The Online Library of Liberty

A project of Liberty Fund, Inc.

• Preface
• Chapter I: Barter
• Want of Coincidence In Barter.
• Want of a Measure of Value.
• Want of Means of Subdivision.
• Chapter II: Exchange
• Utility and Value Are Not Intrinsic.
• Value Expresses Patio of Exchange.
• Chapter III: The Functions of Money
• A Standard of Value.
• A Store of Value.
• Separation of Functions.
• Chapter IV: Early History of Money
• Currency In the Hunting State.
• Currency In the Pastoral State.
• Articles of Ornament As Currency.
• Currency In the Agricultural State.
• Manufactured and Miscellaneous Articles As Currency.
• Chapter V: Qualities of the Material of Money
• 1. Utility and Value.
• 2. Portability.
• 3. Indestructibility.
• 4. Homogeneity.
• 5. Divisibility.
• 6. Stability of Value.
• 7. Cognizability.
• Chapter VI: The Metals As Money
• Iron.
• Lead.
• Tin.
• Copper.
• Silver.
• Gold.
• Platinum.
• Nickel.
• Other Metals.
• Alloys of Metals.
• Chapter VII: Coins
• The Invention of Coining.
• What Is a Coin?
• Various Forms of Coins.
• The Best Form For Coins.
• Coins As Works of Art.
• Historical Coins.
• The Royal Attribute of Coining.
• Chapter VIII: The Principles of Circulation
• The Standard Unit of Value.
• Coin, Money of Account, and Unit of Value.
• Standard and Token Money.
• Metallic and Nominal Values of Coins.
• Legal Tender.
• The Force of Habit In the Circulation of Money.
• Gresham's Law.
• Extension of Gresham's Law.
• Chapter IX: Systems of Metallic Money
• Currency By Weight.
• Unrestricted Currency By Tale.
• Single Legal Tender System.
• Multiple Legal Tender System.
• Composite Legal Tender.
• Chapter X: The English System of Metallic Currency
• English Gold Coin.
• English Silver Coin.
• English Bronze Coinage.
• Deficiency of Weight of the English Gold Coin.
• Withdrawal of Light Gold Coin.
• Supply of Gold Coin.
• Supply of Silver Coin.
• The Royal Mint.
• Chapter XI: Fractional Currency
• Billon Coin.
• Composite Coin.
• Bronze Coin.
• English Bronze Coin.
• Weight of the Currency.
• Nickel, Manganese, Aluminium, and Other Metals and Alloys.
• Chapter XII: The Battle of the Standards
• The Double Standard.
• Compensatory Action.
• The Demonetization of Silver.
• Disadvantages of the Double Standard.
• The Monetary Systems of the World.
• Chapter XIII: Technical Matters Relating to Coinage
• The Alloys In Coin.
• The Size of Coins.
• The Wear of Coin.
• Methods of Counting Coins.
• Cost of the Metallic Currency.
• Chapter XIV: International Money
• Advantages of International Money.
• Disadvantages of International Money.
• Conflict of Monetary Systems.
• International Monetary Negotiations.
• Decimalization of English Money.
• The Future American Dollar.
• German Monetary Reform.
• Systems of Fractional Money.
• Final Selection of the Unit of International Money.
• Chapter XV: The Mechanism of Exchange
• Progressive Development of the Methods of Exchange.
• Representative Money.
• Cheque and Clearing System.
• Chapter XVI: Representative Money
• Early History of Representative Money.
• Reasons For the Use of Representative Money.
• Inconvenience of Metallic Money.
• The Weight of Currency.
• Saving of Interest.
• Chapter XVII: The Nature and Varieties of Promissory Notes
• Specific Deposit Warrant.
• General Deposit Warrant.
• Difference Between a Special and a General Promise.
• Pecuniary Promissory Notes.
• Principles of the Circulation of Representative Money.
• Chapter XVIII: Methods of Regulating a Paper Currency
• 1. Simple Deposit.
• 2. Partial Deposit.
• 3. Minimum Reserve.
• 4. Proportional Reserve.
• 5. Maximum Issue.
• 6. Elastic Limit.
• 7. Documentary Reserve.
• 8. Real Property Reserve.
• 9. Regulation By the Foreign Exchanges.
• 10. Free Issue System.
• 11. The Gold Par Method.
• 12. Convertibility By Revenue Payments.
• 13. Deferred Convertibility.
• 14. Inconvertible Paper Money.
• Over Issue of Paper Money.
• Want of Elasticity of Paper Money.
• Chapter XIX: Credit Documents
• Measurement of Credit.
• Bank-notes.
• Cheques.
• Bills of Exchange.
• Interest-bearing Documents.
• Definition of Money.
• Chapter XX: Book Credit and the Banking System
• Single Bank System.
• System of Two Banks.
• Complex Bank System.
• Branch Bank System.
• Bank Agency System.
• London Agency System.
• Country Clearing System.
• Chapter XXI: The Clearing-house System
• Transaction of Business At the London Clearing House.
• Manchester Clearing House.
• New York Clearing House.
• Extension of the Clearing System.
• Advantages of the Cheque and Clearing System.
• Proportion of Cash Payments.
• Cases to Which the Clearing System Is Inapplicable.
• Chapter XXII: The Cheque Bank
• Relation of the Cheque Bank to Other Banks.
• The Cheque Bank As a Monetary Agent.
• Payment of Wages By Cheques.
• The Cheque Bank As a Savings Bank.
• Results of the Cheque Bank System.
• Chapter XXIII: Foreign Bills of Exchange
• Origin and Nature of Bills of Exchange.
• Trade In Foreign Bills.
• The World's Clearing House.
• Centralization of Financial Transactions In London.
• Representation of Foreign Bankers In London.
• Chapter XXIV: The Bank of England and the Money Market
• Expansion of Trade.
• Competition of Bankers.
• The Bank Charter Act of 1844.
• The Free-banking School.
• Possibility of Over-issue.
• The Right of Coining Bank Notes.
• Scotch and English Banking.
• Cash Reserves of Bankers.
• Remedy For the Sensitiveness of the Money Market.
• Chapter XXV: A Tabular Standard of Value
• Corn Rents.
• A Multiple Legal Tender.
• Lowe's Proposed Table of Reference.
• Poulett Scrope's Tabular Standard of Value.
• Difficulties of the Scheme.
• Chapter XXVI: The Quantity of Money Needed By a Nation
• Quantity of Work to Be Done By Money.
• Efficiency of the Currency.
• Effects of the Cheque and Clearing System.
• Conclusion.

