The Private Mint In Economics: Evidence from American Gold Rushes

Given a gold or silver standard, some economists have supposed that the private minting of coins is socially inefficient because, due to information asymmetry, private coins will be chronically low in quality or underweight. An examination of 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 longer than a few months. Informed by newspapers about the findings of assays, money-users systematically abandoned substandard coins in favor of full-weight coins. Only competent and honest mints survived