The Law of Nations or the Principles of Natural Law (1758)

Emmerich de Vattel

Of Money and Exchange

§ 105. Establishment of money.1
IN the first ages, after the introduction of private property, people exchanged their superfluous commodities and effects for those they wanted. Afterwards gold and silver became the common standard of the value of all things: and to prevent the people from being cheated, the mode was introduced of stamping pieces of gold and silver in the name of the state, with the figure of the prince, or some other impression, as the seal and pledge of their value. This institution is of great use and infinite convenience: it is easy to see how much it facilitates commerce, — Nations or sovereigns cannot therefore bestow too much attention on an affair of such importance.

§ 106. Duty of the nation or prince with respect to the coin.
The impression on the coin becoming the seal of its standard and weight, a moment’s reflection will convince us that the coinage of money ought not to be left indiscriminately free to every individual; for, by that means, frauds would become too common — the coin would soon lose the public confidence; and this would destroy a most useful institution. Hence money is coined by the authority and in the name of the state or prince, who are its surety; they ought, therefore, to have a quantity of it coined sufficient to answer the necessities of the country, and to take care that it be good, that is to say, that its intrinsic value bear a just proportion to its extrinsic or numerical value.

It is true, that, in a pressing necessity, the state would have a right to order the citizens to receive the coin at a price superior to its real value; but as foreigners will not receive it at that price, the nations gains nothing by this proceeding; it is only a temporary palliative for the evil, without effecting a radical cure. This excess of value, added in an arbitrary manner to the coin, is a real debt which the sovereign contracts with individuals: and, in strict justice, this crisis of affairs being over, that money ought to be called in at the expense of the state, and paid for in other specie, according to the natural standard: otherwise, this kind of burden, laid on in the hour of necessity, would fall solely on those who received this arbitrary money in payment, which would be unjust. Besides, experience has shown that such a resource is destructive to trade, by destroying the confidence both of foreigners and citizens — raising in proportion the price of every thing — and inducing every one to lock up or send abroad the good old specie; whereby a temporary stop is put to the circulation of money. So that it is the duty of every nation and of every sovereign to abstain, as much as possible, from so dangerous an experiment, and rather to have recourse to extraordinary taxes and contributions to support the pressing exigencies of the state.2

§ 107. Their rights in this respect
Since the state is surely for the goodness of the money and its currency, the public authority alone has the right of coining it. Those who counterfeit it, violate the rights of the sovereign, whether they make it of the same standard and value or not. These are called false-coiners, and their crime is justly considered as one of the most heinous nature. For if they coin base money, they rob both the public and the prince; and if they coin good, they usurp the prerogative of the sovereign. They will never be inclined to coin good money unless there be a profit on the coinage: and in this case they rob the state of a profit which exclusively belongs to it. In both cases they do an injury to the sovereign; for the public faith being surety for the money, the sovereign alone has a right to have it coined. For this reason the right of coining is placed among the prerogatives of majesty, and Bodinus relates,3 that Sigismund Augustus, king of Poland, having granted this privilege to the duke of Prussia, in the year 1543, the states of the country passed a decree in which it was asserted that the king could not grant that privilege, it being inseparable from the crown. The same author observes, that, although many lords and bishops of France had formerly the privilege of coining money, it was still considered as coined by the king’s authority: and the kings of France at last withdrew all those privileges, on account of their being often abused.

§ 108. How one nation may injure another in the article of coin.
From the principles just laid down, it is easy to conclude, that if one nation counterfeits the money of another, or if she allows and protects false-coiners who presume to do it, she does that nation an injury. But commonly criminals of this class find no protection anywhere — all princes being equally interested in exterminating them.4

§ 109. Of exchange, and the laws of commerce.
There is another custom more modern, and of no less use to commerce than the establishment of coin, namely exchange, or the traffic of bankers, by means of which a merchant remits immense sums from one end of the world to the other, at a very trifling expense, and, if he pleases, without risk. For the same reason that sovereigns are obliged to protect commerce, they are obliged to support this custom, by good laws, in which every merchant, whether citizen or foreigner, may find security. In general, it is equally the interest and the duty of every nation to have wise and equitable commercial laws established in the country.


