Next Sunday, Pique the Geek goes back to a more science and technology oriented format. However, there seemed to be a decent amount of interest in coins, so I will write occasional pieces on that topic.
We will begin by discussing how coins were and are made, and the locations where they are made in the United States. Future entries will include coins by denomination for current denominations, coins that have been discontinued (did you know that there were two, three, and twenty cent pieces?) and other aspects of numismatics (the technical term for all things to do with coins), and trends that I see coming.
To start this off, it would be appropriate to get some history. The Framers were very concerned about sound fiscal policy for the new Nation. President Washington was wise to have selected Alexander Hamilton as the first Secretary of the Treasury. Hamilton was a fierce advocate of of sound policy, having seen the collapse of the paper currency during the Revolutionary War. (The paper currency was referred to as “Continentals”, and the term “not worth a Continental” is still used in some circles, like where I grew up in rural west central Arkansas). He insisted that the war debt be repaid (it was) and that US money would have intrinsic value, so it could not be devalued. This meant gold, silver, and, for low value coins, copper.
The basic unit of the new system was the dollar, based on the widely-circulated Spanish dollar, the most familiar unit of money in the Colonies, because the British were very stingy about providing Imperial coinage. Spain had been minting their dollars for centuries in the New World, and it was the model. Spanish dollars were often cleaved into eight equal pie pieces, and we still remember the term “piece of eight”, also called a “bit”. This usage has continued to the present, as a quarter is still referred to as “two bits”.
Several models as to the design of the money system were offered, and to two that were seriously considered were the one from Gouverneur Morris, who had an elaborate formula based on dividing the dollar into 1440 theoretical units, to correspond with the Spanish dollar (Morris was involved with funding the Revolutionary War) and the one from Thomas Jefferson (a Representative at the time) for a simple decimal system. Washington agreed with Jefferson, and if that had not have happened, we would have had an extremely complex monetary system, at least as far as coinage goes. Hamilton concurred with the decimal concept, and legislation to build a mint, for Washington to appoint artists under contract, and for machinery to coin money to be procured was passed in 1791. A year later, final legislation was passed. Here is a partial quote of the Act, with period capitalization:
“… that the Money of Account of the United States should be expressed in Dollars or Units, Dismes or Tenths, Cents or Hundredths, and Milles or Thousandths…”
So far, so good. But then Congress also established by law coins to be authorized and their composition. Ten different denominations were authorized: the $10, $5, and $2.50 gold coins; the $1.00, $0.50, $0.25, $0.10, and $0.05 silver pieces; and the one cent and half cent coppers. Cents have always been considered subsidiary coinage, with only token value. Hamilton did not like that, and wanted the cents and half cents to have a little silver plug in them to bring them to parity.
Then as now, many acts of Congress have unforeseen consequences, and a big one was the result that, then as now, the metals markets fluctuate, so gold and silver do not always have the same relative value. This had extraordinarily serious consequences, some not realized until over a century later. Congress valued the gold to silver value ratio at 15:1, and using the spot prices from Monday, 08 September 2008, the ratio is over 66:1. Capitalists of the time were as astute, if not as crooked as now, and as soon as the market price of gold versus silver fluctuated, found ways to make money.
In any event, Washington appointed David Ritterhouse (a scientist!) as the first Director of the Mint and construction and procurement began in the spring of 1792. Before the mint was completed, Washington himself provided about $100 worth of silver to me minted, and the first coin of the United States turned out to be the half disme, a 5 cent piece. This is the first official US issue, in July of 1792.
The Law of 1792 has one provision that we would call bizarre now. Gold and silver for coins was provided to the Mint by the public, and the Mint coined it (thus certifying its value) for free, returning the coins to the owner of the gold or silver. The thought was that the owner would put the newly minted coins into circulation in the process of buying things or paying for services. Copper was provided by the government, because it would have cost the government money to take, say 100 cents worth of copper and return 120 large cents to the owner, since cents and half cents were worth less than the metal.
