Author Topic: Coins vs tokens  (Read 6392 times)

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Offline bgriff99

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Coins vs tokens
« on: December 23, 2014, 01:55:21 AM »


As far as I can see, there are heraldic tulips between the dots. The lightning bolt is the mint mark of Poissy. These coins were not struck in Paris, but in the area around it (Ile de France). BTW, a crédit foncier is a mortgage bank, taking the role of the Chambers of Commerce in France for this issue.

Peter
Peter, is there a name for this sort of thing?    Not a state coin, but more official than "notgeld?" 



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This topic was split from: Good for what?

 
« Last Edit: December 26, 2014, 05:35:17 PM by <k> »

Online Figleaf

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Re: Coins vs tokens
« Reply #1 on: December 23, 2014, 09:56:43 AM »
Not that I know, but now that you have mentioned it, I can think of descriptive names, such as "delegated official" or "private official". They are in the same league as Canadian coins marked "token" issued by Canadian banks at the request of colonial governments. As far as I am concerned, I don't care who issued them, but if they were used as money. These are coins. Crown sized commemoratives of sporting events or 37.5 year jubilees are not.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline EWC

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Re: Coins vs tokens
« Reply #2 on: December 23, 2014, 02:15:58 PM »
Regarding inconsistent attitudes on use of the word ‘token’ – I have a story which I think is quite instructive - about the psychology of the matter – and concerning a discussion I had on another group – (supposedly specialists on English Hammered coins).

I made the point to the group that there seemed to me, sometimes, to be a propaganda element to use of the word “token” to describe certain money items

Specifically because post 1816 English silver was widely described as a token currency (at the time, and still is I believe in specialist literature).  Yet is was struck at 62/66 short of full blooded as I recall – thus about 94% of full blooded.

Now, pre-1666, all the way back to Edward I (and perhaps Henry II - and even possibly by Offa), English silver coin was struck around 15/16 short of full blooded by weight – thus again about 94% of full blooded.

My question was – if we call post 1816 British silver “tokens”, then should we not call all English hammered silver “tokens” also?

A group member replied - "No – because all English hammered silver coin always contained its full value in silver". 

Seemed to me to point up a sad state of English numismatic affairs when no-one besides myself could be found on the group to contradict him

Offline <k>

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Re: Coins vs tokens
« Reply #3 on: December 23, 2014, 02:36:52 PM »
So what is your definition of "token", EWC? And why are British silver coins that were issued after 1816 described as a token currency? I'm just curious, as this is outside my area of knowledge. I can say for sure, though, that blood does not circulate in coins. You're not, er, Romanian, are you?  ;)
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Online Figleaf

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Re: Coins vs tokens
« Reply #4 on: December 23, 2014, 06:33:13 PM »
Good point, EWC. I am surprised no one argued that it's not about the metal content but about having the right to have the coins minted and melted at will. The problem with that argument is the same. If you'd bring silver into an Elizabethan mint and demand that it be minted, you'd have gotten a kick in the arse.

The ugly truth is that it is impossible to make coins at full metal value. Metal value changes when metal markets move, which they do daily, but a coin's denomination doesn't.

Shakespeare gives a good definition of a token coin: "A rose by any other name would smell as sweet"

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline bgriff99

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Re: Coins vs tokens
« Reply #5 on: December 24, 2014, 05:19:06 AM »
So what is your definition of "token", EWC? And why are British silver coins that were issued after 1816 described as a token currency? I'm just curious, as this is outside my area of knowledge. I can say for sure, though, that blood does not circulate in coins. You're not, er, Romanian, are you?  ;)
In US parlance, the sterling coins of 1816 to 1919 are a "subsidiary coinage" to the gold, which was money of account.   From 1920 until gold no longer was legal tender, token is a pretty good description.

Offline bgriff99

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Re: Coins vs tokens
« Reply #6 on: December 24, 2014, 07:25:20 AM »
Good point, EWC. I am surprised no one argued that it's not about the metal content but about having the right to have the coins minted and melted at will. The problem with that argument is the same. If you'd bring silver into an Elizabethan mint and demand that it be minted, you'd have gotten a kick in the arse.

The ugly truth is that it is impossible to make coins at full metal value. Metal value changes when metal markets move, which they do daily, but a coin's denomination doesn't.

