Is this the reason?”
“This is the great objection to a double standard. If, from any circumstance, silver became more plentiful than it had been, a man would be anxious to pay his debts in silver. If he owed 100l. to his landlord, he would pay him 100 sovereigns; he would go and get as much silver with his sovereigns as would coin into a hundred and ten pounds, and then pay his landlord the hundred, and keep the ten. Other people would do the same, and we should be deluged with silver coin, while the gold went to the melting-pot.”
“And all money would be worth less, from there being much more of it, I suppose?”
“Yes. There would thus be the two inconveniences of a needless fluctuation in the value of the currency, and of a new coinage being necessary as often as the one metal may be more easy to be had than the other.”
“Yes. If gold were the more plentiful of the two, people would be just as anxious to pay their debts in gold; and then the silver coin would disappear.”
“Certainly. Now, why should we expose ourselves to these inconveniences of a double standard, when a single one does quite as well, except for small payments?”
“But why may we tender so much as forty shillings in silver? Why more than twenty?”
“Because it is not worth any body’s while, for the sake of the profit on payments of forty shillings, to coin more silver than the market will bear. Up to this amount, and not beyond it, we can reconcile the advantage of a variety of money with the safety of a single standard. Surely it is the simplest way to fix one standard, that is, to order what shall be the legal fineness and weight of coin of one metal, and to leave other kinds to the natural variations which they cannot be prevented from sharing with all commodities.”
“Why is gold made the standard? It cannot well be divided into money so small as shillings and sixpences; and surely, it would be better to have the legal tender uniform, instead of gold down to two pounds, and then silver. For that matter, copper would be better still, if it were not so heavy and bulky.”
“There are different opinions among wise men as to which of the two superior metals should be the standard. Nobody, I believe, wishes for copper.”