Seigniorage and its results

Modern nations, it is clear, view the maintenance of the coinage as a public function to be performed in large measure at public expense. Very different has been the attitude of governments in earlier times. The monopolistic power of coining money was often held as a prerogative of the sovereign not because in this way only would the people have the advantages of a uniform and dependable currency, but rather in order that the sovereign might use his prerogative as a means of securing profits. A common practice was that of making a high seigniorage charge—a charge much more than covering the expenses of coinage. When seigniorage is charged, more bullion must be deposited at the mint than is contained in the coins received for the bullion. The surplus bullion went as profits to the sovereign to be made into coins for his own use. A more flagrantly unfair practice was that of calling in all coins in circulation for recoinage into smaller coins.