ore, and is not defaced; but, in
reality, people are in the habit of paying and receiving sovereigns
which are several grains less in weight than the law requires.

Twenty silver shillings are by law to be received as equal in value to a
pound. This is necessary, in order that we may be able to pay a fraction
of a pound, for a coin made of gold equal to the twentieth part of a
pound would easily be lost, worn, or even blown away. But the silver in
twenty shillings is not equal in value to the gold in a pound; its value
varies with the gold price of silver, and, at present, twenty shillings
are only worth about sixteen gold shillings and eightpence, that is, 5/6
of a pound. It is necessary to make the silver coin thus of less value
than it is taken for, in order to render it unprofitable to melt the
coin. In the same way, the metal in a bronze penny is worth only about
the sixth part of a penny, so that people would lose a great deal by
melting up or destroying pence.

#82. Paper Currency.# Instead of using actual coins of gold, silver, or
bronze, it is common to make use of paper notes containing promises to
pay money. When the sum of money to be paid is large, a bank note is
much more convenient, being of far less weight than the coins, and less
likely to be stolen. A five-pound bank note is a promise to pay five
pounds to any person who has the note in his possession, and who asks
for five pounds in exchange for the note at the office of the bank
issuing the note. A #convertible bank note# is one which actually can be
thus changed into the coins whenever it is desired, and so long as this
is really the case, it is evident that the note is just as valuable as
the coins, and is more convenient. The only fear is that, if a banker be
allowed to issue these bank notes, he will not always have coins enough
to pay them when presented. Very frequently banks have been obliged to
stop payment; that is, to refuse to perform their promises.
Nevertheless, when there is no other currency to be had, the bank notes
often go on circulating like money. They are then called #inconvertible
notes#, and there is said to be a #paper money#. A person is willing to
receive paper currency in exchange for goods, if he believes that other
people will take it from him again. But such paper currency is very bad,
because its value will rise or fall according to the quantity issued,
and people who owe money will often be able to pay their debts with