The Simplified Wealth of Nations of Adam Smith, Book 5, Chapter 3: Monetary Devaluation

Chapter 3e: Monetary Devaluation

Money Adulteration and Augmentation
61The raising of the coin's denomination has been the most usual way a real public bankruptcy is disguised under the appearance of a pretended payment.
  • When it becomes necessary for a state to declare itself bankrupt, in the same way as that for an individual, a fair, open, and avowed bankruptcy is always least dishonourable to the debtor and least hurtful to the creditor.
  • 62 Almost all ancient and modern states have sometimes played this very juggling trick when needed. 63 Through such expedients, the coin of all nations has been gradually reduced below its original value. 64 For the same purpose, nations have sometimes adulterated the standard of their coin by mixing more alloy in it. 65 An augmentation or a direct raising of the coin, always is an open and avowed operation. 66 In the end of the reign of Henry VIII. and in the beginning of that of Edward VI, the English coin was raised in its denomination and adulterated in its standard. 67 Great Britain's public revenue can never be completely liberated while its surplus revenue is so very small.

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