More Knowledge Than Arithmetic
September 9, 2012It has become a topic of study already that understanding coins in circulation through David Harper's column in Coin News leads to an understanding of economics. More than President Bill Clinton's description of the deficit in understanding is simple arithmetic.
Since the first US Colonial Congress authorized our first coinage, the President George Washington signing a mandate for our smallest coin as the cent based on Spanish coinage leaving our ties to Britain where the smallest coin was the penny.
Of course there are petty arguments over that which is the smallest coin. In so much as that the Brits had a farthing, the Scots their Groat, the Boodle; and the half cent and half penny coins of the US and British Empire, also. But those are all based on the smallest denomination as the cent or the penny.
It was since William Tyre who came up with a standard of weights and measures before the date 1305 when the smallest weight of metal was the penny-weight, and in Spain they weighed their Escudo down the a one hundredth and called it a centavo. The greatest economic power in 1787 when the US coinage act went into effect was Spain.
The US Colonial Congress put the manufacture of copper cents out for bid, and of the two bids that came back, one was from a Mr. Machin who offered to mint the coins and keep some back as his fee, or to sell the coins to the government. The other bid from a Mr. Jarvis was based on credit. That he would mint the coins from copper disks called 'platens' that would be obtained from the Soho mint in Britain on US government credit. That would put the country into debt.
The wisdom of our founding fathers chose to create an economic foundation on debt, for as a security measure it would be less likely that this -- at that time -- small country would be less susceptible to attack if we owed everybody. Ensuring allies to protect their debt was our first measure of defence.
Today, all too many voters look at the budget of the US as a financial plan, using in debate the principles of finance; and understanding that finance supports commerce it remains that commerce supports economics. Finance and economics are not the same thing. It takes more than arithmetic to see the benefits of debt as a promise that demands opportunity for the next generation not a burden upon them.
Economic debts are promissory notes. Today the coin is a representation of value in the ratio of global economy for trade.