Tag Archive for Coins

A Brief Monetary History Of The United States: Part III

Today we bring you Part III of “A Brief Monetary History of the United States” from the Ron Paul Monetary Policy Anthology. The full series can be found at the following links:

  • Part I – Colonial Money and the Coinage Act of 1792
  • Part II – The Banks of the United States, McCulloch v. Maryland, and Private Coinage
  • Part III – Government Begins to Monopolize Currency
  • Part IV – The Legal Tender Cases and the “Crime of ’73”
  • Part V – The Rise of the Fed
  • Part VI – The Great Depression, Gold Confiscation, and the Gold Exchange Standard
  • Part VII – The Dollar Reigns Supreme: From Bretton Woods to Stagflation
  • Part VIII – The 1980s to the Great Recession and on to the Future
  • III. GOVERNMENT BEGINS TO MONOPOLIZE CURRENCY

    Coinage Act of 1857

    As the 19th century progressed, the federal government sought to enhance its control over the banking industry and the monetary system. In 1857, Congress passed a coinage act which removed the legal tender status that circulating foreign coinage had until then enjoyed. All circulating foreign coins received by the Treasury were to be melted down and recoined. By driving foreign coinage out of circulation, Congress sought to ensure that only U.S. coins circulated, a step towards federal government dominance of the money supply. This was ostensibly to provide a uniform national currency, a stated goal of the federal government since the country’s founding. By “uniform national currency” the federal government did not mean adherence to a dollar defined as a specific weight of metal with coinage circulating by weight and valued in relation to that dollar. Instead, the federal government sought to ensure that only the United States Mint’s coins would circulate in commerce, regardless of what type of coins the market desired.

    A further strike against market choice in currency came in 1864, when Congress passed legislation to prohibit private production of coins. The minting of any coins intended for use as current money was made illegal, even if the coins were of completely original design. This prohibition remains in force today, and was most famously used in recent years to prosecute the creators of the Liberty Dollar.

    A Brief Monetary History Of The United States: Part II

    Today we bring you Part II of “A Brief Monetary History of the United States” from the Ron Paul Monetary Policy Anthology. The full series can be found at the following links:

  • Part I – Colonial Money and the Coinage Act of 1792
  • Part II – The Banks of the United States, McCulloch v. Maryland, and Private Coinage
  • Part III – Government Begins to Monopolize Currency
  • Part IV – The Legal Tender Cases and the “Crime of ’73”
  • Part V – The Rise of the Fed
  • Part VI – The Great Depression, Gold Confiscation, and the Gold Exchange Standard
  • Part VII – The Dollar Reigns Supreme: From Bretton Woods to Stagflation
  • Part VIII – The 1980s to the Great Recession and on to the Future
  • First and Second Banks of the United States

    First Bank of the United States Building

    First Bank of the United States Building

    The First Bank of the United States was established in 1791 as a national central bank. One of the justifications behind the establishment of the Bank was to combat the supposed scarcity of money and to facilitate commerce through the expansion of credit. The national bank proposal ignored the true cause of specie scarcity, which was the legal overvaluation of one form of money over another. Whenever money was given legal tender status and a fixed legal value, Gresham’s Law took hold and gold or silver vanished from circulation. What proponents of central banking really wanted was an enlarged and eased issuance of credit, especially to the federal government, believing that easy credit was the path to economic prosperity.

    A Brief Monetary History Of The United States: Part I

    On this Throwback Thursday, we’ll run the first part of “A Brief Monetary History of the United States” from Ron Paul’s Monetary Policy Anthology. Subsequent sections of that history will run every Thursday for the next several weeks. If you haven’t downloaded the anthology yet, you ought to do so. The anthology is a compilation of Congressman Paul’s tenure as Chairman of the Subcommittee on Domestic Monetary Policy, including his exchanges with Ben Bernanke, the transcripts of his monetary policy hearings, transcripts of the “Tea Talk” lecture series, and additional commentary from prominent economists from the Austrian School such as Bob Murphy, Tom Woods, and Jesus Huerta de Soto.

    The installments in this monetary history series can be found here:

  • Part I – Colonial Money and the Coinage Act of 1792
  • Part II – The Banks of the United States, McCulloch v. Maryland, and Private Coinage
  • Part III – Government Begins to Monopolize Currency
  • Part IV – The Legal Tender Cases and the “Crime of ’73”
  • Part V – The Rise of the Fed
  • Part VI – The Great Depression, Gold Confiscation, and the Gold Exchange Standard
  • Part VII – The Dollar Reigns Supreme: From Bretton Woods to Stagflation
  • Part VIII – The 1980s to the Great Recession and on to the Future
  • A BRIEF MONETARY HISTORY OF THE UNITED STATES

    “Those who cannot remember the past are condemned to repeat it.” – George Santayana

    I. INTRODUCTION

    To avoid repeating the mistakes of the past and to provide for a more prosperous future, the lessons of history must be both explored and understood. This is no less true for something used in everyday life: money. The present monetary regime did not appear overnight. Rather, it is the result of centuries of concerted action, much of which has been forgotten by history. The following pages are intended to provide the reader with a brief yet relatively comprehensive introduction to the history of money and monetary policy in the United States from the late-18th century to the present. While not an all-inclusive look at American monetary history, this section covers the main historical events that have led to the current U.S. monetary system. If America seeks to achieve a sound and stable economy, it is necessary to examine the history of money in the United States and its evolution over time.

