It is demonstrable, even from Sir Isaac Newton's own figures, that the calling down of the guinea to 21s., though largely, was not completely effective in destroying the profit of arbitrage transactions with Holland. With the guinea at 21s., the ratio was still 15 14295⁄68200 while in France and Holland the ratio was 15 or under. That the process of culling and exporting the heaviest silver specie still continued is proved by the state of silver coinage twenty years later, when shillings were found to be deficient in weight, by between 6 and 11 per cent., and sixpences between 11 and 22 per cent., and all species so scarce as to threaten greatest confusion in every branch of trade. At the accession of George III., 1760, the silver coinage was found in so imperfect a state that the crown pieces had almost entirely disappeared,
though minted since 1795 to the amount of over a million and a half sterling. Of half-crowns, likewise minted to the value of £2,329,370, only defaced and impaired specimens remained current, while shillings and sixpences had lost every sign of impression. Up to 1763 only a matter of £5791 in silver had issued from the Mint—practically no coinage at all.
Gradually however, owing to the force of wider principles at work, the matter of the ratio righted itself. Ever since 1756 the value of gold had been rising all over Europe. In 1759 the continental ratio was still calculated at 14 1⁄2, as compared with 15 1⁄5 in England; but by 1773 the continental ratio had overtaken the English, and the market price of standard silver had risen to 5s. 2d. per oz.—the English Mint rate. In the greatly depreciated state of the silver coinage—three-fourths of it was said to be base—even the approach of a fair ratio acted prejudicially on gold. Already, in 1771, the export of gold to Holland had become noticed, and it was asserted that the gold coins had never before been so deficient. They were sent over to Holland, and there filed and returned and put into circulation—a bimetallic phenomenon that always recurs in a currency containing two differently depreciated elements.
ENGLAND: STATE OF THE COINAGE IN 1774
The idea that bimetallic action replaces one good metal by another, an equal weight of one metal for that of the other, a good undepreciated coinage of silver for a good undepreciated coinage of gold, or vice versâ, is not borne out by a single instance in
history. Bimetallic action always substitutes the less for the greater, whether weight or value, the more depreciated for the less, or the depreciated for the perfect standard coin. In this particular instance, 1774, the depreciation of silver had been the result of the action of a too high ratio from 1717 onwards; the depreciation of gold was effected in a much less time between 1770 and 1773, simply because the already depreciated state of the silver causing that differentiation of value, which is the bullionist's opportunity, happened to coincide with a natural rise of the value of gold all over the Continent. The result, therefore, of fifty years of bimetallic régime left England with a currency depreciated in both its limbs, in both gold and silver, and as deficient in the quantity current as in the weight of the individual pieces. This is not in keeping with the theory of bimetallism as developed to-day, according to which the transition from one coin to the other would only be made at the point of equation, and the substituted metal would equalise that displaced. This is theory. The facts of the situation in 1774 are not theory but history, and tell a different tale.
"The evil was so great," says Lord Liverpool, "that the Government found it necessary to take this difficult subject into their immediate consideration. On this occasion I addressed a letter to a noble Lord, who was then Chancellor of the Exchequer, suggesting what appeared to me the proper remedy for this evil. I proposed that, with a view to the general
reform of the coins of the realm, all the deficient gold coins should in the first place be called in and recoined, and that in future the currency of the gold coin should be regulated by weight as well as by tale, and that the several pieces should not be legal tender if diminished below a certain weight. Your Majesty was pleased to approve of this advice and to propose to your Parliament, on 13th January 1774, the calling in and recoining of all the deficient gold coins; and the Chancellor of your Exchequer opened the whole of this plan to the House of Commons, who approved of the measure, which was carried into immediate execution without any complaint and with great success. The defects which had previously existed in this species of coins were thereby removed, and the regulation, then established, of weighing the gold coin has been the means of preserving it at nearly the state of perfection to which it was then brought."
ENGLAND: RECOINAGE OF 1774
The resolutions of the House of Commons on which this recoinage depended were passed on the 10th May 1774. After stating the depreciation existing in the gold coinage the House asserted—(3) that it has been a practice to export and melt down the new and perfect gold coin soon after it is issued for private advantage, to the great detriment of England; (4) that while pieces of gold coin, differing so greatly in weight, are allowed to be current under the same denomination and at the same rate and value, great quantities of the new will continue to be exported and melted down, and,