The Dynamics of Competitive Coinage: Evidence from Private Mints in the American Gold Rushes

25 Pages Posted: 7 Dec 2019 Last revised: 19 Mar 2020

See all articles by Lawrence H. White

Lawrence H. White

George Mason University - Department of Economics; George Mason University - Mercatus Center

Date Written: March 17, 2020

Abstract

Some economists have argued theoretically that the private minting of circulating precious metal coins would be inefficient: Due to information asymmetry, money-users would be chronically victimized by low-quality or underweight coins. An examination of experience with private mints during gold rushes in the United States 1830-61, drawing on contemporary accounts and numismatic literature, finds otherwise. While some private gold mints produced underweight coins, from incompetence or fraudulent intent, such mints did not last long. Informed by newspapers about the findings of assays, money-users quickly and systematically abandoned underweight coins in favor of full-weight coins. Only honest mints survived.

Keywords: gold, coins, private mints, gold rush, information asymmetry

JEL Classification: E40, E41, E42

Suggested Citation

White, Lawrence H., The Dynamics of Competitive Coinage: Evidence from Private Mints in the American Gold Rushes (March 17, 2020). GMU Working Paper in Economics No. 19-41, Available at SSRN: https://ssrn.com/abstract=3499386 or http://dx.doi.org/10.2139/ssrn.3499386

Lawrence H. White (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

HOME PAGE: http://ppe.mercatus.org/scholars/lawrence-h-white

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