2. As the very purpose of coining is to certify that the pieces of Bullion are of a certain definite weight and fineness, it is evident that a fixed quantity of bullion, as a pound weight, must be divided into a fixed number of Coins.

The number of Coins into which a given quantity of Bullion is divided, is called the Mint Price of that quantity of Bullion.

It is perfectly clear then that the Mint Price of Bullion is a fixed quantity; it can by no possibility vary until the same quantity of bullion is coined into a different number of Coins.

To alter the Mint Price of Bullion, is merely an expression which means an alteration in the standard weight of the Coinage.

To suppose that the Mint Price of Bullion could vary is manifestly as great an error as to suppose that a hundredweight of sugar can be a different weight from 112 separate pounds' weight of sugar: or that any quantity of wine in a hogshead could differ in quantity from the same quantity of wine in bottles: or that a loaf of bread could alter its weight by being cut up into slices.

Until recent times, when more attention has been paid to the state of the Coinage, these Coins might circulate for a considerable time in a country, and lose a good deal of their weight, without losing their Value. People were so accustomed to attach a certain Value to the sight of a particular Coin, that unless they were money dealers they did not stop to inquire too curiously whether it was exactly of the proper weight or not.

In fact when a coinage has been some time in use, few people know what the legal weight of the Coins is. Many for instance do not associate the idea of a pound with any particular weight of bullion; and thus in exchange for commodities and services, Coins may pass at their nominal value for a considerable time after they have lost much of their legal weight. Thus Shakespeare says"'Tween man and man, they weigh not every stamp, Though light, take pieces for the figure's sake." "When Coin has been for some time in circulation, it must necessarily lose a good deal of its weight from the wear and tear of circulation, even if it be not subjected to any bad practices, such as clipping, which used to be done to a great extent in this country before the practice of milling the edges was adopted. In 1816, when the last great reformation of the Coinage took place in England, the greater part of it was nothing but a thin wafer of silver, from which all traces of an impression had long since vanished; and it was reduced to scarcely more than half its legal weight.

Though Coins may circulate in a country for some time after they have lost a good deal of their weight, without any perceptible change in their value with respect to ordinary commerce, when they are given in exchange for bullion the case is different. As the value of bullion is measured weight for weight with the Coins, it is clear that if the Coins have lost weight, a greater number of them must be given to purchase any amount of bullion than if they were of full weight. Thus if the Mint Price of silver bullion be 5s. 2d. per ounce; or if that quantity of silver bullion is cut into that number of Coins, then if the Coins have lost their weight from any cause, it is clear that more than 5s. 2d. must be given to purchase an ounce of bullion. It may require perhaps 6s. or even more to buy an ounce of bullion.

The quantity of Coin at its full legal weight which is equal to a given weight of Bullion is called the Mint Price of that quantity of Bullion; but the quantity of the current Coin which is equal to it in weight is called the Market Price; and as, if the Coins are diminished in weight, more of them must be given than if they are of full weight, the Market Price will apparently be higher than the Mint Price, and this is called a Rise of the Market Price of Bullion above the Mint Price.

The meaning of this is that the current Coins are deficient in their legal weight. If the Market Price of silver be 6s. an ounce; it means that six shillings contain only as much silver as 5s. 2d. ought to do, or that the Current Coins want one-sixth of their legal weight. Thus it is perfectly clear that the rise of the Market Price is due to the Depreciation of the Coinage.

Hence we have this fundamental law of the Coinage -

When the Market Price of Bullion rises above the Mint Price, the excess is the proof and the measure of the Depreciation of the Coinage.

The Market Price of Bullion could never fall below the Mint Price, unless there was more Bullion in the Coins than there ought to be; which of course would never be the case. If such a case could happen the fall in the Market Price below the Mint Price would be the proof and the measure of the excess of the Coins above their legal weight.

