Sunday, November 27, 2011

Purchasing Pop Culture


By E.M. Sanchez-Saavedra

Growing up in the pre-credit card era, I was familiar with small coins and the (very) occasional dollar bill at birthdays or Christmas. Being allowed to handle and examine an honest-to-goodness five or ten dollar bill was a genuine treat for a kid whose weekly income amounted to twenty-five cents or so. These days, I rarely deal with a heavy pocketful of little metal discs and the few coins that come my way are generally tossed into a drawer. Thanks to inflation and a rethinking of the nature of the money supply, most of the world’s hard coinage has little or no intrinsic value or purchasing power, and only serves to pay odd amounts of sales tax. Canadian one- and two-dollar coins (“loonies” and “toonies”) and European Union “Euros” are exceptions. Paper bills reign supreme elsewhere. Until 1964, U.S. minor coinage was composed of metal with intrinsic bullion value -- silver -- or industrial worth, like copper and nickel. Only coins manufactured by the three government mints at Philadelphia, Denver and San Francisco were legal tender. Although paper money was largely backed by gold reserves, in 1933 the U.S. officially went off the gold standard and private citizens could not own gold except for numismatic items or jewelry. In 1964 U.S. coins became purely tokens and after 1971 currency could no longer be redeemed in gold. By 1979, the yellow metal had skyrocketed from $35.00 to over $800.00 per ounce. Recently, it has reached over $1,700.00 and will probably go higher.

In the era of story papers and dime novels, the U.S. financial landscape was a nightmarish jungle, where millions of foreign coins circulated alongside odd-looking coins in odd denominations, flimsy paper money issued by flimsier banks and corporations, commodities like gold dust and foodstuffs, postage stamps and tokens or paper scrip.

Paper money had been a mainstay of North American commerce since the seventeenth century, along with whatever foreign hard money arrived in the pockets of immigrants and seafarers. Trade limped along by barter and a mixture of English, Dutch, French and Spanish coins. The American Revolution had been financed by the printing presses of the Continental Congress, whose paper money emissions became ever more worthless as the war progressed. Throughout the first half of the nineteenth century, most issuing authorities had little or no specie reserves to back their promissory notes, and the federal government provided no safety net like today’s Federal Deposit Insurance Corporation to protect receivers of bank notes. Many a wall was papered with worthless “broken bank” notes after the issuers went belly-up. Like the inflationary German “Notgeld” produced after the First World War, American “wildcat” bank notes are infinitely varied in design, colorful and now highly collectible, but they often spelled ruin to the consumer.

Walking into a newsdealer’s shop and buying a story paper or magazine was not as straightforward as an equivalent purchase would be today. If the purchaser tendered a banknote, the merchant would have to calculate whether or not the bill was counterfeit (about 50% of all bills in circulation were bogus), whether or not the issuing bank was still in business, how far away the bank was (the more distant, the less the bill was worth), and whether or not he had enough smaller bills and coins in the till to make change! More astute shopkeepers subscribed to “banknote reporter” publications with diagnostic illustrations of recent counterfeits and news of bank failures.

Some of the same problems cropped up if the buyer offered a coin instead. Was it genuine? Had some of the precious metal been clipped off? If it was a foreign coin, how much was it worth in U.S. money? If it was a gold coin, what was the spot price of gold on that day? (Bullion value and face value of gold rarely coincided.) These questions varied regionally as well. Westerners distrusted anything but gold and silver and paper money was virtually unknown until late in the century. Small change almost exclusively consisted of Mexican “reales.” The big “piece of eight” (“peso de ocho reales”) was worth a dollar. The two-real piece, “two bits” or “pistareen,” was valued at twenty cents, the one-real, or “bit,” at ten cents and the half-real, or “picayune” at five cents. Larger coins were often cut into wedge-shaped pieces to create small change. In New York the English shilling, valued at 12½ cents, and the sixpence at 6 ¼ cents, remained the standard from the eighteenth century through 1857. Local money in the mid-Atlantic states was often backed by cotton or tobacco, and fluctuated according to market conditions abroad. Antebellum New York goods often cost 12 ½ or 6 ¼ cents, and were presumably paid for in English coins or Mexican cut "bits", since the U.S. never minted a farthing ("fourth" -ing) coin.

