The first change in England's method of dealing with her currency difficulties came in 1774. At that time she was suffering from the double evil of a currency deficient in quantity and in the weight of the individual pieces. Owing to the rates at which foreign coins were tariffed, all the full-weight gold and silver coins were speedily exported or melted down, and light-weight money of both domestic and foreign manufacture was alone in current use. On the advice of Lord Liverpool a remedy was adopted which differed in principle from that which had been employed over and over again in the past. A re-coinage of gold was ordered, and it was decreed that the new coins should not be legal-tender if they were underweight; and that henceforth worn and clipped coins should be accepted at their bullion value only. Regarding silver the terms of the act are still more significant. They are as follows: "And be it further enacted that no tender in the payment of money made in the silver coin of the realm, of any sum exceeding the sum of £25 at any one time, shall be reputed in law or allowed to be legal-tender within Great Britain or Ireland for more than according to its value by weight, after the rate of 5s. 2d. per oz. of silver, and no person to whom such tender shall be made shall be any way bound thereby or obliged to receive the same in payment in any manner than as aforesaid ; any law, statute, or usage to the contrary notwithstanding." In this legislation the modern method of maintaining the concurrent circulation of gold and silver coins was clearly foreshadowed and the first step taken towards the introduction of gold monometallism. It was only necessary to still further limit the legal-tender quality of silver coins, and to introduce a considerable margin between their tale and their intrinsic value, as measured in gold, to make them subsidiary in the modern sense of the term, and thus to take away their capacity to drive gold out of circulation and to render their exportation unprofitable.
Nearly half a century passed before these last steps were taken, and in the meantime the country experienced the effects of the suspension of specie payments by the Bank of England. This happened in 1797, and the depreciation of the bank-notes which followed drove both silver and gold out of the country in large quantities, and rendered retail and small transactions of all kinds difficult on account of the scarcity of small change. Tradesmen were forced to issue private tokens and various other forms of unauthorized currency in order to relieve the needs of the situation. It was as a remedy to this state of affairs that the act of 1816 was passed, the preamble of which reads as follows: "Whereas the silver coins of the realm have, by long use and other circumstances, become greatly diminished in number and deteriorated in value, so as not to be sufficient for the payments re quired in dealings under the value of the current gold coins, by reason whereof a great quantity of light and counterfeit silver coin and foreign coin has been introduced into circulation within this realm, and the evils resulting therefrom can only be remedied by a new coinage of silver money," therefore be it enacted, etc. The substance of the enactment was that a Troy pound of silver, eleven ounces two pennyweights fine, should be coined into sixty-six shillings, but issued to the importer or to the public at the rate of sixty-two shillings per Troy pound, and that all silver coins should henceforth be legal-tender only to the amount of forty shillings or less. A portion of the section relating to this last point is worth quoting on account of the clearness with which it sets forth the intention of Parliament to establish the gold standard. These are the words: "And whereas at various times heretofore the coins of this realm of gold and silver have been usually a legal tender for payments to any amount, and great inconvenience has arisen from both these precious metals being concurrently the standard measure of value and equivalent of property, it is expedient that the gold coin made according to the indentures of the mint should henceforth be the sole standard measure of value and legal-tender for payment without any limitation of amount, and that the silver coin should be a legal-tender to a limited amount only."
The principles established by the act of 1816 have not been violated in spite of the numerous efforts of other nations and of many English citizens to induce the government to reintroduce the double standard. Throughout all the controversies of recent times English statesmen have championed the cause of gold monometallism, and have been able to point out very substantial advantages enjoyed by reason of adherence to this system. Since 1816 there has never been any doubt regarding the value of a sound bill of exchange on England or regarding the exact meaning of any other contract calling for the payment of pounds, shillings, and pence. As we have had occasion to point out in the preceding pages of this book, this fact has been one of the chief causes of England's long-continued dominance in the field of international finance, and it is highly probable that she owes much of her industrial and commercial progress to the same cause. Whoever may be disposed to doubt this, however, cannot question the fact that this act put an end to the difficulties which had harassed English statesmen for centuries and had been a constant drag upon industry and commerce. After 1816 the currency problems of England concerned her credit and banking systems rather than her coins.