Peter
Historically, early coins and proto-coin issues did circulate at intrinsic value.   It was a way to monetize a commodity, expanding its market.   Actual copper hoes and knives evolved into stylized versions exclusively for trade.   All the silver and gold coined by the Spanish in their conquistador days was the same thing.  Separate units for gold and silver was the norm everywhere else too.   Reale and escudo floated against each other, albeit in a tight range, same as a guinea and pound sterling.    In East Asia an exactly parallel float between copper and silver money went on for 2000 years.    When Western nations made gold alone their currency base, the coins' gold content defined the value of their units.  At that point, your "impossibility" is only one of the cost of making them, which has to be borne one way or another.   What is truly impossible is stopping counterfeiters.

Offline EWC

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Re: Coins vs tokens
« Reply #7 on: December 24, 2014, 10:30:11 AM »
So what is your definition of "token", EWC? And why are British silver coins that were issued after 1816 described as a token currency? I'm just curious, as this is outside my area of knowledge. I can say for sure, though, that blood does not circulate in coins. You're not, er, Romanian, are you?  ;)

Spookily close!  How on earth did you know?  Actually it is my wife’s mother’s side that hail from Transylvania – a little town once called Borgoprund.  I think it was the last place Jonathan Harker stopped at on his way up the pass……..

We went back last summer.  I have fond memories of sitting in the beer tent next to the bus stop, watching peasant carts clip clop past, with Justin Timberlake blasting non stop out of the sound system.

Tokens?  Heaven forfend that I should dictate to anyone else how to use words – for my own part – I try to stick the sorts of things privately issued by those in trade, who are interested in profiting from the inevitable tendency towards chicanery inherent in money items with limited negotiability.  That others use it differently is easy to discover.  US Federal Reserve Bank Nobel Laureate Thomas Sargent used it differently on the very first page of his book – defining subsidiary coins as tokens.  I once emailed the chap with a longish list of the more important errors I found in his book, but he has never replied

Sigh.

Offline EWC

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Re: Coins vs tokens
« Reply #8 on: December 24, 2014, 11:24:22 AM »
The ugly truth is that it is impossible to make coins at full metal value. Metal value changes when metal markets move, which they do daily, but a coin's denomination doesn't.
 

That tends to assume free markets for metal exist beyond government control.  Governments with sufficient power and reserves probably did occasionally make coins at full metal value imo – or got very close.  Not common – but it seems to me Darius achieved it for gold and silver.  The later Sasanids got very close – Khusru II perhaps only fell short by mint tolerance c. 59/60.  Alexander had so much silver and gold he could dictate a 10:1 ratio and struck at maybe 63/64 of full also.  Interestingly however, Alauddin Mohammed Khalji managed to control market prices – at least for his core provinces – and he too fixed gold:silver for convenience at 10:1.  But he still seems to me to have struck well short of full weight – probably at 11/12

Good point, EWC. I am surprised no one argued that it's not about the metal content but about having the right to have the coins minted and melted at will. The problem with that argument is the same. If you'd bring silver into an Elizabethan mint and demand that it be minted, you'd have gotten a kick in the arse.
 

I would love to know the answer to this – but I strongly suspect you are right.  I once bumped into a fellow who was looking at Edward I pipe rolls and he was sure that ordinary guys then were taking silver to the mint to be coined in small quantities – but it very rarely happened.  Most consignors were foreign merchants with large holdings.  However, under Elizabeth I think – certainly James I – dealing in bullion was a monopoly granted by the crown – so non-guild members turning up at the mint with bullion would have gone straight to a lock-up, one would have thought.

There is a very interesting paper by Om Prakash about the Moghul mint at Surat.  Based on a letter from an EIC chap.  As I read it, under Moghul law, in principle, he was free to deliver silver direct to the mint for coining, but in practice he feared a local mafia would break his legs or worse if he ever tried it.

In short Peter – I do not think you are entirely right here, but you are maybe 75% to 95% right, imo

Of course, by implication, that makes bgriff99 75% to 95% wrong

Offline <k>

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Re: Coins vs tokens
« Reply #9 on: December 24, 2014, 11:38:47 AM »
In US parlance, the sterling coins of 1816 to 1919 are a "subsidiary coinage" to the gold, which was money of account.   From 1920 until gold no longer was legal tender, token is a pretty good description.

