insic worth in a debased silver currency, and afterwards the same
guinea exchanged for only twenty-one of those debased shillings. It is
clear that some great change must have intervened in the state of the
currency between these two different periods, of which Dr. Smith's
hypothesis offers no explanation."

It appears to me, that the difficulty may be very simply solved, by
referring this different state of the value of the guinea at the two
periods mentioned, to the different _quantities_ of debased silver
currency in circulation. In King William's reign gold was not a legal
tender, it passed only at a conventional value. All the large payments
were probably made in silver, particularly as paper currency, and the
operations of banking, were then little understood. The quantity of this
debased silver money exceeded the quantity of silver money, which would
have been maintained in circulation, if nothing but undebased money had
been in use; and consequently it was depreciated as well as debased. But
in the succeeding period when gold was a legal tender, when bank-notes
also were used in effecting payments, the quantity of debased silver
money did not exceed the quantity of silver coin fresh from the mint,
which would have circulated if there had been no debased silver money;
hence though the money was debased, it was not depreciated. Mr.
Buchanan's explanation is somewhat different, he thinks that a
subsidiary currency is not liable to depreciation, but that the main
currency is. In King William's reign silver was the main currency, and
hence was liable to depreciation. In 1774 it was a subsidiary currency,
and therefore maintained its value. Depreciation, however, does not
depend on a currency being the subsidiary or the main currency, it
depends wholly on its being in excess of quantity.

To a moderate seignorage on the coinage of money there cannot be much
objection, particularly on that currency which is to effect the smaller
payments. Money is generally enhanced in value to the full amount of the
seignorage, and therefore it is a tax which in no way affects those who
pay it, while the quantity of money is not in excess. It must, however,
be remarked, that in a country where a paper currency is established,
although the issuers of such paper should be liable to pay it in specie
on the demand of the holder, still, both their notes and the coin might
be depreciated to the full amount of the seignorage on that coin, wh