SEIGNIORAGE  , the due levied by the authority that possesses the right of coining on the

metal that it manufactures into coin . The term " brassage " has been used to describe this due, when confined to the mere cost of the process; the wider term " seigniorage " being employed when the charge is so raised as to become a profit to the imposer . The exercise of the right of seigniorage has been the instrument by which most of the debasements of currency have been carried out . Under feudalism, especially in France, the chief nobles had this prerogative . In the modern state it is reserved for the sovereign authority . Most countries adopt a moderate seigniorage charge . Thus the fundamental currency law of France (1803) provides that " only the expense of coining " shall be charged . At present this due is 6 fr . 70 c. per kilo. of gold 1-90- fine, or 0.24% . The charge by the same law on silver was 3 fr. per kilo. or 1.66% . The limitation on the coinage of silver in practically all countries has made the seigniorage on that metal very heavy . The policy of England in respect to gold has been peculiar .

Since 1664 it has been freed from any charge, though the delay in return amounts to a small due . In consequence of this gratuitous coinage,

English gold has been regarded as equivalent to bullion, and exchange fluctuations have been reduced . The policy was severely criticized by Adam Smith, and it does in fact amount to a bounty on the coinage of gold . The amount is, however, too insignificant to deserve attention, especially as there are compensating gains . The employment of a seigniorage of about 1% on the " sovereign " was suggested by the proceedings of the Paris Monetary Conference of 1867; in order to bring about an assimilation of English and French money . By reducing the amount of gold in the sovereign to that in the proposed 25-franc piece an exact par would have been created, and, so it was hoped, the English currency and accounts need have undergone no change . The scheme was, however, rejected by a Royal Commission on the ground that an adjustment of obligations would be required . The theory of the effects that a seigniorage produces have been discussed at length . The definitive results obtained may be briefly stated as follows:—(r) A seigniorage charge is the same as a debasement, but its evil effect may be avoided by limiting the amount of coin issued . (2) Seigniorage operates as a tax on the metal subject to it, and this tax tends ultimately to fall on the producers, or rather on the rent obtained through the production . A heavy seigniorage on gold would tend to lower the profits derived from the gold mines of the world, and might even compel the abandonment of the least productive ones . See MONEY, MONETARY CONFERENCES, and TOKEN MONEY .

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