Private Coinage in America; B. Summers

Private Coinage AMERICAhas never had a free mar ket in money. From 1933 to 1975, Americans could not legally own gold. Since 1933, contracts pay able in gold or indexed to the price of gold have been illegal, although the restored right to own gold may soon lead to new legal challenges. Since 1864, the private coining of money has been illegal. And since colonial days, we have had legal tender laws designed to force the acceptance of coins and bills mint ed by the government. Despite the absence of a com pletely free market, there. have been times when Americans have privately minted money, and buy ers and sellers have willingly used this money. Let us survey the hisMr. Summers is a member of the staff of The Foundation for Economic Education. 436 in America BRIAN SUMMERS tory of American private coinage, for this history lends support to the practicality of free market money, with private minters sup plying the monetary needs of the market, and the government pro tecting people from fraud and coercion.

One of the first private coiners was John Higley, a blacksmith in GranbY,Connecticut, who minted copper coins in 1737 and 1739. Higley let the market determine the value of his coins, on which he imprinted "I am good copper /Val ue me as you please." Noone was forced to accept Higley's coins, in contrast with our federal govern ment's policy of printing on its pa per money, "This note is legal ten der for all debts, public and pri vate."

1976 PRIVATE COINAGE IN AMERICA 437 The eminent numismatist Edgar H.Adams attested to the quality of Higley's coins: "In fact so pure was the metal contained in these pieces that they were much sought by goldsmiths of the period for the purposes of alloy, and the coins seem to have been in pretty gen eral use until 1792, the time of the opening of the United States mint."l Both Silver and Gold Silver was also coined by private minters. In 1783 1. Chalmers of Annapolis, Maryland minted silver shillings, sixpences, and three pences that were described by Hen ry Chapman as "very creditable."2 But the favorite metal of private minters was gold. Joseph Coffin reports on the first pri vately coined gold: "During this period of our history (1830 1861) many private gold coins were struck in various sections of the United States. The first of such gold coins was issued in 1830 by Templeton Reid, an assayerat the gold mines of Lumpkin County, Georgia, the same county in which the Dahlonega mint [a Federal mint] was located. The Templeton Reid coins were issued in three l_,o'Edgar H. A'dams, "Higley Coppers 'Granby Coinage,'" The Numismatist, August 1908.

2 Henry Chapman, "The Colonial Coins Prior to July 4, 1776," The Numis matist, February 1948. denominations ($2.50, $5, and $10) at Reid's private mint. The gold was of the best quality, and later many of the coins were melted be cause they were worth more as' bullion than the face value of the coins."3 Templeton Reid successfully competed with the Dahlonega Fed eral mint. Another mintmaster who thrived in the face of Federal competition was Christopher Becht ler of RutherfordtOtll, North Caro lina. Bechtler, his sons, and nephew arrived in Rutherfordton in 1830, having emigrated from the Grand Duchy of Baden. From 1831 to 1847 they coined gold in three de nominations ($1, $2.50, $5) de spite competition from the nearby Federal mint established in 1837 in Charlotte. Clarence Griffin reports on the public's acceptance of the Bechtler coins which, like all privately mint ed coins, were not legal tender: "Bechtler coins were accepted and passed at face value in all of west ern North Carolina, South Caro lina, western Tennessee, Kentucky and portions of Virginia. One of the country's oldest citizens once told the writer that he was 16 years old before he ever saw any other coin than the Bechtlers. The 3 Joseph Coffin, The Complete Book of Coin Collecting (Coward, McCann & Geoghegan, New York, 1973) p. 108.

438 THE FREEMAN July coins filled a long-felt need for specie and continued to circulate long after the discontinuance of the mint in 1847. At the outbreak of the War between the States the new Confederacy began issuing currency, but did not put out any specie. Bechtler coins, especially in this locality, were carefully hoarded, and many contracts and agreements of the sixties specified Bechtlergold coins as a considera tion rather than the Confederate States currency or the scant sup ply of Federal specie. "Despite the fact that these coins bore no device emblematic of a national character, or any of ficial guaranty of their purity, they were unhesitatingly accepted by all. In the proper sense of the word they were only 'tokens' and when offered at the government mints were worth less than the face value, as the government de ducted the seigniorage and assay fees for reminting. Yet these coins were passed over the counters of the stores, where they received the same consideration as if they were made by the United States Govern ment. They were carried by trad ers into Kentucky and South Caro lina, and many homeseekers going westward during the great immi gration period of 1850-1870 car ried their Bechtler coins with them.

Many circulated more freely than did government specie, and it has not been so many years since the local banks accepted them at face value. "Today Bechtler coins sell at enormous prices. Numismatists quote them from $5 to $100 and more."4 Honesty the Best Policy G. W. Featherstonhaugh, who visited Bechtler in 1837, gave the following account of his visit: "Christopher Bechtler's maxim was that honesty was the best pol icy and that maxim appeared to govern his conduct. I was never so pleased with observing transac tions of business as those I saw at his house during the time I was there. Several country people came with rough gold to be left for coin age. He weighed it before them and entered it in his book, where there was marginal room for not ing the subsequent assay. To oth ers he delivered the coin he had struck. The most perfect confidence prevailed between them, and the transactions were conducted with quite as much simplicity as those at a country grist mill, where the miller deducts the toll for the grist he has manufactured."5 Christopher Bechtler coined over three million dollars in gold. But his operation was dwarfed by the 4 Clarence Griffin, "The Story of the Bechtler Gold Coinage," The Numismatist, September 1929.· .

l) Ibid.

