19TH CENTURY U.S. PRIVATE GOLD MINTS

 

There were three distinct regional gold rushes with private mints: the southern Appalachians, 1830-51, California between 1849-54, and Colorado during 1860-62.

A visitor to the Bechtler mint in North Carolina in 1827 described how ‘country people' brought in ‘rough gold' that the mintmaster weighed and recorded in his book, while ‘to others he delivered the coin he had struck', net of fees, from the gold that they had previously brought. The mint's operations were like ‘those at a country grist mill, where the miller deducts the toll for the grist he has manufactured'. A mint's revenue likewise consisted of fees deducted from the metal it ‘fluxed' (cleaned), assayed to determine fineness, and stamped into coins. The Bechtler mint charged 2.5 percent for assaying and coining. Thus, a miner who brought sufficient gold dust to make $102.50 would receive $100 in new coins.

A private gold mint accordingly did not need to produce substandard coins to make a profit. Deliberately issuing substandard coins would earn a greater profit per coin, as theoretical sceptics noted, but only until the ruse was discovered. Evidence from contemporary newspapers and numismatic historians indicates that while fraud and incompetence by some private mints was initially a problem, the publication of independent assay results in local newspapers meant honesty eventually dominated as a profit-maximization strategy.

Templeton Reid of Georgia opened the first private gold mint in the United States. Reid over-estimated the purity of his gold, produced coins soon found to contain too little gold, and shut down within three months. The Bechtler mint, by contrast, gained a reputation for competence and honesty that kept it in business for twenty years, between 1831 and 1851. It produced more than $3 million in gold coins, in denominations of $1, $2.5, and $5; these coins were also marked also with weight in grains and fineness in carats, until the local mines began to play out.

In California, private mints produced an estimated $36 million of gold coins between 1849 and 1854. Four of the six prominent private mints established in 1849 produced substandard coins. Once newspapers reported assay results, merchants refused or heavily discounted the underweight coins, forcing their holders to have them melted and recoined elsewhere. Bad mints did not survive into 1850, unlike the two good mints (Moffat & Co., which likely outproduced all the others combined, and the Oregon Exchange Company). Of the five major private mints established in 1850, and later, only one (Baldwin & Co.) produced underweight coins and quickly exited. The other four were competent and honest, and three of them minted large quantities — Dubosq & Co., Wass, Molitor, & Co., and Kellogg & Co.

In Colorado, Clark, Gruber & Co., minted about $3 million of coins dated 1860 and 1861. Their coins were quite popular because they were known to contain a quantity of gold slightly above the US Mint's standard.

To read the complete article, see:
How private gold mints in 19th century America overcame the market-failure problems imagined by some economists (https://ehs.org.uk/how-private-gold-mints-in-19th-century-america-overcame-the-market-failure-problems-imagined-by-some-economists/)

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