Monday, June 15, 2009

Not One Dollar

[Executive Summary: This is the second of an irregular series of essays about the United States Dollar--what it really is, and what the boys in Washington are doing with it and will do with it.]

This is, by every appearance, a silver dollar. A very rare one. I am its proud owner. Ahem.

It bears the year 1797, only the third or fourth year the United States made dollars of its own. And it's in remarkably good condition--"Extremely Fine" or better.

Dollars of the time were the same size and weight as a similar coin, called the "Spanish Milled Dollar," which was essentially standard currency throughout the Western Hemisphere. Spanish Milled Dollars ("milled" meant that the edges were reeded, like the quarter in your pocket) had been made in Mexico since 1505, and, when new, were of a highly reliable weight and purity. They passed for an amount equal to approximately five and a half Spanish dollars to the British pound. A quarter to a half dollar was a standard day's wage for an adult male farm worker of the time.

Since smaller change was rare, these coins were often cut into pieces: an eighth of a dollar--12.5 cents in the new American currency--was called a "bit." A quarter dollar was, therefore, "two bits." (A shave and a haircut, BTW, was considerably cheaper than two bits at this time.)

Now let's take a look at the back:

Interesting, isn't it? It doesn't even say that it is "ONE DOLLAR", all it says is "UNITED STATES OF AMERICA." Everyone knew it was a dollar by the fact that it was silver (when you dropped the dollar, it 'rang' like a bell), from its size, and from its weight. Marking it as a "dollar" was thought superfluous.

Coined currency with real worth, during this era, was called "Specie."

Coins, you see, were very specie-al. No joke. Coins were much preferred to the paper currency in circulation at the time--called "Continentals", a fiat currency that was by this time worth about $100.00 paper to $1.00 silver. People didn't trust paper currency (for reasons we'll discuss in a later essay) and thus preferred coin if they could get it. It was only in coin form, made from precious metal, that real money was considered to have inherent worth.

Then and now, a coin, made of gold or silver, was in fact both a statement of trust and of distrust in the government that issues it.

By putting its image on the coin, the government was putting its 'good name' guarantee that the coin so marked was a "real" coin: that it (say) really was a dollar's worth of silver, of standard weight and purity: that is, that the silver had not been diluted by base metals, or "debased".

It was also a symbol of distrust in that people who wanted coins in transactions demanded that the coin as such was a REAL THING having REAL WORTH--and that in accepting coin (rather than say paper currency) you were saying that you really wanted to have REAL VALUE in trade rather than an accounting entry, which all that paper currency really is. (Not that there is anything wrong with that.)

But. Even coins were not entirely trustworthy, as here.

You see, this "silver dollar" is, in fact, utterly bogus.

A coin collector can easily spot the flaws, but I'll lay them out for you. The date is entirely in the wrong position; it should be much closer to the rim. Secondly, the picture you see on the back--the "Heraldic Reverse"--was not used in 1797 coins, but rather on 1798 coins (and later). American Silver Dollars of the year 1797 had an eagle on the back holding a wreath in its mouth: the eagle was particularly scrawny and unimpressive and also did not hold up to wear well, hence the change in design.

But that's not all. You can't really tell from the picture, but the coin is not silver. It's far too dark and dingy--apparently a lead-nickel mix of some sort was used to make it. Drop it on a table top and it does not go "ring," it goes "thud."

And the weight is off.

And the reverse is not offset 180 degrees from the obverse as a coin is (take one out of your pocket and look at it: coins are, by tradition, always rotated opposite sides between the front and back; this particular one, they're not).

In short, this "silver dollar" is in fact a lie. It is neither silver, nor a dollar; it was not made in 1797, but more likely around 1997. Or later. It says "United States" but is in fact likely a product of the Chinese metalworking industry.

I'd like to be charitable and say that, given the huge number of easily spottable flaws, that this thing is what coin collectors call a "fantasy piece"--that is, meant to be a mere souvenir, rather than a serious attempt at counterfeiting.

Nevertheless, the dimwitted could still be fooled.

As here.

The original owner (not me, thank God) was much displeased to find it decreed bogus. He had paid some $800.00 for the thing in the far east, where such counterfeits are common. He was trying to sell it in the States for $1200.00. I bought it from a dealer for $12.00.

Wouldn't it stink to think you had something that was worth a thousand dollars and to have it turn out to be worth (almost) nothing?

Imagine if the man had taken it to the bank and said, "I want to borrow money from you. Here is a $1000.00 coin. I want to leave it with you as security."

How would the bank react after (a) issuing a $1000.00 check to the man and then (b) finding it was utterly bogus and worth nothing? They'd be seriously ticked.

They'd also be seriously broke, or at least out ten large.

Multiply this little example of this one bogus coin by a billion times, and you have the basis for the banking meltdown that occurred last September, shortly before election day.

[Next: we have a few adventures with some counterfeit debentures.]

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