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The E-Sylum:  Volume 10, Number 19, May 13, 2007, Article 8

WHAT DENOMINATIONS OF NOTES AND COINS SHOULD WE HAVE?

Dick Johnson forwarded the following article by free-banking theorist
Lawrence White from the Free Market news web site (published May 7,
2007):

"Rather than choose the set of note and coin denominations by arbitrary
government edict, I propose that Europe and the US should use the
mechanism we use to choose the set of other goods and services. Why
not let European commercial banks issue EUR1 and EUR2 notes at their
own expense, just as the banks in Scotland and Northern Ireland currently
issue banknotes as low as 1 at their own expense? Let members of the
public use notes or coins as they prefer. In that way the question of
currency denomination can be taken out of the public sector with its
one-size-fits-all approach. In the nineteenth century, private banknotes
prevailed everywhere. In the United States, most banks issued notes in
the usual 1-2-5 set of denominations, but some banks experimented with
$3 bills."

"In the US, some writers have been arguing that the $1 bill should
be withdrawn and replaced by the $1 coin because the coin lasts longer
(30 years vs. 1 year)... Similar arguments apply to the US penny.
Some arbitrarily call for its withdrawal; some want to keep it around.
To see which coin denominations really are worth issuing, we need to
move coin production into the market. Let commercial banks issue coins
of all denominations. There is good historical precedent for private
production not only of gold and silver coins, but also of token coins."

To read the complete article, see:
Full Story

  Wayne Homren, Editor

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