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
Date Written: March 17, 2020
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: Suggested Citation