Good Money, reviewed by Tabarrok
Alex Tabarrok reviews George Selgin's Good Money:
Good Money is George Selgin's explanation of how enterprising button makers solved what Sargent and Velde called The Big Problem of Small Change thereby making the industrial revolution possible. Selgin is a monetary theorist so you might expect a dry account of monetary history but the mint-battle between Matthew Boulton, whom Wired once named the ultimate CEO, and copper-king Thomas Williams propels the story forward. If you can imagine, Good Money is something of a cross between Friedman and Schwartz's A Monetary History of the United States (although not as broad in scope) and a business epic like Barbarians at the Gate. I also liked how Selgin draws on newspapers, novels, limericks and tavern songs to illustrate the problems and events of the time. This bard was both a good economist (he has Gresham's Law!) and public choice scholar....
The money problem influenced and was influenced by all of the major events of the day so Good Money is also an economic and political history of the industrial revolution. Here's an interesting tidbit. Company stores were not so much a way for firms to rip off employees (why not just pay them less?) but were rather a means of economizing on coin. Selgin shows how the shortage of coin sheds light on a number of other otherwise peculiar business practices.
What lessons can be drawn from the history of private coinage? Private money circulated only if it was voluntarily accepted as a means payment. Thus the primary problem faced by private firms was how to create trust and credibility. To encourage circulation, for example, issuers promised to redeem their tokens in gold (which the Royal Mint did not). In turn, the promise to redeem gave producers an incentive to make their coins difficult to counterfeit, which they did by making the coins beautiful - numismatists will appreciate the full-color illustrations of the private coinage produced by Boulton and his rivals - as well as technologically advanced.
