THE FOREIGN EXCHANGES 235

existence of a large mass of full-valued metallic money in
circulation, however, is so far an advantage, that it affords a
large reservoir from which it is possible to draw for purposes
of export. The entire amount of metal exported does not
come from bank reserves when the export is large. Were
the internal circulation entirely one of paper currency and
token coin, international bullion movements would affect
bank reserves only, though, through them, the volume of
the paper currency might be affected, just as the volume of
the metallic circulation can be modified when the circulation
is of full-valued coin. When the state of the foreign
exchanges requires bullion exports, these exports may
consist of foreign coin, of bar-gold, or of domestic coin. It
has been shown above that, if the price to be paid for bargold
 be sufficiently favourable, it will be used rather than
~oin, and similarly foreign coin may be purchaseable at a
rate somewhat more advantageous than would be secured
by operating with domestic coin or uncoined bullion. If
‘he bullion market do not offer supplies of either of the
alternatives at favourable rates, domestic coin will be used
for remittance, In shipping coin, care will naturally be
taken to select such coin as will give the best return abroad.
As the domestic coin is but bullion abroad, the heavier coins
will give a better return than the lighter ones. The light
coins may be returned to circulation at home. We find
thus that, where a currency contains coins of the same
nominal value, but of different metallic contents, those whose
metallic contents are more valuable are selected for export,
when occasion arises for export of coin. The differences
in metallic value may arise from different degrees of wear
and tear in use, or from an original difference in the coins
as minted. In connection particularly with this latter feature,
a principle has been enunciated known as Gresham's Law,
that bad coin drives out good coin from a country. It
means that, when the domestic trade of a country uses
indifferently bad and good coins, the good coins tend
gradually to disappear and leave the bad alone in circulation.
[n addition to export, coin may be taken from circulation
Sy being hoarded, or melted down to provide metal for