3. If the Coinage of a country fall into a degraded state from long wear and tear, or other causes, and a new Coinage of full weight be issued, and allowed to circulate along with it, one of two effects must inevitably follow. Either those persons who have commodities to sell will make a difference in the nominal prices of articles, according as they are paid in full weighted, or degraded, Coin; that is the depreciated Coin will be at a discount as compared with the full weighted Coin; or if there be a law to prevent this, and to make both pass at the same value, bullion dealers will immediately collect all the full weighted Coins they can, and melt them down into bullion, or export them: so that the new Coinage will quickly disappear from circulation.

These considerations lead us to a fundamental and universal law in Economics, which has been found to be true in all countries and ages - That bad money drives out good money from circulation or as it is expressed in an old pamphlet "When two sorts of coin are current in the same nation of like value by denomination, but not intrinsically, that which has the least value will be current, and the other as much as possible will be hoarded" or exported we may add.

The fact of the disappearance of good Coin in the presence of bad Coin was noticed by Aristophanes, and was long the puzzle of financiers and statesmen, who continued to issue good Coin from the Mint while the old and degraded Coin was allowed to circulate, and they were greatly perplexed by its immediate disappearance, till Sir Thomas Gresham explained the cause, whence we have called it Gresham's Law of the Currency. We shall shortly see another instance of its importance.

It is also from the same principle that a Paper Currency is invariably found to expel a Metallic Currency of the same denomination from circulation. And to shew the generality of the principle, it was found in America that when a depreciated Paper Currency had driven Coin out of circulation, and a still more depreciated Paper Currency was issued, the more depreciated Paper drove out the less depreciated from circulation.

It may be worth while to notice an error which is by no means unfrequent. Some writers contend against fixing the price of gold as it is called. It is now acknowledged to be a great Economical error to attempt to fix the price of any articles. Some writers contend that it is an equal error to fix the price of gold. But those who do so overlook a very important consideration. The word "Price" except in the single instance "Mint Price" always denotes the quantity of one article, which is used as a measure which is given for another article of a different nature. Thus we say that the price of a bushel of wheat is 6s., when the silver, the substance of which shillings are composed, is of a different nature from the wheat. But in the expression "Mint Price of Bullion," it always means the value of Bullion expressed in Coin of the same metal. The Mint Price of Gold Bullion means its price expressed in Gold Coin: the Mint Price of Silver Bullion means its price expressed in Silver Coin.

So long, therefore, as the Coins retain their full legal weight, the Market Price of Bullion can by no possibility vary from its Mint Price. If the law requires an ounce of gold to be coined into 31. 17s. 10 1/2d., so long as the Coins retain their full legal weight, it can make no difference in the Market Price whether gold becomes as plentiful as iron, or as scarce as diamonds; for the Money always continues at the same weight whatever be the abundance or the scarcity of the metal. The value of gold may vary with respect to other things; it may purchase more or less bread, or meat, or clothes, or anything else at one time than at another: but it is absolutely impossible that its value in Bullion can differ from its value in Coin. To suppose that it could, would be as irrational as to suppose that because bread became very abundant or very scarce, a loaf of bread could differ from itself in Weight when cut up into slices, or a cask of Wine differ from itself when drawn off into bottles.

The Mint Price of Gold, therefore, is nothing more than a public declaration of the weight of metal which the law requires to be in the Coin, which accidental circumstances have caused to be considered as the legal measure of value in this country: and an alteration of the Mint Price of Gold, would be simply an alteration in the standard weight of the Coin: and would be the same thing in principle as an alteration of the standard yard measure. Those persons who ridicule the idea of having the Mint Price of gold fixed, should, to be consistent, also ridicule the idea of having the standard yard measure fixed. Those who wish to let the Mint Price follow the Market Price should also contend that every tradesman should have his yard measure of as many inches as he pleases: because when the Market Price of gold rises above the Mint Price, it is precisely analogous to cutting so many inches off the yard. This fraudulent curtailment of the measure of value has never been done since Parliament has been the chief power in the Legislature. But it was constantly done in former times when the Crown was more despotic than it is now. The Pound at the present day is curtailed of two thirds of what it was in the time of William the Conqueror.