English Coinage

To preserve the value of coinage, England put in place a system of legal tender, which guarantees that the government will redeem a coin for the specie it represents regardless of its actual weight or alloy. In effect, this means that the loss incurred by debased or devalued coinage would be borne by the government (taxpayers, ultimately) rather than by the person who accepted the coin. This addressed the problem of worn and damaged coins, but did not alleviate the problem of fluctuation in the market value of metals (which will be moved to a separate chapter).

Legal tender also places the market on one standard - a silver or copper coin is redeemable for a fixed quantity of gold, regardless of the value of the metal of the coin. A "shilling" would be worth 1/20 of an ounce of gold, and a "penny" would be 1/240 of an ounce, rather than their weights in silver and copper. In time, these coins would be replaced with tokens (coins containing little to no valuable metal) to discourage exporting/melting when the exchange rate fluctuated.

It's also noted that the act eliminated coining fees or seigniorage, such that an individual could bring gold to the mint and receive an equal weight in coin, and the operational expenses of the mint would be borne by the state (which effectively eliminated the profitability of operating a private mint). A later act that declared all coins issued before a given date would no longer be guaranteed by the state (and valued by their weight and allow) effectively ended the use of pre-dated currencies.

The net result of all of this was to stabilize the value of English coinage, albeit at significant expense to the English taxpayers.