Review of George Selgin, Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage

Abstract

Despite their general commitment to the market as the preferred process of resource allocation, economists do have a few areas that they often treat as exceptions to this principle. Foremost among those, for most economists, is the production of money. It is a widely accepted belief that private enterprise and the profit motive are incapable of producing money and near-moneys in a way that would assure both quality and macroeconomic stability. The power of both the mint and the printing press must be under the control of government if those two goals are to be achieved. George Selgin has spent a career challenging that claim. In his 1988 book The Theory of Free Banking and a number of subsequent articles, Selgin made the case that competition was perfectly capable of producing money that would out-perform central banks in terms of avoiding inflation, deflation, and business cycles and generally providing a sound environment for entrepreneur-led growth. In his new book Good Money, Selgin explores the history of private coinage in Britain, arguing that private mints were effective in producing coins that could satisfy the market demand for small change. The book is a detailed and fascinating history, exploring both the institutions and the personalities that were central to the almost 50 years of private coinage that he covers. The context for Selgin’s story of entrepreneurial innovation is the shortage of small change that affected Great Britain in the mid to late eighteenth century. The early stages of the Industrial Revolution brought with it a general increase in monetary transactions as many things that had previously been done within the household and farm were now sold and purchased in the marketplace, including paying money wages. The increased scale of market production meant that large factories had to have sufficient coinage on hand to pay their workers. It also meant that the coins they were using had to be of sufficient quality to be accepted by Rev Austrian Econ (2010) 23:411–413 DOI 10.1007/s11138-010-0113-5