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the bullion the whole value of the duty； because； the government
having everywhere the exclusive privilege of coining； no coin can
come to market cheaper than they think proper to afford it。 If
the duty was exorbitant indeed； that is； if it was very much
above the real value of the labour and expense requisite for
coinage； false coiners； both at home and abroad； might be
encouraged； by the great difference between the value of bullion
and that of coin； to pour in so great a quantity of counterfeit
money as might reduce the value of the government money。 In
France； however； though the seignorage is eight per cent； no
sensible inconveniency of this kind is found to arise from it。
The dangers to which a false coiner is everywhere exposed； if he
lives in the country of which he counterfeits the coin； and to
which his agents or correspondents are exposed if he lives in a
foreign country； are by far too great to be incurred for the sake
of a profit of six or seven per cent。
The seignorage in France raises the value of the coin higher
than in proportion to the quantity of pure gold which it
contains。 Thus by the edict of January 1726； the mint price of
fine gold of twenty…four carats was fixed at seven hundred and
forty livres nine sous and one denier one…eleventh； the mark of
eight Paris ounces。 The gold coin of France； making an allowance
for the remedy of the mint； contains twenty…one carats and
three…fourths of fine gold； and two carats one fourth of alloy。
The mark of standard gold； therefore； is worth no more than about
six hundred and seventy…one livres ten deniers。 But in France
this mark of standard gold is coined into thirty Louis d'ors of
twenty…four livres each； or into seven hundred and twenty livres。
The coinage； therefore； increases the value of a mark of standard
gold bullion； by the difference between six hundred and
seventy…one livres ten deniers； and seven hundred and twenty
livres； or by forty…eight livres nineteen sous and two deniers。
A seignorage will； in many cases； take away altogether； and
will； in all cases； diminish the profit of melting down the new
coin。 This profit always arises from the difference between the
quantity of bullion which the common currency ought to contain；
and that which it actually does contain。 If this difference is
less than the seignorage； there will be loss instead of profit。
If it is equal to the seignorage； there will neither be profit
nor loss。 If it is greater than the seignorage； there will indeed
be some profit； but less than if there was no seignorage。 If；
before the late reformation of the gold coin； for example； there
had been a seignorage of five per cent upon the coinage； there
would have been a loss of three per cent upon the melting down of
the gold coin。 If the seignorage had been two per cent there
would have been neither profit nor loss。 If the seignorage had
been one per cent there would have been a profit； but of one per
cent only instead of two per cent。 Wherever money is received by
tale； therefore； and not by weight； a seignorage is the most
effectual preventative of the melting down of the coin； and； for
the same reason； of its exportation。 It is the best and heaviest
pieces that are commonly either melted down or exported； because
it is upon such that the largest profits are made。
The law for encouragement of the coinage； by rendering it
duty…free； was first enacted during the reign of Charles II for a
limited time； and afterwards continued； by different
prolongations； till 1769； when it was rendered perpetual。 The
Bank of England； in order to replenish their coffers with money；
are frequently obliged to carry bullion to the mint； and it was
more for their interest； they probably imagined； that the coinage
should be at the expense of the government than at their own。 It
was probably out of complaisance to this great company that the
government agreed to render this law perpetual。 Should the custom
of weighing gold； however； come to be disused； as it is very
likely to be on account of its inconveniency； should the gold
coin of England come to be received by tale； as it was before the
late recoinage； this great company may； perhaps； find that they
have upon this； as upon some other occasions； mistaken their own
interest not a little。
Before the late recoinage； when the gold currency of England
was two per cent below its standard weight； as there was no
seignorage； it was two per cent below the value of that quantity
of standard gold bullion which it ought to have contained。 When
this great company； therefore； bought gold bullion in order to
have it coined； they were obliged to pay for it two per cent more
than it was worth after coinage。 But if there had been a
seignorage of two per cent upon the coinage； the common gold
currency； though two per cent below its standard weight； would
notwithstanding have been equal in value to the quantity of
standard gold which it ought to have contained； the value of the
fashion compensating in this case the diminution of the weight。
They would indeed have had the seignorage to pay； which being two
per cent； their loss upon the whole transaction would have been
two per cent exactly the same； but no greater than it actually
was。
If the seignorage had been five per cent； and the gold
currency only two per cent below its standard weight； the bank
would in this case have gained three per cent upon the price of
the bullion； but as they would have had a seignorage of five per
cent to pay upon the coinage； their loss upon the whole
transaction would； in the same manner； have been exactly two per
cent。
If the seignorage had been only one per cent and the gold
currency two per cent below its standard weight； the bank would
in this case have lost only one per cent upon the price of the
bullion； but as they would likewise have had a seignorage of one
per cent to pay； their loss upon the whole transaction would have
been exactly two per cent in the same manner as in all other
cases。
If there was a reasonable seignorage； while at the same time
the coin contained its full standard weight； as it has done very
nearly since the last recoinage； whatever the bank might lose by
the seignorage； they would gain upon the price of the bullion；
and whatever they might gain upon the price of the bullion； they
would lose by the seignorage。 They would neither lose nor gain；
therefore； upon the whole transaction； and they would in this； as
in all the foregoing cases； be exactly in the same situation as
if there was no seignorage。
When the tax upon a commodity is so moderate as not to
encourage smuggling； the merchant who deals in it； though he
advances； does not properly pay the tax； as he gets it back in
the price of the commodity。 The tax is finally paid by the last
purchaser or consumer。 But money is a commodity with regard to
which every man is a merchant。 Nobody buys it but in order to
sell it again； and with regard to it there is in ordinary cases
no last purchaser or consumer。 When the tax upon coinage；
therefore； is so moderate as not to encourage false coining；
though everybody advances the tax； nobody finally pays it；
because everybody gets it back in the advanced value of the coin。
A moderate seignorage； therefore； would not in any case
augment the expense of the bank； or of any other private persons
who carry their bullion to the mint in order to be coined； and
the want of a moderate seignorage does not in any case diminish
it。 Whether there is or is not a seignorage； if the currency
contains its full standard weight； the coinage costs nothing to
anybody； and if it is short of that weight； the coinage must
always cost the difference between the quantity of bullion which
ought to be contained in it； and that which actually is contained
in it。
The government； therefore； when it defrays the expense of
coinage； not only incurs some small expense； but loses some small
revenue which it might get by a proper duty； and neither the bank
nor any other private persons are in the smallest degree
benefited by this useless piece of public generosity。
The directors of the bank； however； would probably be
unwilling to agree to the imposition of a seignorage upon the
authority of a speculation which promises them no gain； but only
pretends to insure them from any loss。 In the present state of
the gold coin； and as long as it continues to be received by
weight； they certainly would gain nothing by such a change。 But
if the custom of weighing the gold coin should ever go into
misuse； as it is very likely to do； and if the gold coin should
ever fall into the same state of degradation in which it was
before the late recoinage； the gain； or more properly the savings
of the bank； in consequence of the imposition of a seignorage；
would probably be very considerable。 The Bank of England is the
only company which sends any considerable quantity of bullion to
the mint； and the burden of the annual coinage falls entirely； or
almost entire