THE NOTION OF MONEY 171 
practice it could always be turned back into bullion by 
melting, makes the value of coined and non-coined metal 
almost identical ; but it is commonly stated that it is the 
“natural rate,” the “intrinsic value” of the metal, which 
is at the basis of the value common to the bullion and to 
coin. Moreover, it is commonly considered that the com- 
mercial rate of a monetary metal is determined like that 
of any other commodity and that the value of the coin 
minted from that metal is nothing but a reflection of it; 
at most, it may be recognised that the use of a metal for 
currency purposes increases the market and the demand 
for it.! Finally, the fact which we have indicated above, 
that exported coins keep approximately the same value in 
foreign countries where they are only accepted as bullion, 
appears to confirm this view. 
Moreover, it does not seem that by a physical process 
so insignificant as the transformation of one lump into 
smaller lumps in the form of discs merely stamped with 
the weight and fineness, the State could have any effect 
whatever on the value of the metal. Certainly this was 
not the intention; and we shall see that this operation 
has in fact had no fundamental effect. Nevertheless, with 
the system of free coinage the weight of fine metal received in 
the form of coin, which is equal? to that of the fine metal 
contained in the bullion and is therefore constant and 
known in advance, does really constitute a given sum of 
money. Hence it is easy to assert that with a system of 
free coinage the State purchases the metal at a fixed price. 
This seems all the more obvious as in practice, instead of 
giving back the same metal which has been brought to 
the mint in the form of coin, anyone, who brings gold in 
this way, is immediately paid for it in legal currency. It 
is still more curious that the producer of gold will not 
! In rather a different form, Walras observed that the use of the precious 
metals for currency correspondingly diminished the volume available for 
industrial purposes and increased the utility of the commodity money. 
This is an ingenious observation, but it does not adequately summarise the 
theory of the value of money. 
2 Always subject to a slight fixed deduction in some countries for costs 
of minting.