Privately Minted Silver Coins Were Legitimate Money in the 1800s
In the early 1830s, an eastern Kentucky man named Josiah Sprinkle started minting his own coins and circulating them around the area. Eventually, government officials got wind of Sprinkle’s operation and arrested him. But he was ultimately found not-guilty in court.
How did a man minting his own coins escape the long arm of the law? Because his coins were pure silver. They were equal in value to the silver dollars minted by the US government. In fact, they were worth slightly more.
This historical oddity reveals an important truth. When money was actually silver and gold, its value was intrinsic. The value came from the metal, not a promise by the issuing government. The government didn’t have to fiercely maintain its monopoly in order to protect the “value” of its fiat currency. If you had gold or silver – in whatever form – it was literally money. Josiah wasn’t doing anything wrong circulating his pure silver coins. He wasn’t ripping anybody off. His coins were worth what he promised.
A similar private coin was minted in Missouri, known as the Yocum Dollar:
The new money, the Yocum dollar, met the necessary criteria for a medium of exchange: it was a unit of account, it had a store of value, it was portable, and it was acceptable. In a state that did not have a state bank, and on the Ozarks frontier where money was chronically short and where barter was a common commercial exchange, the Yocum dollar would have been welcomed.”
Sprinkle dollar coins continued to circulate in eastern Kentucky for years. The following story, published in a Carter County, Kentucky, newspaper on Nov. 16, 1891, and transcribed by Glen Haney reports three of the coins turning up, and tells the story of Josiah Sprinkle:
“Joseph Shoemaker of Grayson, Carter County received the other day, in payment for a horse sold to an old farmer living near the Lewis County line, $46.00 among which there were three of the famous “sprinkle” dollars of the early thirties.
“It has been more than twenty years since any of these peculiar coins have been found in this section, and the production of these will recall the queer character who flourished in the earlier part of the century and went down to his grave with a secret that was never unearthed. Josiah Sprinkle, the person in question, lived in one of the roughest sections of Lewis County and on a line probably fifty miles north of Grayson. In his day, Washington, the County seat of Mason and one of the oldest towns in this part of the state, was thriving. One day Sprinkle, then well along in years, appeared at Washington with a buckskin pouch full of silver dollars of his own make. In every respect they appeared the equal of the National coin. The weight was more than present and the quality and ring of the metal were all that could be asked.
“He spent them freely, and they were taken on the assurance of Sprinkle that there was nothing wrong with them beyond the fact that he, and not the United States Mint had coined them. Asked where he got the silver, he laughed and shook his head knowingly.
“‘It does not matter where I got and there is plenty of it left,’ was as much as he would ever offer as an explanation.
“The inscriptions on the coins were rudely outlined, and in no wise was any attempt made at imitation of the legal coin. Rudely outlined on one side was an owl while on the other side was a six cornered star. The edges were smooth, no attempt having being made at milling. The coins were considerably larger than the regulation article and thicker as well. Upon various occasions Sprinkle would visit the town, and in every instance he would spend them more and more freely. At one time he volunteered the fact that he had a silver mine in the hills but no one succeeded in inducing the old man to reveal the whereabouts.
“Finally the government agencies learned of the matter and came on to investigate. Sprinkle was arrested and brought into court but the dollars were proved to be pure silver, without alloy, worth in fact a trifle more than a dollar each and after an exciting trial he reached down into a cavernous pocket and pulled out a bag of fifty of the coins and promptly paid his attorney in the presence of the astonished officials. Sprinkle was never afterward bothered, and continued until his death to make the dollars, how and where no one ever knew. He lived alone, having his hut away from relatives, who lived close at hand, and he died suddenly carrying the secret of his find to his grave.”
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Myths that conceal reality, Milton Friedman: