Metals, nowadays serve the purposes of money chiefly in the form of coins. Originally doubtless, and occasionally in historic times, they were used in a crude state, the requisite amount being weighed out on the occasion of each exchange or passed from hand to hand in quills or other crude receptacles capable of being used as instruments of measurement. The great advantages of coins, however, led to their universal use in very early times, and at present their manufacture constitutes a business of no small magnitude and of great social significance.
A coin may be defined as a piece of metal or combination of metals bearing a stamp indicative of its weight and fineness, and other devices designed to render counterfeiting difficult, to prevent clipping and sweating, and sometimes to serve educational, artistic, or patriotic purposes. The explanation of their universal use may be found in the fact that, in order to transact business rapidly and accurately, it is absolutely necessary that the money metals should be put up in accurately labelled packages of convenient size and weight, so that any amount, large or small, can be transferred from one person to another or from one place to another without the waste of time and danger of error which weighing the metals or measuring them in any other way would involve. If gold and silver in its pure state had to be weighed in every transaction, commerce on a large scale, in which rapidity and accuracy are essential and even slight losses in each exchange ruinous, would be impossible. A properly made coin always contains a fixed amount of metal of an invariable degree of fineness, and is so marked that we may know its exact value at sight without resort to the scales or the melting-pot. In making exchanges, therefore, it is only necessary to count and handle them, processes which may be performed very rapidly if their denominations, sizes, and weights are conveniently arranged.
Among the prime considerations in the manufacture of coins are honesty and accuracy. Inasmuch as they must pass from hand to hand throughout the length and breadth of the land and among rich and poor, learned and ignorant, those who understand their nature and those who do not, and must be accepted by everybody at the value represented by the devices placed upon them, absolute confidence in the honesty and accuracy of their manufacture is essential. If the stamp placed upon the coins were false, for example, people would soon discover the fact, and refuse to accept them, or, if compelled by law, protect themselves by refusing to sell their goods and services or by raising their prices. In any case commerce would be seriously obstructed and perhaps entirely destroyed. Inaccuracy in their manufacture is almost equally harmful. Two coins of the same denomination and made from the same metal should be exactly equivalent to each other in weight and fineness. Otherwise the superior coins would soon be culled out and melted up and the currency be constituted exclusively of the inferior ones. Moreover, the process of exchanging coins for each other simply for purposes of gain interferes with their legitimate use and obstructs commerce. Owing in part at least to its great importance, the right of coinage has been considered from very early times as the prerogative of the sovereign. Throughout Europe, however, during the Middle Ages it was frequently granted to petty princes and free cities, and in consequence very much abused. In order to make the money received go very much farther than it otherwise would in the payment of debts and the purchase of commodities, debasement was frequently practised; that is, baser and cheaper metals were substituted for a part of the gold and the silver, the old weight and name being retained. Another method employed to accomplish the same end was the reduction of the weight and the size of the coins. These practices were equivalent to a partial repudiation of debts, and, so far as the sovereign possessed and exercised the right of fixing prices, they also amounted to the levy of a tax upon the merchants with whom these sovereigns dealt. In partial justification, or at least explanation, of this abuse, it should be said that the laws of value were unknown to the royal personages of the Middle Ages, and that they generally believed that they possessed both the right and the ability to fix the value of money arbitrarily. The debasement of coins and the diminution of their weight, therefore, were not considered as criminal acts, but as the exercise of a sovereign right and a sovereign power. Not until commerce was developed to such an extent as to make its importance understood by kings and princes did the voice of the merchant class make itself heard in protest against these practices, and correct ideas regarding the nature and functions of money become a part of the common knowledge of business men and other well-informed people. The process of reform consisted in the gradual withdrawal of the right of coinage from all private persons, and in the development of the strictest integrity in the manufacture of coins on the part of public authorities. At the present time coinage is exclusively a government function, and in no one of the great nations would debasement or other dishonest practices be tolerated. When much worn by usage or in any other way defaced or reduced in weight coins are usually withdrawn from circulation by public authority and reminted. Perfect confidence is thus ensured. Since the laws of every nation contain an accurate description of the material, weight, fineness, and devices of its coins, and the mints execute these laws with perfect integrity, there is no occasion for ignorance, and no danger is involved in accepting metallic money at its face value.
In the preparation and maintenance of a good coinage system several important problems arise, in the solution of which all nations have been guided by substantially the same considerations, though their practices differ considerably in detail. Of these we will discuss the selection of units of value and methods of reckoning, the size, weight, and fineness of coins, and their names and devices.