Nick has an interesting theory about why banknotes replaced coins. Technology made coin counterfeiting easier, he says, so people fled into banknotes. Otherwise they would have stuck with coins.
But it's wrong. 1/4
But it's wrong. 1/4
Government policies—not innovations in counterfeiting—explain the prevalence of fakes. In the UK the Royal Mint refused to coin copper, so the supply of change was worn-out & easily counterfeited. It didn't hire foreigners or adopt new technology, so its work was shoddy. 2/4
Once it was adopted, technology cut down on fakes by providing mints with a new set of defences:
-patterned edges
-elaborate engravings
-crucible steel
-striking in collar
-steam striking
-high reliefs
-die hubbing
I get this from @GeorgeSelgin's excellent book, Good Money 3/4
-patterned edges
-elaborate engravings
-crucible steel
-striking in collar
-steam striking
-high reliefs
-die hubbing
I get this from @GeorgeSelgin's excellent book, Good Money 3/4
If Nick's tech-fueled counterfeiting story doesn't explain why bank IOUs beat out coins, what does?
People prefer notes because banks can be trusted & paper is easier to use than metal. The best example? Americans hate $1 coins but love $1 bills: 4/4
People prefer notes because banks can be trusted & paper is easier to use than metal. The best example? Americans hate $1 coins but love $1 bills: 4/4
