This, from the principles already laid down, must proportionally diminish the value of the money-unit.
From what has been observed concerning the deviations in the coin from the proportion in the market price of the metals, and from the legal weight, we may lay down this undoubted principle, That the value of the money-unit of accompt is not to be sought for in the statutes and regulations of the mint, but in the actual intrinsic value of that currency in which all obligations are acquitted, and all accompts are kept.
Variations to which the money-unit is exposed, from the imposition of coinage.
IV. As I have at present principally in view to lay down certain principles with regard to money, which I intend afterwards to apply to the state of the British coin; and as these principles are here restricted to the effects which every variation in the coin has upon the value of the unit of money in accompt, I shall in this place only observe, as to the imposition of coinage,
That coin being necessary in every country where the money-unit is attached to the metals, it must be procured by those who are obliged to acquit their obligations in material money.
If, therefore, the state shall oblige every one who carries the metals to the mint to pay the coinage, the coin they receive must be valued, not only at the price the metals bear in the market, when they are sold as bullion, (or mere metal, of no farther value than as a physical substance) but also at the additional value these metals receive in being rendred useful for purchasing commodities, and acquitting obligations. This additional value is the price of coinage.
When coinage is imposed, bullion must be cheaper than coin.
If, therefore, in a country where coinage is free, as in England, this coinage shall come to be imposed, the money-unit continuing to be affixed as before to the same quantity of the metals, ought to rise in its value; that is, ought to become equal to a greater quantity of every sort of merchandize than before; consequently, as the rough metals of which the coin is made are merchandize, like every other thing, the same number of money-units realized, or represented in the coin, ought to purchase more of the metals than before: That is to say, that in every country where coinage is imposed, bullion must be cheaper than coin.
This proposition would be liable to no exception; were it true that no debt could be exacted but in the nation’s coin; because in that case, the creditor would be constantly obliged to receive it at its full value.
Exception from this rule.