Why a Country Needs a Mint?
Total Page：16
File Type：pdf, Size：1020Kb
EA ON M H IT W N O I T A I C O S S A N I S W E N Y C P N U E B R L I R S U H C E Y D B VOLUME 3 / SEPTEMBER 2016 Why a Country Needs a The Historical Mint? Or Does a Country Perspective… Need a Mint? or Why a State In 2016, Denmark closes its mint and Mints Coins thereby ends a tradition going back Who does not know the background more than a thousand years. only knows half of the story. That is This is not an isolated incident. In Europe why we have briefly summarised here alone, five nations have privatised, sold the reasons why states started to mint or closed their mints within the last two their own coins. decades. Time after time, governments weigh their options and how much money Private interests group At some time in the second half of the 7th it is worth to them to produce their coins century BC, the minting of coins started. in a state mint. Who was responsible is still a matter of The current economic crisis might be scholarly debate. In all probability, it was a reason why some governments have not any government. It is more plausible reduced their mints to profit centres, that coins were used either by mercenary and why it has become immaterial that leaders to pay their soldiers or by temples for centuries state minting activity was a to personalise votive gifts. matter of pride and national security. Probably contributing is the fact that State monopolies the coin as change in daily transactions Less than 100 years later, minting was in the hands of the state. Governments has become a side issue, as long as Sales, Closures, politicians and representatives of central primarily minted coins to pay for banks do not prefer a complete transition Privatisations of infrastructure, such as temples, a fleet or to cashless payment transactions. Mints in Europe – particularly important – a standing army. Therefore the control of the mints became And let’s also add that the production 1998 Privatisation of the Polish a state monopoly: whoever struck the of coins is compared more and more Mint as a public limited money for the soldiers was the one who to the production of banknotes, where company privately-owned businesses are involved controlled the military. Rome and its a great deal more and much higher 2001 Sale of the Swedish Mint coins turned into a model that was to efficiency is achieved. for SEK 200 million to Mint survive the demise of the Roman Empire of Finland for centuries to come: powerful states There is no point denying these controlled their coinage. developments. In fact, the coin industry 2003 Sale of the Norwegian Mint has to face the demands of our time for NOK 44 million to Mint Public-private partnerships and develop approaches which will of Finland and Samlerhuset In the Middle Ages, only a very few rulers secure its importance – as a state or AS Norge were truly powerful. Accordingly, minting as a private mint – for its clients and was mainly done through private-public 2011 Closure of the Swedish Mint therefore its own survival. partnerships. Ursula Kampmann, Editor 2016 Closure of the These partnerships proved a good Royal Danish Mint business, both for the entrepreneur and 2016 Sale of Royal Dutch Mint for the state: the minting authority was guaranteed a seigniorage whereas the 2017 ? entrepreneur took care of his profit himself. Continued on page 3 > www.currency-news.com Going Private - Mennika Polska The Polish Mint is one of the few cases in But even before the new building was Today the majority of shares are held by which a state-owned enterprise has been officially inaugurated on 26 September Polish entrepreneur Zbigniew Jakubas. The successfully converted into a private 1994, the Polish government converted the state itself no longer holds any shares in the company. At present, the Mennika Polska Mint into a stock corporation, effective 1 previously state-owned company. is a stock company, of which the Polish April 1994, whose shares were initially fully state no longer holds any shares. owned by the Treasury. In 2016, the Polish Mint celebrates the This allowed the Polish Mint to operate as a 5 Good Reasons for 250th anniversary of its foundation. After self-responsible profit centre. Already in the a Private Mint King Stanislaus Poniatowski decided to very first years of its existence, it achieved 1. Market behaviour: Capacity and establish a mint in Warsaw in 1766, the several successes. In 1995, it issued prices react to demand and offer. Polish Mint, however, was not permanently the first Polish bullion coin and, in 1996, Overcapacity will be reduced quickly. in operation. Its work was interrupted at produced blanks for Lithuania as well as a 2. Greater customer orientation: regular intervals by the various foreign new coin series for Ukraine. Without having to take account powers that controlled Poland. But the order for the production of Polish of national preferences, a private In 1868, for example, the Russian Tsar coins does not necessarily go to the Mint. enterprise can fully concentrate on closed the Polish Mint and had the Instead, it is an international competition. meeting the needs of the customer. equipment moved to the Mint of St On 6 February 1998, permission was 3. Fewer restrictions: As non- Petersburg. And during their retreat in granted to trade the shares of the Polish Mint governmental enterprise, a private firm 1944, the Germans blew up the Mint, thus on the Stock Exchange. On 7 April 1998, the is not in the public eye and does not terminating coin production, which was only shares were quoted for the first time. Since have to overachieve regulations. resumed under Communist control. then, the shares in the Polish Mint have been 4. Costs: Experience shows that There are probably only a few nations in freely tradable and highly popular. private firms work considerably more which the mint is so closely connected After all, in its home country the Mennika cost effectively than state-owned with national independence as in Poland. Polska is a model for the successful businesses. Therefore, it was self-evident that, after privatisation of a formerly state-owned 5. Innovative strength: Economic the founding of the third Polish Republic enterprise. It was elected Company of the competition forces private enterprises in 1989, a new Mint, with state-of-the-art Year in 2006 and Company of the Past to remain innovative, to position technology, should be constructed. 20 Years in 2010 by the Polish Business themselves sustainably in the market. Club Association. In 2013, Forbes listed the Polish Mint as one of the world’s most dynamic public companies. The Historical Perspective (Continued) The bill had to be paid by the people. They National money: From then on, a coinage of one’s own meant were given change that was cheap to a question of justice independence. Until then, the colonies manufacture and contained only a small The French Revolution introduced the had been supplied with money by their amount of silver. And this change always decimal system. This was revolutionary motherland, whereas independent nations had to be exchanged at a significant – perhaps just as revolutionary as the founded and operated their own mints. premium. Gold or silver money of stable Declaration of the Rights of Man and of The mints became a source of national value was only available at considerable the Citizen. It put an end to a split system pride. In this spirit, the first President of extra cost. consisting of money for the rich that was the United States, George Washington, This, of course, weakened local economies. of stable value and inflationary money for immediately initiated the construction of a Those affected responded with destructive the poor. national mint. To the citizens, the images of revolts at regular intervals. One of the main The underlying idea was to use a functional the joint currency illustrated the values on characteristics of a strong government, currency to boost the nation’s economy. which their identity was based. therefore, was to seize control of the With the French Revolution, this idea spread Incidentally, something similar happened coinage, in the best interests of the throughout the whole of Europe and from in the 1990s. Back then, the dissolution of community, to make for good money. Europe to overseas. the Soviet Union led to the foundation of national mints. The cost factor In recent decades, national identities have taken a back seat to economic interests, in the same way as the coin has lost its function as a mass medium. The mints have reflected this development insofar as the cost factor has now become the crucial factor in the debate. The repercussions become clear by a look at the examples in this issue. One of the great achievements of the French Revolution was the introduction of a monetary system that did not disadvantage the user of small change: for twenty 5 centimes pieces made of copper he got a franc. During the Ancien Regime, a high fee had to be paid when exchanging small change for silver or gold coins. 2 MINT NEWS QUARTERLY VOLUME 3 | SEPTEMBER 2016 The Rise and Fall of a Private Mint: the Birmingham Mint Founded in 1850, within just ten years Some time at the beginning of the 1960s, Roland Vernon, owner of the Birmingham the Birmingham Mint, which specialised the Royal Mint concluded an agreement Mint also requested that the contract for in bronze coins as the small change with the Birmingham Mint.