Copper coinage used to keep Mint workers employed in early years
RogerB
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As some have mentioned, copper coinage was used as a way to keep skilled workmen employed at the Mint when there were no silver or gold deposits. With precious metal coinage confined to deposits, there were many times when all that kept the employees on the pay roles was copper. Note this excerpt from a letter dated April 22, 1799 from the Director to Mathew Boulton, who supplied copper planchets to the US Mint.
"I am much obliged by your resolution to ship me ten tons of planchets, the bills now sent will fully reimburse you, and I will be careful to keep you in cash for all you may send hereafter. I beg you will not let any opportunity slip to keep us well supplied, as I have been sometime wholly idle as to the coinage of copper: and as to the price, if we get the copper as cheap as other people, it is all we can expect."
[E-3 Journals to 1837\Journal 1793-1824\1793-1815 pp.282-25 – 284-27.]
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Spot on, Roger. For intelligent guys, the Founding Fathers sure goofed up the funding of the mint. Yeah, I get that the debased coinage foisted upon the colonies was the primary driver behind “full weight” coinage, but geez, even back then they had to realize there ain’t no such thing as a free lunch (TANSTAFL), somebody always gotta pay.
With no meaningful charges or seigniorage, the little bit of copper profit sure wasn’t gonna pay the bill, so Congress had to keep coming up with money. And with no means to pay depositors on the spot, it’s mind-boggling to believe that these smart guys actually expected small depositors outside the immediate area to ride to Philly, deposit gold and silver, and then wait for it to be coined!
They sure didn’t have their thinking caps on that day.
I wonder how much specie would have been required to maintain a revolving fund of already struck coins that could be exchanged for deposits on demand for a fee? Would $50,000 have been enough? Did the U.S. government have $50,000 in specie to spare?
Poor planning is a time-honored government tradition. I am reminded of the (perhaps apocryphal) story of the rural school board that voted to build a new school house. The ordinance specified that A: The building materials in the old school house would be re-used to cut expenses; and B: That the old school would remain in use until the new one was completed!
The coinage act of 1837 established a fund of up to 1 million. Not sure what they actually kept on hand. You could come up with a reasonable figure for the first decade by looking at the deliveries for a few years. Money was certainly tight in those days, but even 5K would have been a great help.
The real problem was lack of a reasonable seignorage. Without that, there's no way a mint can be self-sustaining. And, you get the second-order effect of people treating the coinage as just so much "official bullion." Dollars, half dollars, and gold left this country almost as it was struck. Neil Carothers did an excellent treatment of the combined lunacy of free coinage and bimetallism.
The Bank of the United States, commercial banks and bullion brokers often made deposits in the range of $50,000 to $100,000. However, immediate payment was no necessary in most instances. Banks could get 3% to 5% premium on notes covered by specie and were willing to allow the mint to hold deposits until they had enough to make a large batch of coins.
But, the US Mints were not designed to hold an inventory of coins. They were supposed to accept deposits, secure with warrants, refine bullion then strike coins and pay out on presentation of warrants. This was supposed to happen quickly but often took months to complete. Another impediment was the floating premium on specie which sometimes made export more attractive than domestic use.
Lastly, the US had almost no native silver or gold production - everything came from foreign trade and was subject to considerable outside influence.
While it's fun to point a finger of foolishness at the government, reality is that these were the same principles used in ordinary business and by Boulton's private mint.
In some repects we could say this today - coining 9 billion un-needed zinc cents every year probably keeps many mint workers employed . . .
With no meaningful charges or seigniorage, the little bit of copper profit sure wasn’t gonna pay the bill, so Congress had to keep coming up with money.
Sort of reminds me of today's USPS....
Coining unneeded one-cent and five-cent coins is not the US Mint's idea. Go lean on the members of Congress who approved $1,400,000,000,000.00 added to our debt for a "trickle down" effect that has never been shown to work.
So true. Was hoping the $1 bill would finally get eliminated too now that Ted Kennedy has passed but the paper lobby lives on . . . . .
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The cent, nickel, half dollar and one-dollar bill are no longer necessary; and really the $5 bill can be replaced with a coin for further savings and convenience.
The cent and nickel can be accommodated by rounding cash amounts, and maintaining exact electronic transactions. The annual gain or loss for any retail customer will be four cents.
Half dollars do not circulate in sufficient quantities to justify their production.
The dollar bill is a redundancy all developed countries long ago eliminated -- except us chickens. (Crane Company cannot economically produce the special paper used for US currency without $1 bills. In effect, this unique paper creates a subsidized monopoly.)
Interesting story, thanks for sharing !!!
According Early American Coppers Club co-founder, Herb Silberman, in 1814 the U.S. Mint employees were set to work making large cents so that they could receive their wages and salaries.
In one way the Mint's existence depended on a steady supply of copper planchets for cents and half cents. Yet, the primary supplier was Boulton in England. Imagine the problems created by the War of 1812.