A British sovereign of full weight contains about equal intrinsic quantities of pure gold with twenty-five francs twenty centimes.
'But it does not follow that even a full-weight sovereign is more valuable, either in a mathematical or in a commercial sense, than twenty-five francs of gold coin, when it is conveyed to a country within the operation of the Monetary Convention of December, 1865. There the sovereign ceases to be coin, and is nothing more than bullion; and, as bullion, is subject to a seigniorage or mint-charge, when converted into coin. And as, in the countries in question, twenty-five francs twenty centimes of bullion are, on the average, equal to only twenty-five francs of coin, the sovereign is practically "valuable" only as twenty-five francs.'—Royal Commission on International Coinage. Evidence of Mr. Hendriks, p. 145.
The reason for this must be that the British coinage is gratuitous. A sovereign may be regarded from two points of view—as a certain weight of gold of a known fineness, manufactured into a uniform shape by the officials of the mint, and as the current coin of the realm. At present no charge is made for the process of manufacture. The question to be decided is this, Is the coin, plus the process of manufacture, worth more than the same weight of gold before that process is performed? It appears that it is even worth less in France.
'The French Mint publishes a tariff giving a schedule of the coinage of each country, the legal weight and fineness in the country of its mintage, and a comparative estimate of fineness, according to the French Mint tariff of purchase, stating the value of each coin per kilogramme and per single piece.'
If the intrinsic value of the pure gold contained in the sovereign is considered, it is equal to 25·2079 at par; but the Mint tariff giving the price of purchase makes it only 25·12 at par, a deduction of about nine centimes on each sovereign. In estimating it thus,
'The French Mint Commission and M. Durand, its Commissioner-General, practically admit that current gold coin in France is equal in exchange to its full legal weight of bullion, plus seigniorage. In order to test this with mathematical exactness, we must observe that a kilogramme, i.e., 1,000 grammes of absolutely pure gold without deduction for seigniorage or mint charges, is worth 3444·4444 francs; or, with deduction at the rate of 6 francs 70 centimes, on 3,100 francs, 9/10 fine, the 1,000 grammes of absolutely pure gold, 10/10 fine, are worth 3,437 francs. Then, at ·916 fine, i.e., at the French Mint tariff of English gold coin treated as bullion, the proportionate value of the kilogramme of sovereigns, allowing for seigniorage or mint charge, comes out as given in the tariff, 3148·29 francs. And thus, doubtless, the French Mint arrives at its present equation of 25·12 francs = 1 sovereign. For the proportion is, 1,000 grammes : 3148·29 francs :: 7·98085 grammes : x = 25·12602 francs.'—Royal Commission on International Coinage. Mr. Hendriks' Evidence, p. 146.
It appears by this that the pound sterling is practically undervalued 2d. in France; one penny about in the intrinsic worth of the gold; and another, the cost of coining the metal, including the loss for delay in so doing.
Any alteration in the standard of the coinage is, beyond doubt, a measure which should not be carelessly undertaken. Those opposed to such a measure have stated that the standard had remained unchanged in this country for more than a century and a half. Great weight has also been attributed by some persons to the resolution of the House of Commons of 20th October, 1696, and passed again in the same words on the 12th June, 1822, 'That this House will not alter the standard of the gold and silver coins of this kingdom, in fineness, weight, or denomination.' A solemn declaration beyond doubt; but notwithstanding this, several changes have at various times been made in the currency of the realm.
In 1696, the year of the 'Resolution' silver was the sole legal tender.
In 1717, silver ceased to be the sole standard, and the double, or alternative standard of gold or silver, was adopted. This change was made under the advice of Sir Isaac Newton.