VALUE OF A LIMITED COIN 2g

On the value, measured in commodities in general,
of the metal of which the coin is made, seignorage
has no influence except in so far as it tends to reduce
the demand for that metal by diminishing the quantity
taken up by the currency, and this may be taken as
a practically negligible effect when seignorage in only
a single country is being considered. We need, therefore,
 scarcely encumber the exposition by making an
allowance for the tendency of seignorage to depress
the value of bullion : the matter is too trifling to be
worth bringing into account.
As seignorage is seldom or never large, and as for
the most part it simply raises the value of the coin
once for all and then allows it to fluctuate very nearly
with, though a little above, the value of the bullion
contents of the coin, we may regard it as of little
practical importance, but it may be of considerable
use in enabling us to understand the effects of limitation
 in general.
When the fact is once grasped that it is limitation
of supply, coupled of course with sufficiency of
demand, which enables a seignorage to keep the value
of the coin ordinarily above the value of the metal
of which it is composed by the amount of the seignorage,
 the way is opened for comprehension of the
fact that by a * closing of the mint to free coinage,”
and coining only suitable amounts, coins made
of one metal may be made to circulate at some
value fixed “= reference to coins made of another
metal.
This was first discovered in consequence of the very
reasonable desire of every one to keep coins made of
two different metals, gold and silver, both in circulation
 at the same time, cid being convenient for
larger and silver for emaller payments, though not
for the smallest of all. So long as they attempted to
maintain free coinage of both metals, governments