Gold, silver, and copper, like every other product of human industry, depend fbr their value principally on the labour employed in producing and bringing them to market, and in a considerable degree on the actual demand. As these articles are not employed merely in the fabrication of coins, the demand will vary in each, according to circumstances, which admit of no permanent ratio of ex change between them. If the state were to coin certain pieces of known weight and fineness out of each of these metals, and determine that a certain number of the silver pieces, for example, should in all cases be equivalent to one piece of the gold, it would naturally follow, sup posing the individual to pay nothing the coinage, that a debt might be dis charged with more facility to the debtor, and consequently loss to the creditor, in the cheapest of these two metals, when ever, by the fluctuation of the market, either of them should come to represent a larger portion of the other than the edict of the government had determined. This consequence of fixing the relative value of coins would shew itself in a va riety of ways, which need not be enume rated ; because it is certain that the dearer metal would occupy the greater part of the circulation, while the cheaper pieces would either be melted down, or diminished, if their rated value were too high, and they would be fabricated by individuals, if it were too low, in defiance of every public regulation which might be adopted. If we therefore admit, from considerations of this nature, that no go vernment does in reality possess means of fixing a ratio between two arti clesof commerce, intended to be applied as the tickets of transfer, or the medi ums of exchange, we shall be naturally led to the adoption of one of the metals only, as the representative sign, while the two others are applied merely as in struments of accommodation, for the con venient subdivision of value.
With regard to the question of pre ference in these three metals, experi ence has shewn that society is disposed to assume the dearest ; namely, gold. With the single standard of value the fluc tuations of the market price of the metal, when compared with commodities, will be nearly imperceptible, because they confound themselves with the rise and fall in the prices of all other articles to which the standard is thus applied. If a cheaper metal were to be adopted by the state, and gold were left to circulate at election of individuals, the changes of price in this metal of high value would operate so as to produce an uncertainty in the amount of large sums, and greatly disturb the general transactions of com merce. Merchants would therefore con sider the gold coin as mere bullion, and the community would in a great measure be deprived of its use as a coin ; as actu ally is the case in Holland and other countries, where silver is the legal me dium. A more defective scheme was proposed in France in a report presented by Prieur, from a committee of the Council of Five Hundred, of which a very full abstract is given in the Moni teurs of 6 and 7 Floreal, in the year vi. Nos. 216, 217. It is, that silver coin
should be unchangeable in weight and denomination of value ; but that the price of gold (also coined; should be settled every six months by a declara tion from the national treasury, deduced from the medium price of that metal during the preceding half year. It was rejected by the Council of Ancients. It appears most eligible, that gold, in pieces of determinate weight and fine ness, should constitute the effective coin of the state, or legal tende,r of payment ; that silver and copper should be formed into money, for the purpose of repre senting fractions of the smallest gold coin ; and that the creditor or seller should have the option to refuse all pay ments in these last metals, of any sum ex ceeding the smallest unity of the gold coin.
By this distribution, though the coins of silver and copper would, in strictness, be subject to some fluctuations, arising from the state of the market with regard to those metals, yet the difference would be disregarded in the discharge of ac counts, because it would never amount to a sum of any importance. The only inconvenience which offers itself under such an arrangement is, that these sub ordinate coins would also be melted and sold when the metal was dear, and they would be fabricated, if the metal ever happened to be so cheap as to afford an adequate motive of profit to the illegal coiner. The state, in its deliberations on this subject, might determine that the coins of silver and copper should pass either for more or for less than the medium market price of the metal, or for that value precisely. It is evident that the first of these dispositions would afford coin, which would continually vanish into the melting-pot, and is there fore altogether unadvisable. The me dium rate of intrinsic value would pro duce a similar effect, whenever the mar ket price was low. Whence it follows, that the metal contained in such auxiliary money ought to be of less value than the gold it represents ; and, to prevent the introduction of a similar coinage from private manufacturers, it would be neces sary that the difference between the value of the metal and that represented by the coin should be somewhat less than the cost of workmanship. Under these circumstances, the public would be sup plied with an useful implement or ticket of exchange, which would operate as a pledge of value, very nearly to the amount of its denomination, and would be aflbrded cheaper from the extensive manufactories of government, than it could possibly be made by private work men.
Coin, like every other utensil or tool, is subject to wear, and will, in time, be more or less deprived of its dis tinctive figure, and rendered less valua ble by the loss of weight. When new, it is the real pledge of measure it pre tends to be ; but, if it be suffered to cir culate after its weight is considerably diminished, it may become a desirable object to the coiner to fabricate new pieces apparently in the worn state, or otherwise he may exercise his industry in speedily reducing the new coin to that state, for the sake of the precious metal he may thus acquire.