VII. Surrender of the Coinage Prerogative.

THIS brings us to the coinage legislation of 1666-7. Some twenty years after the Company had obtained from Elizabeth the privilege to export £30,000 a year in portcullis coins, Mr. Francis Day, one of the Company's agents, purchased a concession from the Rajah of Madras to strike "Three-swamy," or Lakshmi pagodas of gold at their factory and fort of St. George. Lakshmi was the wife of Ieshna or Vishnu. She was the mother of gods, the Indian Maia, Ceres, or Venus, the personification of maternity, abundance and increase.

The Hindu Rajah who permitted the English merchants to strike these coins, was, no doubt, persuaded that they would be better or more economically and numerously fabricated than with the rude appliances of the native mintners; and that therefore the venerated image which they bore would be circulated far and wide. What the accommodating English merchants really designed was that they should go into the melting-pots of Europe; and this design was fully carried out.

In 1661 Charles II. obtained, as part of the dowry of Catherine of Braganza, sister of Alfonso VI., King of Portugal, the island and city of Bombay, which down to that year had belonged to the Crown of Portugal. In 1665 (Articles of January 14) it was taken possession of by the British Crown. On March 27, 1668, it was sold by Charles to the East India Company, together with all political powers necessary to its maintenance and defence, with the exception of the factory and fort of St. George at Madras. This was the beginning of the territorial possessions of the East India Company. It thus acquired the elements of a State; land, a people, certain political powers, and an army and navy.

But one thing more was needed to complete its sovereignty: the power to coin, to evaluate by denominations and to circulate, money. This had been the object of the Act under consideration, which was put upon its passage shortly after Bombay was acquired by the Crown and when the Company fully expected to obtain that place from the complaisant Charles. Any open attempt to wrest the coining power from the Crown of England would have met with the resistance of a nation always jealous of its political rights. No Englishman would have listened to the proposal for a moment. But openness was not the Company's mode of procedure. Rather was it subterfuge and bribery. It first secured the influence of the Speaker and euphemistically entitled the bill, which under his auspices was introduced to the House of Commons, "An Act for the Encouragement of Coinage."

In the speech to the king made by the Speaker, this pliant official referred to the scarcity of coin, which, as compared with the period preceeding the Commonwealth, had made itself generally apparent, by saying that:

"We find your Majesty's mint not so well employed as formerly; and the reason is because the fees and wages of the officers and workmen is in part paid out of the bullion that is brought to be coined, and what is wanting is made up by your Majesty. We have, therefore, for the ease of your Majesty, and those that bring in any plate or bullion to be coined there, made another provision, by an imposition upon wines, brandy, and cyder imported from any foreign nations."

The argument to the king was, in plain language, as follows:

"As compared with the Elizabethan era, there is a scarcity of coin in the kingdom. This is probably due at bottom to the amelioration by the Spanish Crown in 1608 of the previously heavy seigniorage levied upon the coinage of silver in Spanish America, and by a similar amelioration in the United Provinces of the Netherlands. It is due immediately to the unwillingness of our mintners to employ the new mill-and-screw process, by which, so recently as four years ago, a mintner in a given interval could strike twenty or more times as much money as now. But as our London merchants in their wisdom choose to attribute the scarcity of coin to the very moderate seigniorage levied by your Majesty, and especially to that surcharge of two-pence in the pound tale of silver imposed for the benefit of your mistress, Barbara Villiers, which has occasioned great scandal and dissatisfaction, we propose to remedy the matter by taxing ourselves, your always loyal commoners, in paying a duty upon all future importations of spirits, wines, beer, cider and vinegar, and by abolishing the seigniorage altogether.

