Receipts:

Earnings (charges for refining, assaying, manufacture
for other countries, etc.).........................  $392,000
Bullion recovered, by-products, old materials, etc...   143,000
Profits on seigniorage, subsidiary silver............ 3,013,000
Profits on seigniorage minor coinage and recoinage... 2,387,000
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Total receipts.......................................$5,935,

000

Expenditures: 
All kinds............................................$1,138,000
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Net revenues from mint service.....................$4,797,000

Sec. 5. #Worn coins and Gresham’s law.# Coins may be light-weight as the result of another cause—­namely, the abrasion (wearing off) of the coins in circulation.  Nearly always when this has occurred the worn coins have still been accepted as money,[6] and ordinarily without any depreciation.  That is to say, they have a value as money greater than the value of the bullion that is in them.  Everybody takes them without hesitation as readily as if they were full weight.  If, however, at this point, new full-weight coins are put into circulation, these at once disappear while the old ones remain in circulation—­a fact that has always been somewhat mystifying.

In explanation of the phenomenon was formulated “Gresham’s law” of the circulation side by side of coins of different bullion value:  bad money drives out good money.  Sir Thomas Gresham (whose name has but recently been given to this so-called law), explained the principle to Queen Elizabeth when counseling her regarding the recoinage of the debased money of the realm as was done in 1560.  He showed that when old, worn coins were in circulation and the mint began putting out full-weight coins, the old lighter ones remained as money, while the new ones, being heavier, were picked out by jewelers and by those needing to send money abroad.

Gresham’s law has a paradoxical wording and is frequently misunderstood.  “Bad” money means not counterfeit money, but merely money that has not as great a bullion value compared with its money value as some other kind of money then in circulation.  But not every piece of such money will drive out every piece of good money.  The law applies only under certain conditions, and within certain limitations.  The “good” will be driven out only if the total amount of money in circulation is in excess of what would be needed if all were of full weight and of best quality.  Paradoxically speaking, if there is not too much of the bad money, it is just as good as the good money.  But even if good money is driven out, it may not leave the country.  It may be hoarded, or be picked out by banks and savings-institutions to retain as their reserves, or be melted for use in the arts.  Gresham’s “law” becomes thus a practical precept.  As applied to the plan of recoinage it is:  Withdraw the worn coins as rapidly (in equal numbers) as you put new coins into circulation.