The best Form for Coins.

It is a matter of considerable importance to devise the best possible form for coins, and the best mode of striking them. The use of money creates, as it were, an artificial crime of false coining, and so great is the temptation to engage in this illicit art that no penalty is sufficient to repress it, as the experience of two thousand years sufficiently proves. Thousands of persons have suffered death, and all the penalties of treason have been enforced without effect. Ruding is then unquestionably right in saying, that our efforts should be directed not so much to the punishment of the crime, as to its prevention by improvements in the art of coining. We must strike our coins so perfectly that successful imitation or alteration shall be out of the question.

There are four principal objects at which we should aim in deciding upon the exact design for a coin.

• 1. To prevent counterfeiting.
• 2. To prevent the fraudulent removal of metal from the coin.
• 3. To reduce the loss of metal by legitimate wear and tear.
• 4. To make the coin an artistic and historical monument of the state issuing it, and the people using it.

For the prevention of counterfeiting, our principal resource is to render the mechanical execution of the piece as perfect as possible, and to strike it in a way which can only be accomplished with the aid of elaborate machinery. When all coins were made by casting, the false coiner could work almost as skilfully as the moneyer. Hence, in the Roman Empire, it was difficult to distinguish between true and false coin. Hammered money was a great improvement on moulded money, and milled money on hammered money. The introduction of the steam coining press by Boulton and Watt was the next great improvement; and the knee-joint press of Ulhorn and Thonnelier, now used in nearly all mints, except that on Tower Hill, forms the last advance in the mechanism for striking coin.

The utmost attention ought to be paid to the perfect execution of the milling, legend, or other design, impressed upon the edge of modern coins. This serves at once to prevent clipping or tampering with the coin, and to baffle the skill of the counterfeiter. The coins of ancient nations were issued with rough, unstamped edges, and the first coin marked with a legend on the edge was a silver coin of Charles IX. of France, issued in the year 1573. The English coinage was first grained or marked on the edge in 1658 or 1662, when the use of the mill and screw was finally established in the mint. All the larger coins now issued from the English, and, indeed, from most other mints, bear a milled or serrated edge, produced by ridges on the internal surface of the collar which holds the coin when being struck between the two dies. These collars are difficult to make, and useless when made except in the coining-press, and the counterfeiter cannot imitate the milling by hand work, it being almost impossible to use a file with sufficient regularity.

The French five-franc pieces bear a legend on the edge in raised letters, the words being "Dieu protége la France." Such raised letters are quite beyond the art of the counterfeiter. The English crown has a legend, "Decus et Tutamen," and the year of the reign in incised letters, which could obviously be imitated by the use of punches. The new German gold coins are issued with smooth edges, the ten-mark piece having only a few slight incised marks, and the twenty-mark piece bearing the legend, "Gott mit uns," in faint letters; this is surely a far less satisfactory protection than the milled edge adopted in most other mints. It may be worthy of inquiry, whether the milled edge might not be combined with a legend or other design in relief, so as to render imitation still more difficult. One or two centuries ago, silver coins used to have a kind of ornamental beading on the edge. Elaborate patterns, produced by machinery with perfect regularity, and altogether incapable of imitation by hand, might now be substituted.