The New International Encyclopædia/Coinage
COINAGE (from Engl., OF. coin, wedge, piece of money, from Lat. cuneus, wedge; connected with Gk. κῶνος, kōnos, cone, Skt. śāna, whetstone, from śā, to sharpen). Coins are pieces of metal designed to circulate as money, whose weight and fineness are certified by the impressions they bear. These impressions are the symbols of the authority by whose orders the coins are issued, but they also bear an important function in maintaining the integrity of the coin. To insure constancy in the weight of the coin it is necessary to protect it against clipping and against unnecessary wear and tear, or abrasion. The form of the coin is, in itself, a guaranty. Convenience of carriage, as well as greater durability, has given the preference to a rounded, generally a circular coin, over other shapes. Where, as in Japan, we find oblong coins, the corners are generally rounded off. The symmetry of outline guarantees the coin. This is heightened by milling the edges. Raised inscriptions serve the same purpose and do so better than incised letters, which are also used. The design upon the face of the coin is usually protected by raised edges, which project as much as the highest part of the design.
The importance of these features of modern coins in maintaining intact the weight of the coin by showing at once any attempted clipping, and by preventing the wearing off of surfaces by use, can best be appreciated by comparing them with the crude, irregular disks from which early coins were made, and the high relief of many of the designs upon them.
Gold and silver were used in settling accounts before coins were invented, but scales were a necessary adjunct of such transactions. Just as gold dust is weighed in the mining regions, so all exchanges effected by the metals before the introduction of coinage involved weighing the metal used. The prevalence of exchange by weight is reflected in the correspondence, at least in their origin, between coins and measures of weight. To go back no further than the origin of English money, it is sufficient to recall that the monetary pound was once a pound weight of silver. This system was derived from the money of Charles the Great, and while in the subsequent development they departed widely from the original source, the monetary systems of modern Europe all trace back to the pound of silver.
The invention of coins, which, in classical antiquity, seem to have been first used in Lydia, did away in a measure with the necessity of weighing. In the multiplicity of Grecian States, coins were numerous, and while this was removed by the Roman Empire, it reappeared with the break-up of the Empire of Charles the Great. Not only did each nation make its own coins, but with the disintegration of central authority, nobles and cities usurped this right or had it conferred upon them by feeble monarchs. The multiplicity of coins restricted the area within which they were current. Outside of such areas they had no legal validity; they did not pass by count, but, if at all, only by weight. Certain coins, however, bore such an excellent reputation for uniformity and excellence of workmanship that they acquired an international circulation and passed generally by count or tale. As modern centralized States became strongly rooted, a unification of the coinage took place, and the numerous units disappeared. Improvements in the processes of coinage have made effective the certification of weight and fineness which coinage implies.
The right to coin money is a prerogative of the State and one of the foremost marks of sovereignty. The circulation of coins rests, in the first instance, upon the authority of the State; but that authority must be exercised in good faith. Coinage issued by individuals would lack authority and lack also the guaranty of good faith. There have been occasions of great dearth of money where private persons have issued coins. Such issues are known as tokens, and gain circulation either from their similarity to legal coins or from the promise of redeeming them. Their total lack of uniformity gives a picture of what might be expected were the issue of coins left wholly to private initiative. Almost equally obvious is the necessity for the manufacture by the State of the coins which it issues. To delegate the manufacture of its coins to a private establishment, as was done in France before 1879, requires such a minute control of all its operations by State officials that the plan has generally been abandoned. The greater integrity of a national mint over a private enterprise is further illustrated by the fact that the mints of the leading nations are frequently called upon to execute the coinage for smaller States which have no mints of their own. Thus, in 1901, the United States Mint executed a gold coinage for Costa Rica.
The metallic circulation of a country usually consists of standard coins and token coins, with respect to whose issue different rules prevail. The first are those of the standard monetary metal, and their coinage is usually free. This means that such coins are freely issued to individuals who bring bullion to the mint for coinage. There may be a coinage charge or this transformation may be made gratuitously by the State. Gratuitous coinage, which prevails in England and the United States, is favored because it promotes the transformation of bullion into coin to meet the demands of trade. A coinage charge, as in France (7 francs 44 centimes per kilogram of gold, or 3437 francs), is justified on the ground that the value of the coin is greater than that of the bullion by the cost of production; and, further, that the policy of the Government should be to give reasonable ease to the transformation, but not to favor a constant oscillation between coin and bullion. The English language knows but one name, seigniorage, for such coinage charges, whether they merely cover the cost of coinage (Fr. brassage) or are high enough to involve a profit. High seigniorage charges upon the standard money metal defeat the purposes of free coinage and are no longer customary. See Seigniorage.
