10. #Seigniorage defined#.  Coinage, as practised by early governments and rulers, came to be a function of great importance politically as well as economically.  The right to issue money came to be one of the most essential prerogatives of sovereignty.  The prince, king, or emperor stamped his own device or portrait upon the coin; hence the term seigniorage from seignior (meaning lord or ruler).  Seigniorage meant primarily the right the ruler, or the estate, has to charge for coinage, and hence it has come to mean also the charge made for coinage, and often, in a still broader sense, the profit made by the government in issuing any kind of money with a value higher than that of the materials (whether metal or paper) composing it.  Coinage is rarely without charge, and often has been a source of revenue to the ruler.  In antiquity and in the Middle Ages this right was frequently exercised by princes for their selfish advantage to the injury and unsettling of trade.  This introduced a very great problem of value into the use of money.

The coinage is said to be gratuitous when no charge is made for coinage.  Coinage is said to be free if the subject or citizen may take bullion to the mint whenever he pleases, paying the usual seigniorage.  Coinage is limited if the government or ruler determines when coinage is to take place.  Thus, coinage may be both free and gratuitous, when citizens are allowed to bring bullion whenever they please and have it converted into coins without charge or deduction.  But coinage is free without being gratuitous when any citizen may bring metal to the mint, whenever he chooses, to be coined subject to the seigniorage charge.

[Footnote 1:  See Vol.  I, pp. 15-16 and 50-53 for an introductory statement of the origin of money in connection with markets.]

[Footnote 2:  See ch. 5.]

[Footnote 3:  See Vol.  I, p. 43, on the decline of barter.]

[Footnote 4:  “I will ... refine them as silver is refined, and will try them as gold is tried.”  Zech. xiii, 9.  “I bought the field ... and weighed him the money, even seventeen shekels of silver.  And I ... weighed him the money in the balances.”  Jer. xxxii, 9, 10.  A shekel was 224 grains, troy weight, which is about equal to six-tenths of the pure metal in a silver dollar to-day and worth now about twenty-four cents in gold.  At that time, however, the purchasing power of silver was many times greater than it now is.]

[Footnote 5:  From the French coin, in turn from Latin cuneus, wedge, suggestive either of an earlier wedge-shaped piece, or of a wedge-shaped mark on the piece.  The German word Muenze is from the Latin moneta (as is the English mint, the place where coins are made), which meant money, that name being taken from the temple of Juno, called Moneta, where coins were made.]

CHAPTER 4