"As the existing seigniorage, grievous as it appears to our London merchants, (especially of the East India Company) does not in fact pay the expenses of your Majesty's mint, this duty upon spirits, etc., will ease your Majesty of the deficit which now you are obliged to make good, and at the same time—as you will observe in Section XII—it will provide a sure annuity of £600 a year which your Majesty will be enabled to settle upon Barbara, in place of that precarious one hitherto afforded her by the comparative inactivity of the mint. Thus all parties will be gratified, and we, your loyal commoners, the only losers. The scarcity of coin will be remedied, bullion in vast quantities will flow into the mint, the merchants will rejoice, the phrase 'free coinage' will tickle the ears of a people yearning for freedom of any sort, the duties on liquors will please the already established publicans aud brewers, your Majesty will be relieved of expense and Barbara will not only be provided for, but what is perhaps still more desirable, (now that you have other beauties in view), it will place her annuity entirely in your Majesty's power, which now is a public charge and cannot be withdrawn or withheld without the open and discreditable repudiation of a royal grant. Upon our shoulders alone will the extra burden fall. We shall bear it willingly, both as a proof of our profound attachment to your Majesty's person, and because it complies with the desire of that noble and unselfish body of London merchants, goldsmiths, and dealers in money, whose prosperity is ever synonymous with that of the kingdom."

Through the united influence of the various parties who expected to profit by this measure, and aided by the bribes of the East India Company, this iniquitous and mischievous bill was got through Parliament and obtained the royal assent. It swept away not only the seigniorage of the Crown, but also its control over the issuance of money, because it left this to the volition and pleasure of those who chose to bring metal to the mint to be coined, and these were practically the East India Company and the goldsmith class, with which it co-operated and which it influenced. By a rule of the coinage which was afterwards made, refusing any but large deposits of bullion (the limit is now £10,000) the general public was virtually shut out from the mint, which was thus fully subjected to the control of the intriguants.

Judging from the remarks of the Speaker quoted above, as of the date of January, 1667, the Act 18, Charles II., c. 5, was retroactive; for in clause I it is made to operate from December 20, 1666, for five years, and "until the end of the first session of Parliament then next following and no longer." It was really passed in January or February, 1667, probably the latter, and with certain unessential modifications was kept in force by 25 Charles II., c. 8, and by subsequent enactments down to 9 George III., c. 25 (year 1768), when it was made perpetual. (This was two years after the battle of Plassey and the introduction of a silver monetary system into India by the East India Company.) By a subsequent enactment, 38 George III., c. 59 (year 1798), the gratuitous and unlimited coinage of silver, at the request of private individuals, was restricted. By 56 George III., c. 68 (year 1816), it was suspended; and in 1870 it was abolished altogether; but it has been continued as to gold down to the present time.

The act of 1666 entirely failed to realize any of the expectations that were held out in its title or preamble. It did not increase the coin of the kingdom, but on the contrary, diminished it. It did not ease the king, but on the contrary, robbed the State of its prerogative of coinage and the profits it would have made by the Indian exchange; it did not promote the trade and commerce of the kingdom, but only that of the East India Company. It did not even answer the expectations of Barbara Villiers, through whose influence, more than any other, it owed its success in the Lords; for she was soon after supplanted in the king's affections by the Duchess of Richmond, and she (Barbara) thrown aside as a broken toy. To everybody but the East India Company the bill was deceptive and injurious. It was engendered by avidity, spawned in corruption, and has worked nothing but mischief down to the present moment.

In the House of Lords, February 22, 1670, Lord Lucas declared that this bill had promoted a further scarcity of money. Sir Dudley North was even more emphatic. He was:

". . . infinitely scandalised at the folly of this law, which made bullion and coined money par; so that any man might gain by melting; as, when the price of bullion riseth, a crown (5 shillings) shall melt into five shillings-and-sixpence; but on the other side, nothing could even be lost by coining; for, upon a glut of bullion he might get that way too, and upon a scarcity, melt again; and no kind of advantage by increase of money, as was pretended, like to come out."

The Lord Treasurer gave some of the banker-goldsmiths and Sir Dudley North a meeting.

