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V11 2008 INDEX
E-SYLUM ARCHIVE
GEORGE SELGIN OFFERS HISTORICAL PERSPECTIVE ON COIN SHORTAGES
George Selgin, author of Good Money offered an
historical perspective on the U.S. Mint recent bullion coin supply
shortfall in Numismatic News. His opinion piece was published
September 29th on the Numismaster web site. -Editor
Coin dealers and collectors are still reeling
from the U.S. Mint's announcement that it had run out of American Eagle
gold coins. But what ought to surprise every American isn't that a
government agency came up short. It's that the U.S. government should be
making little metal discs at all.Coin shortages are nothing new. A few months before running out of gold Eagles, the U.S. Mint had to ration silver Eagles. Not long before that, pennies were in very short supply. Nor are other government mints any better. Back in 2007, for instance, Argentina had such a severe change shortage that its panhandlers nearly starved to death, while in southern China 100-yuan coins commanded a whopping 25 percent premium.
Why are coin shortages so common? Governments typically blame unexpected changes in demand. But suppliers of all sorts of other goods manage to avoid running out despite even more dramatic demand changes. So what's special about coins? An old chestnut says that, if the government were put in charge of the desert, pretty soon there'd be a sand shortage. Recall the plight of consumers under socialism: socialist governments tried to make everything and eventually ran out of everything.
Now socialism is dead, but not when it comes to coining. So coin shortages keep breaking out, as they have ever since governments first monopolized coin making in ancient times.
George's article is headlined Get Government Out of Coin
Manufacture, and he outlines the history and successes of private
mints in the U.S. and England. -Editor.
During the gold rush, for
instance, no fewer than 15 private mints went into business, sparing
prospectors the need to send their gold all the way to Philadelphia or New
Orleans to be coined. Although some of the mints made sub-standard coins,
they went rapidly out of business. The ones that survived produced coins
every bit as good as - and in some cases better than - those from the U.S.
Mint. The survivors' reputations were so good, in fact, that they
withstood both local attempts to outlaw private coinage and the opening,
in 1854, of a San Francisco branch of the U.S. Mint. To end this
embarrassing competition, Congress bought out the biggest private mint in
1863 and outlawed the rest a year later. Private coiners played a still bigger role in Great Britain's Industrial Revolution, which was in danger of grinding to a halt thanks to a shortage of official coins. When the Royal Mint refused to do anything about the shortage, private entrepreneurs took matters into their own hands. From 1787 to 1797 and again from 1811 to 1818, the greater part of Great Britain's stock of coins came, not from the Royal Mint in London, but from a score of private mints in Birmingham.
Far from having been inferior to their Royal Mint counterparts, as government officials would have it, Great Britain's private coins were more popular than official ones, and for good reason: being much harder to counterfeit, they were more likely to be genuine. But the British government cared more about protecting the Mint's monopoly than with catering to the public's need for sound money, so in 1818 it banned private coins, even though official ones were still in short supply.
To read the complete article, see: Get Government Out of Coin Manufacture (http://www.numismaster.com/ta/numis/Article.jsp?
ad=article&ArticleId=5364)
Wayne Homren, Editor
The Numismatic Bibliomania Society is a non-profit organization promoting numismatic literature. See our web site at coinbooks.org.
To submit items for publication in The E-Sylum, write to the Editor at this address: whomren@gmail.com
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