The E-Sylum:  Volume 10, Number 19, May 13, 2007, Article 9

IF AMERICA HAD PRIVATE ISSUE MONEY

Dick Johnson further comments on what would happen in America if private
issuing of coins and currency were permitted as proposed by professor
White.  He writes:

"For coin issues:

"The U.S. Mint would become the largest custom minter in the world,
creating coins for banks and large retail chains. They would produce
custom coins for each such issuer, accepting orders directly from them
and instead of shipping all coins to the Federal Reserve System, ship
the custom coins to retail branches. This would become, in effect,
the most efficient method in the distribution of coins.

"Private mints would be established to service banks and businesses
of all sizes. As was the case for the Civil War cents even small
retail merchants would issue their own coins, possibly ordering them
in several denominations. There would be extensive competition among
private mints. Some would have round-the-clock production. Costs of
new coining presses and engraving equipment would skyrocket as mints
required more production capacity.

"Competition for the profits from seignorage would drive the purity
of coins higher. Coins would be issued both in precious metal and
token coinage in base metals.

"Large retail chains would be the most active issuer of their own
coins. They would make their own decision, for example, to have and
use low denomination coins, or to to round off to the next highest
denomination they made available.

"Owners of several private minting firms would have sellers remorse
for selling out recently, perhaps hitting their forehead like a V8
commercial --  "Oh, If I had only held out for a few more years!"
This would include Roger Williams Mint, acquired last year by Osborne
Coinage of Cincinnati. Or perhaps by Hoffman of California, which
sold much of its minting equipment to Northwest Territorial Mint,
and four coining presses acquired by Striker Tokens and Medals of
Eureka Springs, Arkansas. How fortunate for them."

"For currency issues:

"The U.S. Bureau of Engraving and Printing would become a large
custom banknote printer in addition to private banknote printers.
They would receive orders from banks direct instead of the Federal
Reserve System and print notes specifically for these banks with
their names (a la National Bank Notes).

"Banks would issue their own notes and encourage their use for
the float they would have access to between the time the notes
were issued and the time they were redeemed.

"Bank loan interest rates would drop for the banks that would be
most aggressive in issuing their own notes. They would have such
excess capital available for loans they could charge a lower
interest rate.

"ATM machines would proliferate. This would be the most effective way
of distributing a bank's custom notes. There would be no charge for
the use of this service. In fact some aggressive banks may offer a
premium for the use of their currency. Competition among banks would
vary the amount of the premium.

"Standards would have to be made in the design of the currency. This
would be required to insure its acceptance by everyone.

"The currency issued by a bank that defaulted would have to be accepted
by all other banks, otherwise the public would not accept any bank's
currency. Or the banks would have to form their own insurance plan
for this."

  Wayne Homren, Editor

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