Currencies: Coins and Paper Money-Revisited

By David G. Firestone

Money really is the great equalizer. Every human being on the planet wants as much of it as possible. We work jobs we hate in order to get it, and we spend it as we see fit. While we mainly spend it on things we need to live, food, shelter, and clothing, we do spend it on things that make us happy.

I find it amazing that most people know so little about one of the most important objects in the world. For a lot of us, our pocket change can be useful, but if you knew the history about it, and how it was made, they would be awestruck.

Metallic coins really started with the human desire for gold. While the earliest known coins date back to around the 8th and 7th centuries BCE, gold has been used since 600 BCE for monetary purposes. Today, gold is still a part of global currency, but most gold mined is used for other applications, such as jewelry, electronics, medicine, commercial chemistry, and other industrial uses.

Gold is also a status symbol. Gold medals, and trophies are symbols of victory and achievement. Gold used in jewelry is symbolic of wealth and success. Gold in and of itself is seen as both a form of good and evil. One of James Bond’s most well known foes was Auric Goldfinger, who spent his entire life trying to acquire as much gold as possible.

I happen to have some pure gold in my possession. I have .1 gram from NZP Gold, a smelting plant in Turkey. Gold is one of the few minerals we all want to have. This is a small gold nugget. It is .07 grams. When pure gold is flattened by “goldbeating” the end result is a sheet of gold leaf. It’s main uses are for art and architecture, but it can also be edible. These are two small jars of gold leaf. Silver has uses in many different applications, including electronics, medical uses, solar panels, currency, photographic film, x-rays, and numerous other uses. These are three 4 gram bars of 99.999% silver. Coins started their lives as a way to simplify the use of gold as currency. Coins were originally made by using molds and metal. The blank was made using bars of metal, which was hammered out on anvils. Then the blank, which is known as a “planchet” was then heated up, placed between the two molds, and hammered. This was a less than precise method, and since the mold had to be hammered by hand, the design would vary. This Constantine-era coin is an example of that process.These examples of medieval coins are also examples of that process.

 Modern currencies are very heavily monitored. The designs in recent years aren’t so focused on being artistic, but focused on being counterfeit-proof. Older coins tend to be better looking. These better-looking designs include:

Wheat Pennies, Liberty Nickels, Buffalo Nickels, and Mercury Dimes,As time went on, the process improved. Dies replaced the molds. The die process is similar in theory to the mold process, but there is a lot more quality control involved. Dies are cast from a master die. The design for the master die is drawn on paper, and then hand carved in clay then plaster by an engraving expert, in a much larger size than the coin will be. That is then coated in expoxy, which takes 18 hours to set and cure, then it is placed in a machine that is called a “reducing lathe” which spins the design around while transferring every minute detail from the large epoxy mold to a coin-sized die. This die is called “the reduction hub” and is used to make the master die.

When the master die is made, the reduction hub is placed into a machine with a cone-shaped piece of metal. The machine presses the hub into the cone, creating the master die. This master die is used to make “working hubs” which are used in the die press. Dies have the image of the coin reversed, so they come out properly in the minting process. Planchets come about from 1,500 foot rolls of prefabricated metal, which has the correct mixing of metals. The planchets are punched out, and the waste metal is recycled. These are two examples of modern planchets, one is a quarter, one is a dime.After they are washed and cleaned, the coins go through an “upsetting mill” which uses a large spinning disk to move the planchet through a groove which grows narrower and narrower. This adds a raised edge to the coin, higher than the design, which is called a “relief.” This is done to protect the relief. Then the planchet, with the raised edge heads to the press, where a die set is waiting. The coin press can stamp out 750 coins a minute, or 12.5 coins a second! One die is the “hammer” which moves back and forth during the stamping process, and the other is called the “anvil” and is stationary.

After the coin is struck, mint technicians examine a sample from the batch. If there are die errors, or other forms of damage, the lot it scrapped, the metal recycled, and a new hub is brought in. This is done for several reasons. The mint takes pride in their work, but the main reason is that new vending machines have scanners that scan coins as they are inserted. Errors of any kind mean that the scanner will reject the coin as it sees it as fake.

Interestingly, the US Mint doesn’t simply throw away used coin dies. They realize that there is a huge demand for coin dies. The relief is removed from the die, and destroyed. The end result is packaged with one of the coins it minted, and sold in sets to collectors.

The relief has to be removed. This is not a minor issue, as there are a lot of counterfeiters out there, who want to make money the illegal way, rather than earn it. This also goes back to the Canadian Voyager Die incident. In 1986, the Royal Canadian Mint shipped both sets of master dies from Ottowa to Winnepeg. In the following investigation, it was discovered that the Royal Canadian Mint had no set procedure for shipping dies, and in a bid to save $43.50 Canadian. This disastrous decision forced the Mint to come up with a new design, due to the very real fears of counterfeiting, and as such, the Loonie was chosen as the new design for the dollar coin.

While it is impossible to get a die used in a monetary coin, medallion dies are easier to get. While some dies are clearly canceled, others, such as these three examples, still have the reverse image present. These two small dies were used to make a small “B.T.” token, slightly bigger than a nickel.  The accompanying token is a fit to the mold. This second die is from a 1960’s Wildwood Medallic Arts Wildlife series medallion and the matching die. This is from the 3rd medal in the series, this is the Grizzly Bear die from the Grizzly Bear/Golden Eagle Medallion. The relief is just under 1.5 inches across, and is in perfect condition, having no evidence of cancellation. The medallion fits perfectly in to the die. The first government to issue bank notes was the Song Dynasty in China. The Song Dynasty, in the early 11th century, allowed 16 different banks to print up the first bank notes. This was done because copper coinage is much heavier than a bank note, and that copper production was declining. Once the Song Dynasty realized the advantages of bank notes, they took over production of the notes in 1023. By the 1200’s, most Dynasties were using some form of paper bank note.