Thank you!
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Offline EWC

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Re: Coins vs tokens
« Reply #10 on: December 24, 2014, 11:42:57 AM »
Historically, early coins and proto-coin issues did circulate at intrinsic value.   It was a way to monetize a commodity, expanding its market.   Actual copper hoes and knives evolved into stylized versions exclusively for trade.   All the silver and gold coined by the Spanish in their conquistador days was the same thing.  Separate units for gold and silver was the norm everywhere else too.   Reale and escudo floated against each other, albeit in a tight range, same as a guinea and pound sterling.    In East Asia an exactly parallel float between copper and silver money went on for 2000 years.    When Western nations made gold alone their currency base, the coins' gold content defined the value of their units.  At that point, your "impossibility" is only one of the cost of making them, which has to be borne one way or another.   What is truly impossible is stopping counterfeiters.

Adam Smith was a very polite man, and called this position  ‘a vulgar prejudice of the mercantile system’.  Alexander del Mar was less polite, and seems to have been sacked as a result. 

http://www.sciencedirect.com/science/article/pii/S0176268003000764

Offline <k>

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Re: Coins vs tokens
« Reply #11 on: December 24, 2014, 11:47:38 AM »
Spookily close!  How on earth did you know?  Actually it is my wife’s mother’s side that hail from Transylvania – a little town once called Borgoprund.  I think it was the last place Jonathan Harker stopped at on his way up the pass……..

What can I say?  And that use of "heaven forfend". Could it be you're a few centuries older than you look?  :o

US Federal Reserve Bank Nobel Laureate Thomas Sargent used it differently on the very first page of his book – defining subsidiary coins as tokens. 

Food for thought.
Visit the website of The Royal Mint Museum.

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Online Figleaf

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Re: Coins vs tokens
« Reply #12 on: December 24, 2014, 12:30:35 PM »
Historically, early coins and proto-coin issues did circulate at intrinsic value.   It was a way to monetize a commodity, expanding its market.   Actual copper hoes and knives evolved into stylized versions exclusively for trade.

You are confusing trade value and intrinsic value here. Copper had a value X. A knife-shaped lump of copper had a value of X+Y, Y being an expression of the surplus utility of an unfinished knife over a lump of copper. An unfinished knife was acceptable because it could be sharpened. Later, the knives spades etc. got too small to be of any use, even when sharpened. This was fiduciary money. At least one emperor of China acknowledged as much in his correspondence. If that doesn't convince you, consider that Tibetan traders always preferred Indian silver over Chinese cash coins, even when China occupied Tibet and such preference could be at the risk of their lives.

All the silver and gold coined by the Spanish in their conquistador days was the same thing.

Most certainly not. Newton's papers prove that beyond any doubt. They were accepted by tally, but with a discount for certain mints or dates, depending on local tradition that may or may not have been correct and a bonus in places where coins were scarce. (see Chalmers)

Separate units for gold and silver was the norm everywhere else too.   Reale and escudo floated against each other, albeit in a tight range, same as a guinea and pound sterling. In East Asia an exactly parallel float between copper and silver money went on for 2000 years.

Almost correct. The gold/silver price was reflected in the relation of gold to silver in coins in Europe and European colonies until the introduction of the double standard. In East Asia, the price of gold and silver was part of an elaborate system of price controls, based on the price of rice, maintained by the central government. This was much to the detriment of Asia when the two systems met. European traders were quick to arbitrage the East Asian imperial prices, taking silver to Asia and carrying back gold (or the inverse in the rare cases that silver was undervalued in Asia). Domestically, circulation was close to 100% copper and paper. The sycee and koban were prestige items (note that paper was usually expressed in strings, not sycee.) I am less sure about India. My best guess is three circuits of circulation, where copper went mostly be tally (the exception being largesse money), silver by tally in small transactions, by weight in large transactions and gold little used, but going mostly by tally (Tipu Sultan seems to have paid his French military advisers in gold coins by tally) and silver floating against copper.

When Western nations made gold alone their currency base, the coins' gold content defined the value of their units.