1976 PRIVATE COINAGE IN AMERICA 439 private mints that sprang up after the discovery of gold in California in 1848. At least 15 private mints coined gold in California during 1849-1855. The bullion content of some of these coins was less than their face value, so these coins were rejected by the market and soon passed out of circulation. However, the coins of Moffat & Co., Kellogg & Co., and Wass, Mol itor & Co. enjoyed the confidence of the community and were readi ly accepted. The January 8, 1852 issue of the San Francisco Herald contains the following comments on the Wass, Molitor & Co. mint: "The very serious inconveniences to which the people of California have been subjected through the want of a [Federal] mint, and the stream of unwieldy slugs that have issued from the United States Assay Of fice have imperatively called/for an increase of small coin. The well known and highly respectable firm of Wass, Molitor & Co. have come forward in this emergency, and are now issuing a coin of the value of $5 to supply the necessities of trade.

"The mechanical execution of the coin issued by these gentlemen certainly reflects the highest cred it upon their skill. It is a beautiful specimen of art, far superior in finish to anything of the kind ever gotten up in California. "But the most important point to the public is its fineness and weight, as upon these two qualities combined must depend its value. In this particular it will be found highly satisfactory, and at once secure the confidence of the com munity. It has a uniform standard of .880, and contains no other al loy than that of silver, which is found naturally combined with gold. The weight of each of the $5 pieces, which are the only ones at present issued, is 131.9 grains. "The standard fineness of the United States Five Dollar piece is .900, weight 127 grains. It is there fore 20/1000 finer than Wass,. Molitor & Co.'s pieces, but this is more than counterbalanced by the latter's being 4.9 grains heavier, so that the new Five Dollar gold piece is in reality worth five dol lars and four cents, a sufficient ex cess to pay the expense of recoin age at the United States Mint without cost to the depositor.

"The reason Messrs. Wass, Moli tor & Co. have adopted the stan dard of .880 is because this is about the average fineness of Cali fornia gold, and further because the cost of refining California gold to the United States standard is exceedingly heavy, and the neces sary chemicals cannot be obtained in this country. But it will be re membered that the difference is more than made up by the in440 THE FREEMAN July creased weight of 4.9 grains, which everyone can try for him self on a pair of scales. These coins will be redeemed on ·presentation in funds received at the Custom House and banks. The high reputa tion for honor and integrity en joyed by Count Wass and his as sociates in this enterprise is an ad ditional guaranty that every rep resentation made by them will be strictly complied with. The public will be glad tohave a coin in which they can feel confidence, and which can't depreciate in their hands.

The leading bankers, too, sustain and encourage this issue, and will receive it on deposit."G The End of an Era One of the last private mints was Clark, Gruber & Co. Carl Wat ner writes: "Between 1860 and 1862 the firm of Clark, Gruber & Co. was engaged in the manufac ture of their· own coins from their mint in the city of Denver. Here G Edgar H. Adams, Private Gold Coin age of California (Edgar H. Adams, Brooklyn, N.Y., 1913) pp. 79-80. again, the demand for a circulat ing medium was satisfied by pri vate means before the government was able to act. The Clark, Gruber coins were of high quality and al ways either met or exceeded the gold bullion value of similar Unit ed States coins. In a period of less than two years this firm minted approximately three million dol lars' worth of coin. Their mint promised to outdo the govern ment's own production, and to get rid of them, <the government bought them out in 1863 for $25, 000."7 In 1864 the private COInIng of money was banned by an Act of Congress. Today the prohibition against private coinage, the doubt ful legality of gold contracts, and legal tender laws assure the fed eral government a legal monopoly over money, and prevent buyers and sellers from freely choosing mutually acceptable media of ex change. , 7 Carl Watner, "California Gold: 1849 65," Reason, January 1976, pp. 27-28.

IDEAS ON LIBERTY Universal Money FOR SOME 2500 YEARS small pieces of gold and silver, called coins, constituted universal money. It survived two millennia in spite of countless attempts by hosts of governments to manipulate it or replace it with their own media. From the book, Gold Is Money edited by HANS F. SENNHOLZ A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN The Conservative Intellectual Movement Since 1945 IT TOOK FIFTY YEARS for the Fa bian Society to conquer Britain for socialism. In the beginning .the Fabian Society was a tiny debat ing forum for George Bernard Shaw, not yet a famous play wright, and Sidney and Beatrice Webb, who preached something called "the inevitability of grad ualism." This peculiarly British slow-motion approach to socialism stirred Lenin, then living in exile in Switzerland, to sardonic laugh ter. "A good man fallen among Fabians," he remarked o~ George Bernard Shaw.