A seignorage will, in many cases, take 
away altogether, and will in all cases diminish
the profit of melting down the new coin
This profit always arises from the difference 
between the quantity of bullion which the 
common currency ought to contain and that 
which it actually does contain. If this difference 
is less than the seignorage, there will 
be loss instead of profit. If it is equal to the 
seignorage, there will be neither profit nor 
loss. If it is greater than the seignorage, there 
will, indeed, be some profit, but less than if 
there was no seignorage. If, before the late 
reformation of the gold coin, for example, 
there had been a seignorage of five per cent
upon the coinage, there would have been a 
loss of three per cent. upon the melting down 
of the gold coin. If the seignorage had been 
two per cent, there would have been neither 
profit nor loss. If the seignorage had been 
one per cent., there would have been a profit 
but of one per cent. only, instead of two per 
cent. Wherever money is received by tale
therefore, and not by weight, a seignorage is 
the most effectual preventive of the melting 
down of the coin, and, for the same reason, of its 
exportation. It is the best and heaviest pieces 
that are commonly either melted down or exported
because it is upon such that the largest 
profits are made
The law for the encouragement of the coinage
by rendering it duty-free, was first enacted 
during the reign of Charles II. for a 
limited time, and afterwards continued, by 
different prolongations, till 1769, when it was 
rendered perpetual. The bank of England
in order to replenish their coffers with money
are frequently obliged to carry bullion to the 
mint; and it was more for their interest, they 
probably imagined, that the coinage should 
be at the expense of the government than at 
their own. It was probably out of complaisance 
to this great company, that the government 
agreed to render this law perpetual
Should the custom of weighing gold, however, 
come to be disused, as it is very likely 
to be on account of its inconveniency; should 
the gold coin of England come to be received 
by tale, as it was before the late recoinage
this great company may, perhaps, find that 
they have, upon this, as upon some other occasions
mistaken their own interest not a 
Before the late recoinage, when the gold 
currency of England was two per cent. below 
its standard weight, as there was no seignorage
it was two per cent. below the value of 
that quantity of standard gold bullion which 
it ought to have contained. When this great 
company, therefore, bought gold bullion in 
order to have it coined, they were obliged to 
pay for it two per cent. more than it was 
worth after the coinage. But if there had 
been a seignorage of two per cent upon the 
coinage, the common gold currency, though 
two per cent. below its standard weight
would, notwithstanding, have been equal in 
value to the quantity of standard gold which 
it ought to have contained; the value of the 
fashion compensating in this case the diminuation 
of the weight. They would, indeed, 
have had the seignorage to pay, which being 
two per cent., their loss upon the whole transaction 
would have been two per cent., exactly 
the same, but no greater than it actually 
If the seignorage had been five per cent., 
and the gold currency only two per cent. below 
its standard weight, the bank would, in 
this case, have gained three per cent. upon the 
price of the bullion; but as they would have 
had a seignorage of five per cent. to pay upon 
the coinage, their loss upon the whole transaction 
would, in the same manner, have been 
exactly two per cent
If the seignorage had been only one per 
cent., and the gold currency two per cent
below its standard weight, the bank would, in 
this case, have lost only one per cent. upon 
the price of the bullion; but as they would 
likewise have had a seignorage of one per 
cent. to pay, their loss upon the whole transaction 
would have been exactly two per cent., 
in the same manner as in all other cases
If there was a reasonable seignorage, while 
at the same time the coin contained its full 
standard weight, as it has done very nearly 
since the late recoinage, whatever the bank 
might lose by the seignorage, they would gain 
upon the price of the bullion; and whatever 
they might gain upon the price of the bullion
they would lose by the seignorage
They would neither lose nor gain, therefore, 
upon the whole transaction, and they would, 
in this, as in all the foregoing cases, be exactly 
in the same situation as if there was no 
When the tax upon a commodity is so moderate 
as not to encourage smuggling, the 
merchant who deals in it, though he advances
does not properly pay the tax, as he gets it 
back in the price of the commodity. The tax 
is finally paid by the last purchaser or consumer
But money is a commodity, with regard 
to which every man is a merchant. Nobody 
buys it but in order to sell it again; 
and with regard to it there is, in ordinary 
cases, no last purchaser or consumer. When 
the tax upon coinage, therefore, is so moderate 
as not to encourage false coining, though 
every body advances the tax, nobody finally 
pays it; because every body gets it back in 
the advanced value of the coin
A moderate seignorage, therefore, would 
not, in any case, augment the expense of the 
bank, or of any other private persons who 
carry their bullion to the mint in order to be 
coined; and the want of a moderate seignorage 
does not in any case diminish it. Whether 
there is or is not a seignorage, if the currency