History of Private Mints Has Relevance Today
George Selgin thinks free markets can do a better job at running the nation’s economy than can governments, and he’ll put his money on it.
In fact, given the opportunity, he might make his own coins, were it not decreed illegal by the government. He certainly knows enough about it.
Selgin, the College’s BB&T Chair of Free Market Thought, spent eight years on his just-published book Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage, 1775-1821, published by the University of Michigan Press.
The book follows the efforts of private mints, in particular that of Matthew Boulton, partner of James Watt, inventor of the steam engine.
The story takes place in England at a time when the government did not supply sufficient small coinage to meet demands of the nascent industrial revolution and industries that needed pennies, half-pennies and farthings to pay their workers.
Where there is a demand and money to be made, the entrepreneur steps in, as was the case with Boulton, who established the Soho Mint in 1789 in his Soho Manufactory at Handsworth, England.
The mint had eight machines, driven by steam engine, each capable of striking 70 to 84 coins per minute. Indeed, the steam engine was the most remarkable aspect of Boulton’s enterprise, because private mints that depended on human power only had sprung up across England to fulfill the need for coinage.
They did this by producing some of the era’s most popular–and beautiful–coins. Problem was, the government saw this entrepreneurship as flouting the sovereign’s authority – “the inalienable prerogatives of the crown,” as one 18th century official put it. Not an unprecedented viewpoint, inasmuch as Egyptian rulers banned mints long before the time of Christ.
The late Milton Friedman, recipient of the Nobel Prize in economics in 1976, said “George Selgin’s story of how private enterprise solved a monetary problem that threatened seriously to retard the Industrial Revolution is a splendid piece of historical analysis.”
Dr. Selgin is an economic historian whose research has convinced him that minimal governmental intervention in financial matters and that markets with fewer regulations are more robust and better at generating wealth and economic development.
In the instance of private coinage he sees a broader landscape than just government intrusion in minting. Indeed, private coinage today would be “of little practical importance” given the check and direct deposit, he says. There’s a bigger story, a lesson from history. He sees a long record of monetary meddling that might have been better left in the hands of the market.
“The payoff of the commercial coinage story consists not in any particular reform it might suggest but in the broader lesson it teaches concerning the need to ponder governments’ role in money through the same wary eyes economists tend to cast upon other government ventures.”
Selgin points out that despite their knowledge of how monopolies and nationalization has slowed economies, “incredulous economists tend to take goverments’ monetary prerogative for granted,” he says.
“The outcome has been a body of monetary thought well suited toward tinkering with existing government-controlled monetary systems but not at all cut out for revealing the advantages, as well as the true shortcomings, of less top-heavy alternatives.”
Words, perhaps, of current application in Washington and on Wall Street…
Selgin recently joined the WVU College of Business and Economics from Terry School of Business at the University of Georgia. He previously held positions at the University of Hong Kong and George Mason University.
He is a prolific researcher and writer of books and journal articles, and he has participated in a number of boards of editors of academic journals concentrating in areas of money supply and monetary policy. Selgin also has publications in the works addressing domestic and international currency issues, and he has presented his work internationally.
Selgin has received international and U.S. fellowships, grants and other awards. He is a research fellow at the American Institute for Economic Research, an associate editor of Econ Journal Watch and has been a trustee of the Southern Economic Association. In addition, Selgin has been a visiting scholar of the Federal Reserve Bank of Atlanta and a member of the boards of editors of The Cato Journal and Durell Journal of Money and Banking. He has a doctorate from New York University in economics and a Bachelor of Arts degree from Drew University.
Selgin will continue his research on the workings of free markets along with Russell Sobel, who has generated much discussion on the topic in West Virginia, and Christopher Coyne, and teaches classes in the College of Business and Economics. The BB&T Charitable Foundation contributed $1.75 million to College of Business and Economics in 2006 to establish the position.
