I just have something short and sweet today as I’m heading out to TowerGroup’s annual conference in Boston, to give that presentation on multichannel integration that I mentioned last time. But I saw this and I thought of all of you and I couldn’t leave without posting it.
Did you know that during the American Civil War and for a few years after, the United States issued paper currency in lieu of coins? According to rebelstatescurrency.com, the 5, 10, 25, and 50 cent notes were issued due to a coin shortage. Because of the shortage, people had been using stamps for change. To stop that practice, the decision was taken to issue actual paper “change”. Follow the link and you can see pictures of the various issues of paper change.
Fast forward to today and I would be interested in hearing your views on paper change. Would it be easier if change today were also on paper? On the one hand, you wouldn’t be lugging around all of that heavy change. On the other hand, you’d probably be sending mutilated paper change back to the Fed in buckets (or bundles, as the case may be).
P.S. Many of you in the currency world may have known this but I’m not ashamed to admit, I did not. And I’m also not ashamed to admit that I initially learned about this from watching Pawn Stars. That show is just one big history lesson.
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Small change was almost always a problem in countries under the gold standard (or some other specie standard, like gold & silver or gold & copper). And was only resolved, more-or-less successfully, once the world adopted fiat money, that is to say, like US money today, “backed by the full faith & credit” of the United States. In the pre-modern era, like in 18th century England, small change might be made of gold but could be tiny little round coins smaller than the toenail on your baby toe. And still be worth say, $20, in today’s purchasing power. For a period between around 1780 & 1820, British button manufacturers made metal coins (not “legal tender”) that could be accumulated to get one of the real gold ones. In the US (and in the English colonies in America), it is well known that small change could be made by chopping recognized coins into pieces (hence, the “piece of eight,” the Spanish dollar chopped into 8 pie slices). So the fractional currency of the US Civil War era is not so unique.
I saw the same episode of “Pawn Stars”. I understand that in Iraq and Afganistan our miliatary and civilian forces use cardboard slugs instead of coin. Seems to have solved a logistical problem for the folks supporting that infrastructure.
In a meeting just yesterday I heard a rep from a leading branch/currency automation vendor refer to coin as a low value propisition. That struck me as ironic. It is true that the asset value is low compared to our paper currency. However, my experience has been that the handling of coin consumes more resources.
A conversion to paper is not a bad idea, but it would have to be combined with a consolidation to fewer increments. We probably cannot make a business case for $.01, $.05 or $.10, but $.25 and up might work.
I wish Pawn Stars wasn’t so darn slow moving. Otherwise I’d be more diligent about watching. After a few episodes it resembles nothing so much as that other show about making Choppers (it probably is produced by the same people).
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