Published by EH.NET (August 2010)
George Selgin, Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage, 1775-1821: Private Enterprise and Popular Coinage. Ann Arbor, MI: University of Michigan Press, 2008. xvii + 345 pp. $40 (cloth), ISBN: 978-0-472-11631-7.
Reviewed for EH.NET by John Wood, Department of Economics, Wake Forest University.
This book is an absorbing and informative study of the intersection of the industrial revolution and the development of the British coinage, particularly the private sector’s solution, over the government’s obstruction, of “the big problem of small change.” It treats the problem, its causes and consequences, the (mainly profit) incentives to solve it, and the contributions of technology and competition to its solution.
The scarcity of small-value coins hindered efficient exchange in the rising market economies from the Middle Ages until well into the nineteenth century. Their scarcity was due to several reasons, including the technological infeasibility of sufficiently small gold, silver, and even copper coins, their disappearance because of differences between nominal and market values, and hoarding induced by their liquidity premia. Fundamentally, the problem was due largely to the government’s failure to address it -- not for technological reasons, Selgin points out, but to the complacency and inefficiency of the Royal Mint, compounded by its refusal, erratically enforced, to let others supply the need because of the belief that money was a royal prerogative.
Costly consequences of the scarcity included time-consuming searches for coins to meet payrolls, non-monetary payments (often of disputed values) to workers in lieu of cash, and credit by retailers, on little security, until feasible amounts accumulated, and delays in wage payments for the same reason.
Subject:
Financial Markets, Financial Institutions, and Monetary History
Time period:
18th Century
19th Century