"Charles Duncombe, a great advancer, had whispered somewhat in his lordship's ear, that made him inclinable to the bill. Sir Dudley North reasoned with him against it, beyond reply, and then the argument was: 'Let there be money, my Lord; by God, let there be money!' The reasons why this scheme prevailed were first that the Crown got by the coinage duty, to wit, the imposts on spirits, wines, beer, etc., out of which was to be paid the substitute annuity to Barbara Villiers; next, that the goldsmiths, who gained by the melting trade, were advancers to the Treasury and its favorites. The country gentlemen are commonly full of one profound mistake: which is, that if a great deal of money be made, they must, of course, have a share of it; such being the supposed consequence of what they call plenty of money. So little do assemblies of men follow the truth of things in their deliberations, but shallow unthought prejudices carry them away by shoals. In short, the bill passed, and the effects of it have been enough seen and felt; however, the evil has since been, somewhat, but notw'holly, remedied." [From Life of Sir Dudley North]

I am quite at a loss to imagine in what manner this evil hath since been remedied, either wholly or partly. On the contrary, the mischievous influence of this measure continually augments as time advances.

The Rev. Dr. Ruding, in his Annals of the Coinage, written during the early part of the present century, than whom no more cautious, impartial, nor competent authority could be cited, says in reference to this bill: "Its influence has been most fatal to the mint." Said J.R. McCulloch, writing in 1844:

"Down to 1666 a seigniorage or duty upon the coinage was usually charged upon the gold and silver coins issued by the mint; and it may be easily shown that the imposition of such a duty, when it is not carried to an undue height, is advantageous. A coin is more useful than a piece of uncoined bullion of the same weight and purity; the coinage fitting it to be used as money, while it does not unfit it to be used for any other purpose. When, therefore, a duty of seigniorage is laid upon coin, equal to the expense of coinage, it circulates at its real value; but when this charge is defrayed by the public, it circulates at less than its real value, and is consequently either melted down or exported whenever there is any demand for bullion in the arts, or any fall in the exchange."

But neither North, Ruding, nor McCulloch saw the whole of the mischievous influence of this legislation, because at the time that they wrote (previous to the demonetization of silver), these influences were not fully developed. We now perceive that these eminent authorities omitted the consideration of a circumstance invested with the profoundest importance. It has become a widespread belief that a coin, for example, a sovereign or a dollar, is merely a piece of metal whose value is determined by its weigh and fineness, which weight and fineness is certified by the State, and that this is all that is effected by such stamp or seal of the State. So far is this from being true that were the State to fabricate two kinds of coins of precisely the same weight and fineness, on one of which is stamped: "This piece contains 25.8 grains of gold 0.9 fine," and on the other merely: "This piece is one dollar," I venture to say that, with open mints for the former, and all other mint laws swept away, the latter would command a premium of at least twenty percent. With the mints closed to coinage for private individuals such premium would rise to 50, 100, possibly to several hundred percent. Such is the superiority of legal tenders over mere bits of metal; such the value of government seal and endorsement; such the measure of the gratuity which by this mischievous law the government confers not upon the industrious miner or producer, but upon the idle speculator in bullion and exchange.

This law, which deprives the government of seigniorage, throws upon it the whole burden and expense of coinage; the maintenance of the mints and mint officers; the cost of watching, detecting, arresting and punishing counterfeiters; the loss of metal in smelting and refining; the loss by robbery and defalcation; and finally, the loss occasioned by the wear and tear of coins. These various items in the United States amount to several millions a year. They should properly come out of the coins, because they are all sustained for the benefit of the coins. A charge of "retinue," or "brassage" should cover the cost of fabrication and maintenance of the mints; while the superior value imparted to the metal by the imposition of the government stamp, should be compensated by a seigniorage. Such charges were common to all mints previous to the plunder of America and ascendancy of the goldsmith class. They were then swept away for the benefit of Barbara Villiers, the East India Company, and the community of billoneurs.

Here I am tempted to narrate a story concerning that illicit mint in Boston which afterwards gave rise to so much irritation between the British government and the New England colonists that became one of the causes which led to the Revolution. Charles II., upon being shown one of the Pine-tree shillings struck by this mint, became greatly offended at the assumption of the coinage prerogative by the Americans, a prerogative which, it must be remembered, he had already sold to the East India Company. He told Sir Thomas Temple that he would make the Americans rue the day when they had dared usurp the royal prerogative of coinage; but being informed that the Tree which appeared upon the coins was intended for the Royal Oak that had sheltered him in the days of his distress, he relented; and declaring that the American colonists were "honest dogs," he spared his distant thunder.