The first copper (six pounds of used material) was purchased in the fall of 1792. Legend has it that this copper came from bands holding blackpowder kegs together supplied by the French for the Revolutionary war. If true, this is likely the first Federal contract for recycling.
Other than Washington’s $100 in silver, the first deposit was for $80,715.735 from the Bank of Maryland (in French coins, no doubt part of the assistance package from the French for the Revolutionary War). It is assumed that the bank received an equal value in silver coin.
Moses Brown, from Boston, contributed the first gold, worth $2276.22 in ingot form in February 1795. He took his payment in silver coin. Probably a bad move for him, as I will explain later. The first gold coins were delivered to the Treasurer on the last day in July 1795.
In 1793, only half cents and cents were minted, and these were placed into circulation. Around $50,000 worth were injected into the economy. Not enough for commerce, and barter, foreign coins, and other means were used to make up for the lack of specie. This problem actually continued until 1857, when legislation was enacted to keep money in the country.
Part of the problem was that the original Law allowed free exchange of any Spanish dollar for a new, shiny US silver dollar. One problem with that was many of the Spanish dollars by that time were often over a hundred years old, and very worn. It would be sort of trading your worn $5 bill for a new $10 one. Speculators bought up large quantities of worn Spanish dollars and exchanged them. That was not lost on people from foreign countries, and remember, at the time, Spanish influence, whilst waning, was still large and there were millions of old Spanish dollars in use around the world. Thus, most of the new silver coins were sent to foreign countries, and were not available for domestic use.
It was as bad or worse for gold coins. Remember when I talked about unintended consequences? Congress pegged gold to silver in a 15:1 ratio (advocated by Hamilton, by the way), but by 1799 the relative value had shifted to 15.75 to one. In other words, you could take $10 in silver and exchange it for $10 face value in gold, but the actual value of the gold was $10.50 on the world market. Fifty cents was a big deal at the time, so silver was traded for gold, and the gold melted for bullion for a profit for the traders.
The situation got so bad that President Jefferson suspended the coinage of gold $10 pieces (“eagles” in the lingo) in 1804, and the silver dollar in 1806, although it appears that no silver dollars were actually minted after 1804. Dates of coins from that period did not necessarily correspond to the actual year of minting. Interestingly, some coins from the mid 1960’s are also not necessarily dated the year of minting, for some of the same reasons. We will talk about that in a later installment.
That left mostly half dollars, quarters, and smaller denominations for commerce. Barter, promissory notes, and other measures were used. Some experts believe that in 1830 there was only one coin, or even fewer, for each person in the Nation. Hard times indeed!
Next time I will continue the evolution of money here, but want to talk about the technology before this gets way too long.
Originally, coins were made by putting a piece of metal onto a rock and beating it into a convenient size. Other media of exchange included cocoa beans (Mayan), wampum (clam shell beads, Eastern Native American), and many others. The impetus for money evolved with the human fascination for mathematics, and the practical need to represent, say, a shipload of fish for something easier to handle for trade. The ancients did not like totes on a clay tablet as their compensation, so insisted on something more tangible that would be recognized by everyone in their trading community as having a standard value. Interestingly, as we move more and more towards electronic commerce, totes in a database are replacing tangible coins and currency.
Dies to put recognizable impressions came later, and a piece of metal of known weight was put into the die, and a slave or other worker would hammer the die to make a reproducible coin. Very early on it was discovered that unscrupulous people would shave a little gold or silver from the edges, reducing the amount of metal in the coin and accumulating the shavings for their value. That is why some of our coins are “reeded”.
“Reeds” are the lines struck into the edges of US coins from the dime up (excluding the new Sacagawea dollar). The reeding readily allowed people to feel whether the edge was smooth or not, and so not to accept silver or gold coins with smooth edges, since they most probably had been shaved. Since US coins are only tokens now, the reeding is preserved just for legacy, but the sight disabled still depend on it to identify coins, so its use had another unintended consequence, this time positive, at least to a relatively small segment of society.