Adding to the confusion was the fact that much of the silver coinage never reached general circulation. U.S. silver dollars and half-dollars were virtually unknown at home. These were used in bulk as specie reserves in bank vaults, or shipped abroad for foreign trade. The Mexican piece of eight, later renamed the “peso,” was the international trade dollar of its day, accepted from New York to China at full face value. In the 1870s, the U.S. began to issue a “trade dollar” to compete with it and with the French “Piastre du Commerce,” the Austrian “Maria Teresa” crown, the English dollars minted for Hong Kong, and several other standard pieces circulating in Asia, Africa and the Middle East.

There was a brisk market in “ready reckoner” handbooks, which illustrated some of the coins likely to pass over a shop counter, in addition to giving tables for estimating bulk quantities of flour, lumber, and other commodities, and tables of currency conversion, weights and measures and so on.

Although credit cards would not become commonplace until the 1970s, merchants often extended credit to regular customers, who could purchase goods “on tick” and settle up monthly or quarterly. An English invention did much to simplify small transactions: the humble postage stamp. Introduced by Sir Rowland Hill in 1840, the prepaid postage stamp revolutionized global postage delivery and relieved American shopkeepers of much uncertainty. Until then, recipients had to pay for a letter or parcel upon delivery. If they refused to pay, the mail ended up in the dead letter office. Postal carriers often shirked their duties if the prospects of payment were dim at the receiving end. But if the fee were paid up front, the post office could complete the delivery with no fear that their labors would go unpaid.

Because postage stamps were issued by stable governments (more or less) and had a recognized redemption value at any post office, they became an ideal auxiliary currency. Once the idea caught on in the U.S. in 1847, stamps were used as money as often as they were for their intended purpose. The federal government even authorized three-cent silver and three-dollar gold coins to facilitate the purchase of three-cent first-class stamps in quantity. Recognizing the fragility of little paper stamps, canny merchants encased them in brass disks, covered with transparent mica, bearing advertising material on the reverse sides.

In the financial panic of 1837, merchants took to issuing their own cent and half-cent “Hard Times” tokens with political and commercial slogans. These circulated for the next two decades, since the Philadelphia Mint could never keep up with the demand for small change. During the panic year of 1857, the feds attempted a sweeping coinage reform by demonetizing all foreign coins, abolishing the half-cent and replacing the large cent with a small coin costing less to produce. Thanks in part to the sinking of the S.S. Central America, with its huge gold shipment destined for New York banks, the country was plunged into another depression, from which it emerged in time for the outbreak of Civil War.

The Civil War years saw the disappearance of almost all small change thanks to hoarding. Once again, merchants issued millions of patriotic, political and trade tokens to supply the need. This time, the government responded with the issuance of the first true federal paper currency (greenbacks), including an extensive fractional currency, based on postage stamps. According to Horatio Alger, Jr.’s novels of New York street waifs, “stamps” became a universal synonym for money. His fictional bootblacks, newsboys and street vendors were always trying to “raise the stamps” for a meal or other purchase. Although the currency had been designed for redemption only in actual stamps, it quickly supplied the place of small change in everyday transactions. Despite rampant inflation, the Confederate government likewise issued a fifty-cent fractional bill during the war. Various Southern cities and counties issued a wide variety of fractional bills to substitute for nonexistent coins. The older large cents circulated in the Confederate States during the war along with foreign coins, but hard money was rare by 1863.

Cheap publishers began including images of coins and paper currency in their cover designs, beginning with the firm of Beadle and Adams. Their Dime Novels series, started in 1860, featured a cut of the reverse side of a silver ten-cent piece in the center. Beadle’s earliest competitor, George Munro, featured a cut from the ten-cent postal currency note on the title pages of his Ten-Cent Novel series. Fractional notes were issued until the 1870s and remained in circulation long after.

Following the Civil War, the U.S. government issued three- and five-cent pieces made of a nickel alloy, concurrently with the older silver "trimes" and half-dimes. In 1877, Beadle’s Half Dime Library featured a cut of a nonexistent U.S. coin, an 1877-dated half-dime. (The last one had been minted in 1873.) It matched the cut of a silver dime featured on Beadle’s New York Dime Library. The Nickel Library, published first in Chicago and later New York, prominently displayed one of the new nickel five-cent coins. Street and Smith’s Nugget Library carried a masthead design showing a mixture of gold nuggets, nickels and half-dimes.