Around the 13th Century, Marco Polo and other European explorers made their way into Asia, and began to encounter paper bank notes. Polo was especially interested in these notes, stating chapter 24 in The Travels of Marco Polo:

“All these pieces of paper are, issued with as much solemnity and authority as if they were of pure gold or silver… with these pieces of paper, made as I have described, Kublai Khan causes all payments on his own account to be made; and he makes them to pass current universally over all his kingdoms and provinces and territories, and whithersoever his power and sovereignty extends… and indeed everybody takes them readily, for wheresoever a person may go throughout the Great Kaan’s dominions he shall find these pieces of paper current, and shall be able to transact all sales and purchases of goods by means of them just as well as if they were coins of pure gold.”

This system was seen as effective way to transport currency from one country to another, with little confusion as to exchange rates. These early notes were not true bank notes, but were promissory notes. The note was an instruction to the bank to pay the person holding the note the amount in gold or silver. As time went on, the banks began preferring to issue bank notes as currency, and governments soon followed. For a time, there were both governments and private banks were issuing their own notes. Private banks were eventually banned from issuing their own notes as currency, and the government bank notes became the standard.

In the United States, the Federal Government is in charge of printing bank notes, though this was not always the case. The Coinage Act of 1792 specified a “dollar” to be based in the Spanish milled dollar and of 371 grains and 4 sixteenths part of a grain of pure or 416 grains (27.0g) of standard silver and an “eagle” to be 247 and 4 eighths of a grain or 270 grains (17g) of gold (again depending on purity). This was based on the Spanish Dollar, which was in use in many of the Colonies at that time. This had its drawbacks, as at the time, all 13 Colonies were each using a different state-specific currency. Each currency defined the value of a dollar differently. This system was used until 1862, when, because of The Civil War, banknotes attached to gold or silver, called gold certificates or silver certificates were issued. These could be exchanged for a set amount of gold or silver. Such as this $1 example from 1935: American bank notes are made with a special paper, which uses scrap cotton from the denim jeans industry. This helps with durability. Granted a coin will have a useful life of 30 years, whereas a bank note will have a useful life of 22 months. The paper itself is made by Crane and Company of Dalton Massachusetts, who have made this special paper since 1879. Blue jean scraps make up 75% of the material in the paper, with the other 25% being waste flax. The process is painstaking. The steps to make the paper itself, including reductions, security threads, and security strips are very exacting. The paper is then rolled into rolls and shipped.

The paper then goes to the Bureau of Engraving and Printing in either Washington D.C. Or Fort Worth Texas. The paper is cut into uniform squares, and printed using the Intaglio printing method, first used in Germany in the 1430’s. A simplified explanation of the process is that the dies that have the reverse image of the bill are filled with ink. Excess ink is removed, and the design is stamped into the bill. The ink fills all the small crevices of the die. This gives the bank note a textured feel to it, due to the different layers of ink.

While the United States has had a somewhat stable currency since the Civil War, some other countries were not as fortunate. Germany, for example, went through a lot of upheaval in the 20th Century. Prior to World War I, The German Gold Mark was the banknote Germans used. Produced in denominations of 20, 50, 100 and 1000 Mark, the bank notes are quite large, especially compared to American notes, as this 1000 Mark example from 1910 shows: The German Gold Mark was replaced in 1914, by the German Papiermark. This decision was because the link between the gold reserves and the mark was abandoned. By the end of the War in 1918, the German Papiermark was nearly worthless, due to the German loss, and insistence of Germany to pay back war debts by printing and using bank notes. The Rentenmark replaced the Papiermark as such, due to hyper inflation. It was replaced with the Reichsmark, prior to World War 11, and then the East German Mark, and Deutsche Mark from War’s end to 1990, when Germany was reunited, and the Deutsche Mark took over from 1990, until 2002, when the Euro took over as currency for Germany and much of Europe.

Another country that had a lot of economic upheaval was Russia. The Ruble is the traditional currency of Russia, and like other currencies, were made of gold or silver. The amount of metal per coin varied, until Peter The Great standardized the amount of silver in 1704. By 1768, banknotes were being printed, by the Assignation Bank. This lasted until 1843, when the Assignation Bank folded, and “state credit notes” were issued by the government.

The old system lasted until the October Revolution of 1917, when the Russian Soviet Federative Socialist Republic took over as government, and began circulating their own version of the ruble. The first version, which was used until 1922, had to be adjusted for post-war, non-gold standard hyperinflation after World War I. In 1922, the second version was instituted, this version having a rate of 1 “new” ruble for 10,000 “old” rubles, due to hyperinflation. The third change took place in 1923, at a rate of 100 to 1. This lasted until 1924, when Joesph Stalin’s consolidation of power following the death of Lenin, and Stalin issued the fourth version of the Soviet Ruble, which was attached to the gold standard, and lasted through 1947, when the fifth version, which was issued in response to citizens selling wartime rations for a profit, and keeping the money for themselves. This was placed on amounts over 3,000 rubles.

These are examples of the sixth version, used from 1961 to 1991. These brand new bank notes were designed by artist Victor Tsigal, and had a gold exchange rate of one ruble for 0.987412 gram of gold, though the gold was never offered to the general public. These are the 1, 3, 5, 10, and 25 ruble bills from 1961, the first year of issue. The size differences between vintage bank notes are amazing:Next week, a vintage suit revisited.