Token coins are those whose metallic value is less than their nominal value. As such coinage involves a profit to the State, the State reserves the right of issue to itself. (See Money for an exposition of the principles of such issues.) In the United States this applies to the silver, nickel, and bronze coins. The metallic value of the coin is no protection against its unauthorized issue by individuals, but this protection is secured by the laws punishing counterfeiting. The processes of manufacturing a good counterfeit are so complex and require such heavy machinery that the secret manufacture can hardly escape detection.
Important considerations in coinage legislation, apart from the larger monetary aspects, are to secure uniformity in the coin at its manufacture and to maintain the integrity of the coin in circulation. Absolute accuracy in weight and fineness for every coin issued is out of the question. The law therefore allows, in the manufacture of coin, a certain tolerance both of weight and fineness. Variations within these limits, over or under the standard fixed by the law, do not disqualify the piece from issue. In former days these limits were often set quite wide, and by systematically getting under rather than over the average, considerable profits were stolen from the coinage. This was one of the abuses of the old régime in France which awakened the ire of the legislators of the Revolution when they took the reform of the coinage in hand. It should of course be the object to make these limits as narrow as possible, with the idea that the deviations, one side or the other, should balance, so that for the mass of the coinage the legally established standard should prevail. In the United States the standard fineness for both gold and silver is 900. and no gold ingot showing a greater deviation than one-thousandth, or silver ingot with a greater deviation than three-thousandths can be used in coinage. As to weight, the rule for single pieces prohibits deviations of more than one-half a grain for the double eagle (516 grains legal weight) or eagle, or more than a quarter of a grain for the half-eagle. The law also provides that in “weighing a number of pieces together, when delivered by the coiner to the superintendent, and by the superintendent to the depositor, the deviation from the standard weight shall not exceed one-hundredth of an ounce in $5000 in double eagles, eagles, and half-eagles.”
Every effort is made by watching the process of manufacture to insure the observance of these rules. Trial pieces of every lot of coin which passes through the mints must be reserved. Once a year an Assay Commission is appointed for the examination of these sample pieces, which are both weighed and assayed. The accuracy of the work of the United States mints is shown by the report of the Assay Commission for 1901 that the fineness of gold coins varied from 899.5 to 900.2, the legal limits being 899 to 901, while that of silver coins varied from 898.2 to 900.9, the legal limits being 897 to 903.
In the circulation of coins from hand to hand, the friction gradually wears the impressions off and reduces the weight of the coin. It is, therefore, customary for coinage legislation to determine the point at which the coin loses its legal validity. In the United States gold coins which have lost more than one-half of one per cent. of their weight in twenty years from date of issue, or proportional amounts for less periods, are legal tender only by weight. All such coins received by the Government must be recoined. The depreciation of coins by abrasion has, in earlier times, been a serious problem. By a familiar monetary law (Gresham's Law), full-weight money is always preferred for export, while the worn coin remains at home. If the home circulation is much worn, there is a great temptation to ‘sweat’ all the new coins which come from the mint for the profit of the transaction. Hence the necessity from time to time of general recoinage of the money in circulation. The Government calls in all outstanding coins of certain dates and replaces them with new coins, declaring, moreover, that after a certain date the coins not presented shall lose their legal-tender quality.
In England, coining, although a prerogative of the Crown, is regulated by Parliament. By the Constitution of the United States the power of coining money, regulating the value thereof, and of foreign coin is granted to Congress, and the several States are prohibited from coining money as well as from making anything but gold and silver coin a tender in payment of debts. The uttering of spurious coin, therefore, is a crime against the United States. It is also punishable by a State government as a cheat. Coin has been judicially defined as “a piece of metal stamped and made legally current as money.”
A counterfeit coin is one made falsely in imitation of the genuine, and intended to resemble or to pass for it. The mutilation or debasement of United States coin, as well as the fraudulent importation or use of spurious foreign coin, is a crime under Federal statutes. See Counterfeiting.
The works cited under Money contain much information in relation to coinage. Consult also Reports of the Director of the Mint, and Coinage Laws of the United States. See Mint; Money; Numismatics; Legal Tender.