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.