That is a legal fiction, not a reality. Expressing all prices in terms of a gold only makes the gold coin unfit to measure the price of un-minted gold. A gold coin has a fixed value in terms of other countries' gold coins only quite temporarily. It has a floating value in terms of domestic goods. Domestic stuff gets cheaper or more expensive. The international relation (exchange rate) become a stress or breaking point as long as the coins remained fixed when inflation differs.

Let's set up a model of two countries, two goods, no trade (but with international investments) to show why that must fail. I'll leave it to you to relax the restraints and see how the model still fails with multiple goods and trade. I'll call the goods holes (in the ground) and gold (coins of the same weight and alloy). Country A has shovels, country B doesn't. It follows that A can produce holes in the ground more efficiently than B. In the first period, wages in A and B are the same. In the second period, workers in A demand some more gold because they produce more holes. Hole owners also profit from the extra productivity, because the wage increase is less than the productivity increase. Makes sense. However, no matter how people use the extra income, the value of gold in terms of holes in A and B will start to differ. One of the two should adjust the weight and/or alloy of its coins, or arbitragers will sell all the holes from one country and buy all the gold from the other country (depending on whether holes and gold become overvalued or undervalued.)

This is exactly what happened under the gold standard. You will find that French*, Belgian, Italian and Swiss gold coins of the Latin union is relatively expensive, while their silver (except for the 5 francs coins, that could be freely minted and melted) is relatively cheap. At the same time, British sovereigns of the period are still plentiful and half crowns and shillings are very worn or relatively expensive. Like the East Asian empires, Europe could not maintain a fixed price for gold in terms of other currencies.

Peter

* except for trade coins that didn't circulate and went by weight
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Online Figleaf

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Re: Coins vs tokens
« Reply #13 on: December 24, 2014, 01:33:25 PM »
That tends to assume free markets for metal exist beyond government control.

I would put that slightly differently. It assumes that there is not enough foreign trade and international investment to create forces larger than government control. As you note, that situation may occur in ancient times, but it would be the exception, not the rule and it may have dire consequences as trade increases.

I would love to know the answer to this – but I strongly suspect you are right.  I once bumped into a fellow who was looking at Edward I pipe rolls and he was sure that ordinary guys then were taking silver to the mint to be coined in small quantities – but it very rarely happened.  Most consignors were foreign merchants with large holdings.  However, under Elizabeth I think – certainly James I – dealing in bullion was a monopoly granted by the crown – so non-guild members turning up at the mint with bullion would have gone straight to a lock-up, one would have thought.

I extrapolated from what I know about Dutch 18th century mints. The control point was the number or weight of coins minted. This was established by the government. It makes little difference if the mint was government operated or farmed out: the mint master would only buy the quantities of metal needed for the coins ordered. He was a manager, an entrepreneur, but not a financial speculator. Who he bought it from is another question, where corruption comes in, making anything possible. Same thing for who got the newly minted coins first.

Can you enlighten me on pipe rolls? I only know pipe heads and strongly suspect they are not the same. ;)

There is a very interesting paper by Om Prakash about the Moghul mint at Surat.  Based on a letter from an EIC chap.  As I read it, under Moghul law, in principle, he was free to deliver silver direct to the mint for coining, but in practice he feared a local mafia would break his legs or worse if he ever tried it.

Going by memory now ... Surat was for long a special place. Foreigners were OBLIGED to take all their silver and gold there to be re-minted (Oesho published a fun hoard of foreign gold found in India, cancelled at Surat). They could land their load anywhere, but if it wasn't in Surat, they'd have to pay Surat mint personnel and infrastructure to come, assay and transport the metal to Surat. Something similar happened in Augsburg. The Habsburgs could take their silver in for paying the troops fighting the bleeping protestants in the "Burgundy inheritance" (the Benelux), but the city would do its utmost to re-mint the stuff before allowing it to move on. At a small fee, of course. In both cases, the locals profited from the knowledge that the coins would leave their territory immediately, i.e. increase their seigniorage and global market share at little or no marginal cost.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline EWC

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Re: Coins vs tokens
« Reply #14 on: December 24, 2014, 01:42:46 PM »
Could it be you're a few centuries older than you look?  :o

Ha!  A kind thought………………..

Have you noticed bgriff99 writing very authoritatively about things that happened 2000 years back?