An Inquiry into the Principles of Political Oeconomy (Vol. 1 of 2) / Being an essay on the science of domestic policy in free nations. In which are particularly considered population, agriculture, trade, industry, money, coin, interest, circulation, banks, exchange, public credit, and taxes

by Sir James Steuart

Or for making of plate.

III. A sudden call for bullion, for the making of plate. A gold-smith can well afford to give 67 pence for an ounce of silver, that is to say, he can afford to give one pound of gold for 14 pounds of silver, and perhaps for less, notwithstanding that what he gives be more than the ordinary proportion between the metals, because he indemnifies himself amply by the price of his workmanship: just as a tavern-keeper will pay any price for a fine fish, because, like the goldsmith, he buys for other people.

Exchange raises, and the mint price brings down bullion.

IV. The mint price has as great an effect in bringing down the price of bullion, as exchange has in raising it. In countries where the metals in the coin are justly proportioned, where all the currencies are of legal weight, and where coinage is imposed, the operations of trade make the price of bullion constantly to fluctuate between the value of the coin and the mint price of the metals. This shall afterwards be sufficiently explained, in the second part.

Continuation of the operations of money-jobbers

Now let us suppose that the current price of silver bullion in the market is 65 pence the ounce, paid in lawful money, no matter of what weight, or of what metal. |Their rule for melting the coin.| Upon this the money-jobber falls to work. All shillings which are above ¹⁄₆₅ of a pound troy, he throws into his melting pot, and sells them as bullion, for 65d. per ounce; all those which are below that weight he carries to market, and buys bullion with them, at 65 pence per ounce.

What is the consequence of this?

That those who sell the bullion, finding the shillings which the money-jobber pays with perhaps not above ¹⁄₆₆ of a pound troy, they on their side raise the price of their bullion to 66 pence the ounce.

This makes new work for the money-jobber; for he must always gain. He now weighs all shillings as they come to hand; and as formerly he threw into his melting-pot those only which were worth more than ¹⁄₆₅ of a pound troy, he now throws in all that are in value above ¹⁄₆₆. He then sells the melted shillings at 66 pence the ounce, and buys bullion with the light ones, at the same price.

This is the consequence of ever permitting any species of coin to pass by the authority of the stamp, without controlling it at the same time by the weight: and this is the manner in which money-jobbers gain by the currency of light money.