    Pennies And Nickels: More Expensive To Mint Than To Use

    Nickel
    It’s not breaking news, but the cost of producing pennies and nickels is still higher than their face value. This has been an issue for the past decade, with no progress being made. If the US Mint decides to change the composition of the penny and nickel, operators of vending machines and other coin-operated machines would have to spend hundreds of millions of dollars retrofitting their machines, while the Mint would save a sum that’s only in the tens of millions of dollars. A far better solution would be just to stop using pennies and nickels altogether. Since the Coinage Act of 1792, the United States monetary system has used mils, but no coin was ever minted to provide for that 1/10 of a cent of value. The half cent was eliminated in the mid-19th century. Now it’s the turn of the penny and the nickel. The Federal Reserve’s inflationary monetary policy has so eroded the value of US coinage that those small coins aren’t even worth producing anymore. It’s only a matter of time before they will disappear from circulation anyway. One of the best commentaries on the government’s continuing fiasco with the penny and nickel is from Congressman Ron Paul’s statement at a Congressional hearing on coin production. It’s well worth a read.

    Bubble Watch: Numismatics

    1880 $4 Coiled Hair Stella Pattern

    1880 $4 Coiled Hair Stella Pattern

    We’re always trying to be on the lookout for more bubbles in this economy, plagued as it is by the Fed’s easy money. From Coin Update comes news that 2015 set a record for the most rare US coins reaching $1 million or more at auction. 17 coins achieved or exceeded that sum, up from 12 in 2014. Is the rare coin market in a bubble, just like the art market and markets for other expensive luxury goods?

    Today in Monetary History: July 23, 1965

    90% Silver Half Dollar (L); 0% Cupronickel Clad Half Dollar (R)

    90% Silver Half Dollar (L); Cupronickel Clad (0% Silver) Half Dollar (R)

    Today marks the 50th anniversary of the Coinage Act of 1965, perhaps the most radical piece of monetary legislation since the founding of the Republic. For the first time in American history, all circulating coinage was intended to be made out of base metals, not gold or silver. You’ll notice in your pocket change that half dollars, quarters, and dimes have a thin band of copper visible along the edge. This is because those coins are now “clad” – made of a sandwich of copper and nickel known as cupronickel. You’ll also notice that the only coins you’ll ever see minted before 1965 are pennies and nickels, neither of which contained silver. Silver dimes and quarters (1964 and before) are rarely seen in circulation, and when they are they’re immediately removed since their metal value is far higher than their face value.

    Today in Monetary History: July 9, 1985

    SilverEagle
    On July 9, 1985, Congress enacted P.L. 99-61, Title II of which was entitled the “Liberty Coin Act.” Text of the legislation is after the jump. This act authorized the minting of one-ounce silver bullion coins, the American Silver Eagle. Featuring Adolph Weinman’s design from the Walking Liberty half dollar on the obverse, the American Silver Eagle contains one ounce of silver and has a legal tender face value of one dollar. If you’re looking to buy some, you might have to wait a little while as the US Mint just sold out of them due to the increased demand brought about by lower silver prices.

    Today in Monetary History: July 4, 1864

    Original Plan for the Dalles City Mint

    Original Plan for the Dalles City Mint

    On July 4, 1864, Congress enacted legislation authorizing the establishment of a mint branch at Dalles City, Oregon (now called The Dalles). Full text of the legislation is after the jump. Just as the San Francisco Mint was formed in response to the California Gold Rush, the Dalles City Mint was authorized in response to gold rushes in Idaho and Oregon. Rather than shipping gold dust and nuggets to San Francisco, it would be more convenient to have a branch of the US Mint located near the mines.

    You’ve never heard of the Dalles City Mint before? Well, that’s because it never went into operation. By the time construction began, the gold rushes were already beginning to wane and the mint building was never completed. So now you have a little bit of trivia to impress all your friends and family at your backyard cookouts this afternoon.

    Today in Monetary History: July 3, 1852

    Old San Francisco Mint
    On July 3, 1852, Congress enacted legislation to establish a branch mint in California. Leaving the decision to the Secretary of the Treasury as to where to site that mint, the mint branch was eventually established at San Francisco. The history of coinage in California is fascinating, as the large amounts of gold found during the California Gold Rush needed to be minted into coins to suit the needs of commerce. Gold dust and nuggets were only so useful. Without a US government mint, private mints sprang up to provide the need for coinage. Eventually a US Assay Office was founded at San Francisco, and finally the US Mint branch was authorized in 1852, beginning its operations in 1854.

    The San Francisco Mint minted one of the coins best-known and most sought-after by collectors, the 1909-S VDB Lincoln penny.

    1909-S VDB Penny

    1909-S VDB Penny

    Most circulating coinage production ceased at the San Francisco Mint after 1955, and the Mint is now active only in the production of proof coins.

    Text of the legislation establishing the San Francisco Mint is after the jump.

    Today in Monetary History: Silver Certificates

    SilverCertificate
    On March 25, 1964, the Secretary of the Treasury announced that Silver Certificates would no longer be redeemable for silver dollars. By this time, the market price of silver had risen so high that the silver content of silver dollars was now worth more than one dollar. Silver dollars had not been minted since the 1930s and the Treasury had no desire to draw down its stocks of increasingly-valuable silver dollars by allowing arbitrageurs and coin collectors to redeem silver certificates for silver dollars. Silver certificates continued to be redeemable in silver bullion at the Treasury Department until June 24, 1968, after which time redemption of silver certificates for metal was abolished by Act of Congress. Silver certificates continue to be legal tender and can be exchanged for Federal Reserve Notes for anyone wishing to do so.

    Image: Wikipedia