The private mint in economics: evidence from the American gold rushes

By Lawrence H. White.

"Abstract

Prominent economists have supposed that the private production of full-bodied gold or silver coins is inefficient: due to information asymmetry, private coins will be chronically low-quality or underweight. An examination of private mints during gold rushes in the US in the years 1830–63, drawing on contemporary accounts and numismatic literature, finds otherwise. While some private gold mints produced underweight coins, from incompetence or fraudulent intent, such mints did not last long. Informed by newspapers about the findings of assays, money-users systematically abandoned substandard coins in favour of full-weight coins. Only competent and honest mints survived."