A Select Collection of Scarce and Valuable Tracts on Money
Bullion can never be lower, but may frequently be higher, than mint price.
19th Century John Ramsay McCulloch (ed.) EnglishWhether the coinage be free or otherwise, if the mint be always ready to make its returns in coin; neither silver nor gold bullion, can fall in our market below mint price; for the mint is always open to receive them both, at those respective rates: But one or both these metals, may be frequently higher than mint price.
If the bullion is exportable by law, and the coin is not, without some penalty; this, whenever we want to make any considerable remittances abroad, may somewhat advance the price of bullion; and that in proportion to the demand for, or scarcity of, bullion. But the advanced price of bullion, on account of the mere inexportability of coins, I think, must be very inconsiderable; as coins may be reduced into bullion, at a small risk of discovery, and at a small expence. For, the demand for bullion upon this account, is chiefly in great towns, where the melting-pot is always at work; and it is very easy to conceal the contents, from the knowledge of any servant or by-stander.
Although both coins and bullion were legally exportable; yet the market price of bullion, might be frequently above the mint price. For, the remitter might not have by him, or be able readily to procure, a sufficient quantity of weighty coins to answer his present purpose; in that case, he will not scruple giving some advanced price for bullion; and he will be reimbursed with profit, by those who want his bills upon that place, to which the bullion is to be sent: Or, if he himself be the debtor abroad, he may find it cheaper to give an advanced price for bullion, than the purchasing of bills of exchange. But upon the present supposition also, of coin being exportable; the advanced price of bullion cannot be considerable or permanent, unless there be some other cause co-operating.
If the coins pass by tale, and are by wear or otherwise become sensibly lighter than their just standard, at their first coming out of the mint; this, when there is a demand for exportation, will naturally raise bullion above mint price. But the difference between coin and bullion upon this account, cannot exceed the average of the whole deficiency upon the coins; and it will fall something short of that average, because the heaviest coins will be first sent abroad; and by being sent, keep down the price of bullion: And when the demand for exportation is satisfied, bullion will again fall to mint-price.
If the current coins are heavy, or pass by weight, and the merchants or importers of bullion into the mint, pay a certain rate for coinage, as the case is in all other countries; bullion at times, will fall as much below coin, as this rate amounts to; that is, a given quantity of bullion, might be purchased for so much less quantity of coin, as the coinage of that bullion would cost at the mint.
These different causes may concur, to vary a little the price of bullion; and to raise it, sometimes more and sometimes less, above mint-price, as exigencies vary; whilst it can never be lower than that price: But the effects of these causes are only temporary, and never very considerable.
- The arrival of plate fleets from America, and the departure or fitting out of fleets for the East-Indies; have, perhaps, greater influence upon the market price of bullion, than all the preceding causes put together: But because those incidents upon the arrival and departure of the said ships, are irregular, and usually of short continuance; no great stress need be laid upon them in this place.
Some of the causes, above enumerated, of the disparity between coin and bullion, occurred to Mr. Locke; but, having missed of the principal cause for his purpose, which here comes next to be considered; he brought himself under some embarrassments, by laying a greater stress upon the others, than they were able to support.