7. We must now observe the difference between two expressions, which, though often used indiscriminately, are essentially distinct, viz. Diminution in Value and Depreciation. An Alteration in Value of any commodity means that the quantity of it which was considered as an equivalent for a certain amount of some other commodity with which it is compared, has undergone a change. Depreciation means that it is not really of the Value it professes to be. Alteration in Value of a commodity is always used in reference to some other commodity with which it is compared; Depreciation in reference to itself. Thus if at any given time an ounce of gold will exchange for fifteen ounces of silver, and if owing to any great and sudden increase of the quantity of silver, while the quantity of gold remains the same, one ounce of gold becomes able to purchase twenty ounces of silver, then silver is said to have sustained a Diminution of Value with respect to gold; or if, while silver remained the same, gold became very scarce, so that one ounce of gold would purchase twenty ounces of silver, then gold would be said to have risen in Value with respect to silver. But if a Bank Note which professes to be of the Value of five sovereigns, will only purchase four sovereigns, it is Depreciated; or if a guinea which professes to contain a certain fixed weight of pure gold, does not contain that amount, it is Depreciated. The expression Diminution in Value is applied both to commodities and Money: the word Depreciation is more usually applied to Money: when an analogous change takes place in commodities it is usually called Deterioration.

These distinctions are very necessary to be observed in all discussions regarding the Value of Coins which retain the same name during a long series of ages. The pound of money in the days of William the Conqueror really meant a pound weight of silver bullion; and silver was the only Money. Since then, silver has greatly increased in quantity, and other things are used as Money, which have greatly tended to diminish its Value. It is said, though of course all such statements are extremely difficult to verify, that silver has fallen to a twelfth of its Value in those times. Not only has the Value of the metal greatly dimin-ishedy but also the Coinage is greatly deteriorated. The shilling was originally the 20th part of a pound weight of silver; it is now only the 62nd part. Hence it is said that a shilling will only command the 36th part of what it formerly would. But as great changes have taken place in everything else as well, it would be difficult to prove this.

These causes affecting the Value of Coins which retain their names through long periods, may act in the same or opposite directions. It is quite easy to imagine that a Coin, though greatly deteriorated, or diminished from its original weight, may in consequence of the increased Value of the material of which it is composed, be able to purchase as much as it would have done originally. It is sometimes alleged that this happened at Rome. The first Coinage of Rome was copper, and this metal was found in great abundance for some time after the foundation of the city. The first measure of Value was the as, which was a pound weight of copper. The as was subsequently reduced to the twelfth part of its weight, and some writers say that in consequence of the great scarcity of the metal, it had increased so much in value, that the deteriorated Coinage would purchase as much as the full pound would originally. This may be so, or not, but it in no way affects the argument. It might very possibly have been so.

These considerations greatly affect the public in the matter of Public Debts. The State agrees at a particular time, to pay a fixed quantity of Bullion, either for ever or for a long period to the Public Creditors. Now even supposing all other things to remain the same, the Value of the Money may vary greatly during long periods, either from the increased scarcity, or the increased abundance of the metal: and either the State or its Creditors may be grievously affected by these changes.