Mr. Cullinane is co-founder and Academic Director of the Academy of the Rockies, a one-year work — study — adventure prep school at Bonners Ferry, Idaho.
Boston was a hustling frontier trading center in 1652 when a young goldsmith, at the urging of hard-pressed merchants and artisans, began minting coins of value they could trust. Only 32 years had passed since the landing of the Mayflower, but already the industrious frontiersmen suffered from having debased European coinage traded off to them before they could learn of the latest currency inflations being worked by the rulers of Europe.
Dutch ducators, guilders, rixdollars and ryals; Portuguese joannes, moidores, reis, and crusadoes; French livres; and Spanish doubloons, rials, dollars and pistoles circulated side by side with English coins in the colony whose merchants were eager to trade with all comers.
But what to-do about the fluctuating values of these varied European coins so unpopular in local trade? The answer to their coinage problem came at a meeting in Boston in 1652 when the men of the business community agreed among themselves to purchase, use, and mutually honor coins which would be produced by a local goldsmith. Accordingly the colony’s General Court granted a franchise to Capt. John Hull and his partner, Robert Sanderson, to mint twelve penny, sixpenny and three penny coins. The early Puritans were ready to turn to the marketplace for their money, sturdily ignoring the prohibitions of their English rulers.
The twelve penny coin became the famous Pine Tree Shilling. After several modifications it was stamped with "Massachusetts" and a pine tree on one side, and "1652" and "New England" on the other.
Today the coin is little mentioned in books, articles or pamphlets dealing with coinage and monetary problems and that’s too bad, for of all the marketplace coins produced in America, the Pine Tree Shilling was the first, and one which adhered most closely to the principles of coinage integrity. The particularly sound policy of the Pine Tree Shilling minters was their practice of striking coins only when a customer came to their shop, bringing his own silver with him.1 What a check on inflation!
Most minters — government or private — using their own supply of metal, mint coins in whatever quantity they think expedient, and assign them a value. The metal may or may not be of high value; a dollar coin may be minted of 900 worth of silver, for instance, or 100 worth of cupro-nickel. The difference between the 100 worth of metal and the $1.00 cost to the public is kept by the mint. That difference is called seigniorage, implying a lordly right of the ruler to such profit.
This system of minting allows the minter — in most cases the government — to control and manipulate not only the quality of the currency, but also the quantity, which will be available to the marketplace. This is why it is said that those who control the currency control the commerce of a country.
Captain Hull and Robert Sanderson did not control the quantity of coinage minted for the marketplace; the marketplace — their customers — controlled the quantity. The two minters limited themselves to guaranteeing the quality of the coins. They produced 100 shillings for every fifteen ounces of silver brought in by their customers; each shilling was guaranteed to contain 15 ounces of silver. In establishing the silver quality they desired, the merchants and the General Court purposely kept the content of silver at three-fourths that of the English shilling. They hoped thereby to keep the coin in the Boston area and to prevent its moving, a la Gresham’s Law, into European trade.²
An Honest Assay
Into Hull’s small mint came silver buttons, tankards, goblets, knives, old sword hilts, spoons and European coins to be assayed, melted down and converted into the Pine Tree Shilling. Bullion from Peruvian mines, sometimes taken by privateers from Spanish galleons, found its way to the Boston melting pot as well.
Often the pieces to be melted contained a higher percentage of silver than the finished coins, which were alloyed with copper, so an honest assay was important. To determine the silver content of the variously shaped family pieces brought into their shop, the two men used the technique developed nineteen hundred years earlier by Archimedes: the pieces to be melted were weighed, then submerged in a tub of water which was filled up to an overflow spout so that the object spilled its exact volume of water into a measuring vessel beneath the spout. Given the volume of the object and its weight, the minters computed the percentage of silver it contained.
Their fee was handsome — they kept one out of every twenty shillings minted plus wastage — but their risk was great as well, for though they were providing a much needed service, they were also turning their backs on a restriction imposed by the English government which expressly forbade private coinage in the colonies. Risky it may have been, but the Bostonians were ever an independent lot, and they needed honest coinage in their commerce. With reliable coins of intrinsic value, hard work by the colonists was more easily rewarded. Merchants and artisans could sell their goods or labors rather than barter, and they could save the coins they received until they wanted to spend them. So useful and popular was the Pine Tree Shilling that the English government chose to ignore its existence rather than attempt to suppress its circulation; an important early step toward independence was taken 129 years before that fateful April morning in Lexington.
After the American Revolution — and both before and after the Constitution — private minters supplied Americans with coins of integrity, and thousands of merchants have minted private tokens to be used in their transactions. But the proud silver coin — the Pine Tree Shilling — was the first. And like so much that emanated from the first generations of New Englanders, it was honest, independent and reliable; an important part of our free-market heritage.
1 There are a few other instances of this minting policy in American history. For an interesting account of post-Revolution private minting see, William C. Wooldridge, UNCLE SAM THE MONOPOLY MAN (Arlington House, New Rochell, New York) Chapter 3.
2 In this the Bostonians were foiled; the coin did move out into international trade. Because the Pine Tree Shilling contained the same quality alloy as the English Shilling, it did not matter to the Europeans that it was a lighter coin. Its value was simply three-fourths the value of the English Shilling — if the English Shilling was valued at twenty cents, the Pine Tree Shilling’s value was fifteen cents. As a result of this international acceptance, the General Court attempted to halt its natural outflow by imposing a heavy fine upon anyone caught exporting more than twenty of the coins.