Section X.: Of a Copper and Base Metal Coinage.

The copper coin and that of base metal, are not, strictly speaking, money; for debts cannot be legally tendered in this coin, except such fractional sums, as are too minute to be paid in gold or silver. Gold and silver are the only metal-money of almost all commercial nations. Copper coin is a kind of transferable security, a sign or representative of a quantity of silver too diminutive to be worth the coinage; and, as such, the government, that issues it, should always exchange it on demand for silver, when tendered to an amount equal to the smallest piece of silver coin. Otherwise, there is no security against the issue of an excess beyond the demand of circulation.

Whenever there is such an excess, the holders, finding the base metal less advantageous than the gold and silver it represents but does not equal in value, would strive to get rid of it in every way; whether by selling to a loss, or by employing it in preference to pay for low-priced articles, which would consequently rise in nominal price; or by proffering it to their creditors in larger quantity, than enough to make up the fractional part of sums in account. The government, having an interest in preventing its being at a discount, because that would reduce the profit upon all future issues, generally authorizes the latter expedient.

Before 1808, for instance, it was a legal tender at Paris to the extent of 1/40 of every sum due; which had exactly the same effect, as a partial debasement of the national currency. Every body knew, when a bargain was concluded, that he was liable to be paid in proportion of 1/40 copper or brass metal, to 39/40 silver, and made his calculation accordingly, on terms proportionably higher, than if no such regulation had existed. It is with this particular, precisely as with the weight and standard of the silver coin; sellers do not stop to weigh and assay every piece they receive, but the dealers in gold and silver, and those connected with the trade, are perpetually on the watch to compare the intrinsic, with the current, value of the coin; and, whenever their values differ, they have an opportunity of gain; their operations to obtain which, have a constant tendency to put the current value of the coin on a level with its real value.

The obligation to receive copper in any considerable proportion, has, in like manner, an influence upon the exchange with foreigners. There is no question, that a letter of exchange on Paris payable in francs is sold cheaper at Amsterdam, in consequence of the liability to receive part payment in copper or base metal; just as it would be, if the franc were made to contain less of silver and more of alloy.

Yet, it is to be observed, that, on the whole, the value of money is not so much affected by this circumstance, as by the mixture of alloy; for the alloy has positively no value whatever, for the reasons above stated; whereas, the copper money, payable in the ratio of 1/40, had a small intrinsic value, though inferior to the sum in silver, it was made to pass for: had it been of equal value, there would have been no occasion for an express law to give it currency.

As long as a government gives silver on demand for the copper and base metal regularly presented, it can with little inconvenience give them very trifling intrinsic value; the demand for circulation will always absorb a very large quantity, and they will maintain their value as fully, as if really worth the fractional silver represented; on exactly the same principle, as a bank-note passes current, and that too for years together, without any intrinsic value, just as well as if really worth the sum it purports on the face of it to contain. In this manner, such a coinage can be made more profitable to the government than by any compulsion to receive it in part payment; and the value of the legal coin will suffer no depreciation. The only danger is that of counterfeits, which there is the strongest stimulus for avarice to fabricate, in proportion as the difference between the intrinsic, and the current value, grows wider.

The last King of Sardinia's predecessor, in attempting to withdraw from circulation a base currency, issued by his father in a period of calamity, had more than thrice the quantity originally issued by the government thrown upon his hands. The same thing happened to the king of Prussia, when, under the assumed name of the Jew Ephraim, he withdrew the base coin he had compelled the Saxons to receive, during his distresses in the seven years' war; and for exactly the same reason. Counterfeits of the coin are usually executed beyond the national frontier. In England it was attempted to remedy this evil in the year 1799, by a coinage of half-pence with a very fine impression, and executed with an attention and perfection, that counterfeiters can rarely bestow.