Section XII.: Of the Party, on whom the Loss of the Coin by Wear should properly fall

It has been a question, who ought to defray the loss, consequent upon the friction or wear of the coin? In strict justice, the person who had made use of it, in like manner as the wearer of any other commodity. A man, that re-sells a coat after having worn it, sells it for less than he gave for it when new. So a man, that sells a crown-piece for some other commodity, should sell it for less than he gave; that is to say, should receive a smaller quantity of goods than he obtained it with.

But the portion of a specific coin, consumed in its passage through the hands of any one honest person, is less than almost any assignable value. It may circulate for many years together, without any sensible diminution of its weight; and, when the diminution is discovered, it may be impossible to tell, by which of the innumerable holders it was effected. I am aware, that each of them has imperceptibly shared the depreciation of its exchangeable value, occasioned by the wear; that the quantity of goods it would purchase has declined by an insensible gradation; that, although the depreciation has been imperceptibly progressive, it becomes at last very manifest; and that worn money will not be taken at par with new coin. Consequently, I think, that, if an entire class of coin were gradually so reduced as to make a re-coinage necessary, its holders could not in reason expect that their reduced coin should be exchanged for new at par, piece for piece. Their money should be received, even by the government, at no more than its real value; the silver it contains is less in quantity than at the first issue; and it has been received by the holders at a lower rate of value; they have given for it less goods than they would have done in the outset.

In fact this is the course that rigid justice would prescribe; but there are two reasons, why it should not be strictly enforced.

1. Each individual piece of coin is not, if I may be allowed the expression, a substantive article of commerce. Its exchangeable value is calculated, not according to the weight and quality of the identical piece in question, but according to the average weight and quality of the coin in large quantities, as ascertained by common experience. A crown piece of an earlier date, and more worn, is yet freely received in exchange for one more new and perfect; the difference is sunk in the average. The mint issues new pieces every year of the full weight and standard, which prevents the coin from declining sensibly in value, in consequence of the friction, even for many years after its issue.

This circumstance is illustrated by the fact, of the French pieces of 12 and 24 sous passing current at par with the crown-pieces of 6 livres without any difficulty; although the same nominal sum, in the shape of the worn pieces of 12 and 24s., contained in reality about ¼ less silver than the crown-piece.

The subsequent law, which prohibited their being taken by the public receivers or private persons at more than 10 and 20 sous, rated them at their full intrinsic value, but below the rate, at which the then holders had taken them. For their value had been previously kept up to 12 and 24 sous in spite of the wear, by reason of their passing current at par with the crown-piece. Thus, the last holder was saddled with the entire loss of a friction, to which the innumerable hands they had passed through had all contributed.

2. The impression is equally effectual in giving currency at the last as at the first, although it becomes in course of time scarcely, if at all visible; witness the shillings of England. The coin derives, as above explained, a certain degree of value from the mere impression, which value has been admitted and recognised throughout, until it reaches the ultimate holder, who has in consequence received it at a higher rate, than he would a piece of blank bullion of equal weight. To saddle him with the difference, would be to make him lose the whole value of the impression, although it has been equally serviceable to perhaps a million of others.

On these grounds, I am inclined to think, the loss by wear, and that of the impression, should be borne by the community at large; that is to say, by the public purse: for the whole society derives the benefit of the money; and it is impossible to tax each individual, in the precise proportion of the use he has made of it.

To conclude: every individual, that carries bullion to the mint to be coined may be fairly charged the expenses of the process, and, if thought advisable, the full monopoly-profit. Thus far there is no harm done; his bullion is increased in value to the full amount of what he has been charged by the mint; otherwise, he would never have carried it thither. At the same time, I am of opinion, that the mint should always give a new piece in exchange for an old one on demand: which need nowise interfere with the utmost possible precautions against the clipping and debasing of the coin. The mint should refuse such pieces as have lost certain parts of the impression, which are not liable to fair and unavoidable wear; and the loss in that case should fall on the individual, careless enough to take a piece thus palpably deficient. The promptitude, with which the public would take care to carry injured or suspicious pieces to the mint, would greatly facilitate the detection of fraudulent practices.

With diligence on the part of the executive, the loss arising from this source might be reduced to a mere trifle, and the system of national money would be materially improved, as well as the foreign exchange.