English paperbacks and penny dreadfuls sometimes included coin designs on their mastheads. For a few years, Beadle and Adams maintained a London branch and produced Beadle’s American Sixpenny Library. After Beadle discontinued the London operation, the firm of George Routledge purchased the plates and continued the series. In place of the dime, a sixpence takes pride of place. The Union Jack, a penny paper conducted by W.H.G. Kingston, and later by G.A. Henty, showed the reverse of a large English penny, featuring a seated Britannia.

When examining a dime novel, or other piece of Victorian ephemera, it’s fun to speculate on how, and with what currency, it was first purchased. In England, paper money was relatively scarce, and until Victoria’s reign small change was also in short supply. Many merchants issued private tokens to relieve the lack, and counterfeiters proliferated. Poorer people sometimes clubbed together to buy or rent the latest issues of penny papers. In London Labour and the London Poor, Henry Mayhew reported that thrifty working-class readers of penny dreadfuls often purchased larger sized publications because they could get more resale value per pound from the rag-and-bone dealers. Many surviving American novels have been stamped and restamped by used-book dealers who often traded a new issue for two or more back numbers, and then sold the used pamphlets for half price or less. So pure barter enters into the equation as well.

In modern terms, just how much was a penny worth? Since 1971, the English “new penny” has been a small coppery-appearing coin, superficially resembling U.S. and Canadian cents. Unless he or she subscribes to the belief in “pennies from Heaven,” the average citizen of the U.K. will not bother to stoop and retrieve a dropped penny from a sidewalk -- it is not worth the effort. The Victorian English penny was a large bronze coin, the same diameter as a U.S. half dollar -- about 30.6mm. -- exhibiting a left-facing bust of Queen Victoria on the obverse and a seated figure representing Britannia holding a shield and trident on the reverse. These were termed “coppers” or “browns,” and intrinsically worth their face value in scrap bronze. In other words, pennies were not mere tokens.

In the present age of plastic credit and debit cards and electronic fund transfers, it is hard to realize that the nineteenth-century world operated on a bullion standard, in which circulating coins were made of precious metals, according to accepted ratios of gold to silver to bronze. This system dated back to the international coinage of the ancient Roman Empire -- the forerunner of the “Euro.” Even the traditional abbreviation for penny, “d,” stands for the Roman silver denarius. It has been estimated that the pound sterling of 1871, was roughly equivalent in purchasing power to two hundred dollars in modern U.S. currency. A penny was 1/240 of a pound, giving a rough value of 83 cents in early twenty-first century money. Such equivalencies are problematic at best, because we do not consume the same goods or purchase the same services as our nineteenth-century forebears. How does one quantify chamber pots, antimacassars and bears’ grease hairdressing against television sets and automobiles? Candles vs. light bulbs? We know that a well-paid author of penny fiction could live a survivable, though threadbare, existence on two pounds a week. An American artisan made a dollar per day, (up to fourteen hours,) or six dollars a week, and could support a family in modest living quarters and adequate groceries. Family members of all ages had to contribute either household labor or outside work to supplement papa’s wages. There was no government-funded welfare, unemployment insurance, health insurance, or much of anything else. People were compelled to be self-reliant, economical, hardy and practical to survive.

England’s central Royal Mint provided the kingdom with the necessary hard coinage to carry on its everyday business, and the Bank of England issued incorruptible paper money. By contrast, the U.S. Mint at Philadelphia, and several branch mints for coining California gold and Nevada silver, could never provide enough coins or currency for America’s burgeoning commerce. The same inflation estimate as used for English money generally works for U.S. money. At the time, a pound sterling was tariffed at about $5.00. An 1871 dollar was worth approximately fifty dollars or more in today’s money. A one-cent newspaper would cost about fifty cents now. A dime paperback book would thus retail at $5.00. (If you have purchased a trade paperback recently, Beadle’s Dime Novels look like a pretty good bargain.)

Despite the petty annoyances of ATM machines that can’t read your card, or credit card “swipe” readers that choke up occasionally, we actually have it pretty easy compared to our forebears (so long as there are enough funds to cover the transaction!)

Part II Gallery HERE


  1. This is a great post John, I really enjoyed reading it. I work for The Royal Mint (we've been making coins for 1100 years and counting!) and I often speculate on the future of coins and the concept of a cashless society.

  2. I will pass on your comment to Mike Saavedra, James. Since we had so many images I will be posting Part II Gallery today. I vote we abolish the penny!