The first US coins were pretty much made the same way, but the dies were better and better mechanical presses were used. Steam power soon took over, and the coins were pressed by heavy presses powered by steam. In modern times, the presses are hydraulic, and some can make an astonishing number of coins, too fast for the eye to follow. Multiple presses are used to keep up with production demand.
In the past, all individual die halves were hand crafted (you need two die halves to strike both the obverse and the reverse simultaneously). This makes for a very rich variation of defects and unique characteristics on older US coins.
Present practice is to produce a “master hub” from which all of the working dies are made. The master hub is steel, heat annealed to be soft enough to be engraved, but of high carbon content. This gets important in a minute.
The master engraver takes a large model of the coin that the artists have produced and uses an engraving machine to reproduce the model in each of the die halves. Most of this is done mechanically, but the final inspection and touchups are done by humans using magnifying devices. Once the image (in a positive aspect, and this is important in a minute) is made and accepted, the mint mark is added to the hub. This hub, actually two pieces, one for the obverse and one for the reverse, will make all of the coin striking dies for each mint.
The hub pieces are then subjected to hardening by heat and other processes, and the Mint keeps some of those close to the vest. The final product is a positive image, in three dimensions, of the exact coin to be produced. If you looked at a cropped picture of a hub, you could not tell it from the finished coin, except its features are sharper.
The hardened and perfected hubs are then put in presses and forced into softened steel dies. The dies produce a negative image of the coin to be produced. After inspection, the dies are hardened and cleaned, and handcrafted to eliminate any imperfections. One hub set can produce many dies sets with little loss of quality. That is important, because dies wear out, and can make only about half a million to a million coins until they have to be replaced. You can actually buy decommissioned dies from the Mint, but will not be able to make coins from them. The Mint grinds all traces of the coin image off of the die before it is offered for sale. Coin geeks like me like them anyway.
The dies are then shipped to the appropriate Mints. Philadelphia and Denver produce “business strikes”, the coins that we all handle every day. San Fransisco produces only “proofs”, very carefully crafted collectors items. There is also a small Mint at West Point that is dedicated to a limited series of gold, and I recently understand, platinum, coins.
The dies are engaged into the press, and a test run is made with new planchets. Oh, I should explain that term.
Except for cents, the Mint takes metal sheets and uses a press and die to cut out blank coins. A piece of metal of about the right size and exact weight is a “planchet”. Cents are a little different, because the Mint orders them already plated with copper. They are made in the conventional way, but after being cut out, the zinc alloy is plated with copper.
The metal left over is recycled (think of a rolling board of biscuits. The dough around the cutouts is still good), and the process continues. There is a special step for dimes and quarters, and I will talk about it in another post.
Automated equipment places the planchets onto a conveyor, and they are sorted into an “upsettor” or “rimmer” that produces the raised edge on them. The raised edge is important, because it reduces wear of the rest of the coin for years, until it wears away. For reeded coins, the reeds are impressed at the same time.
Then the rimmed planchet goes to the coin die set. Conveyors direct them, and modern electronic control equipment assures that one and only one planchet goes to the die (there are rare exceptions, highly prized by us collectors). Then the dies are impressed on the planchet by hydraulic presses, and the new coin is ejected. Electronic monitoring equipment looks for defects, and if any are found, they go to the recycling bin.
This is long enough for this installment. I always welcome questions, comments, or disagreements. I will not restrict myself the the Pique the Geek rules: if I do not know something, I will attempt to look it up and get back to you as soon as possible.
Warmest regards, and thanks for reading and commenting,
Doc
Tags: Coins, Copper, Currency, Dies, Gold, History, Hubs, Intrinsic value, Learning, Money, Silver, Teaching, Token
No Comments
You must be logged in to post a comment.