     1.    The modern law of nations, and the municipal law of England, as to coin, bullion, and money, will be found collected in 1 Bla. Com 276 to 280; 4 Id. 84 to 120; 1 Chitty’s Commercial Law, 583; 2 Id. 179 to 187, and statutes and decisions there collected. — C.
     2.    In Boizard’s Treatise on Coin, we find the following observations: “It is worthy of remark, that, when our kings debased the coin, they kept the circumstance a secret from the people: — witness the ordinance of Philip de Valois in 1350, by which he ordered Tournois Doubles to be coined 2d 5 1/3 gr. fine, which was, in fact, a debasement of the coin. In that ordinance, addressing the officers of the mint, he says — Upon the oath by which you are bound to the king, keep this affair as secret as you possibly can, that neither the bankers nor others may, by your means, acquire any knowledge of it; for if, through you, it comes to be known, you shall be punished for the offence in such manner as shall serve as an example to others.” — The same author quotes other similar ordinances of the same king, and one issued by the Dauphin, who governed the kingdom as regent during the captivity of King John, dated June 27, 1360, by virtue of which the mint-masters, directing the officers engaged in the coinage to coin white Deniers 1d. 12 gr. fine, at the same time expressly command them to keep this order secret, and, “if any persons should make inquiry respecting their standard, to maintain that they were 2d. fine.” Chap. xxix.

The kings [of France] had recourse to this strange expedient in cases of urgent necessity; but they saw its injustice. — The same author, speaking of the debasement of coin, or the various modes of reducing its intrinsic value, says — “These expedients are but rarely resorted to, because they give occasion to the exportation or melting down of the good specie, and to the introduction and circulation of foreign coin — raise the price of every thing — impoverish individuals — diminish the revenue, which is paid in specie of inferior value — and sometimes put a total stop to commerce. This truth has been so well understood in all ages, that those princes who had recourse to one or other of these modes of debasing the coin in difficult times, ceased to practice it the moment the necessity ceased to exist.” We have, on this subject, an ordinance of Philip the Fair, issued in May, 1295, which announces, that, “The king having reduced the coin both in fineness and weight, and expecting to be obliged to make a further reduction in order to retrieve his affairs, — but knowing himself to be, in conscience, responsible for the injury caused to the state by such reduction, — pledges himself to the people of his kingdom, by solemn charter, that, as soon as his affairs are retrieved, he will restore the coin to its proper standard and value, at his own private cost and expense, and will himself bear all the loss and waste. And, in addition to this engagement, Dame Joan, Queen of France and Navarre, pledges her revenues and dower for the same purpose.” Note. edit A.D. 1797.
     3.    In his Republic, book i, chap. x.
     4.    This is a sound principle, which ought to be extended so as to deny effect to any fraud upon a foreign nation or its subjects. But in England a narrow and immoral policy prevails of not noticing frauds upon the revenue of a foreign state. Roach v. Edie, 6 Term Rep. 425; Boucher v. Lawrence, R.T. Hardw. 198; Holman v. Johnson, Cowp. 343; James v, Catherwood, 3 Dowl. & Ryl. 190, {Cambiooso’s Ex. v. Maffet’s Assignees, 2 Wash, C.C. Rep. 99.} And so far has this narrow doctrine been carried, in disgrace of this country, that, in Smith v. Marconnay, 2 Peake’s Rep. 81, it was held, that the maker of paper in England, knowingly made by him for the purpose of forging assignats upon the same, to be exported to France in order to commit frauds there on other persons, might recover damages for not accepting such paper pursuant to contract. So a master of an English ship was even allowed to recover salvage for bringing home his captured vessel, by deceptively inducing the enemy to release the vessel on his giving a ransom bill, payment of which he look care to countermand in London. 2 Dodson’s R. 74.