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Lesson in Depression of 1837

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Message Steve Shapiro

Serious coin collecting as numismatics tells more on economics, when history shows some solutions as today legislators chip away at the penny. Forgotten is the depression of 1837 when the rich people came to the rescue of the US failing commerce and minted coins to stimulate the economy.

No one talks about the depression of 1837, though the new Speaker of the House, John Boehner, openly brought up the 1787 coin and currency act of the First Congress of the United States. Now, that first version of the act began with a scandal and grew worse over corrupt private contracts to mint coins until the US fell into a serious depression, which began in 1834. These facts were overlooked by the Speaker and his followers.

The most important failure of the Speaker's reference was the scandal of having a private mint Contract fulfilling the need for the most important coin in our US economy, the one cent, which at that time was the Fugit Cent.

This contract was awarded to a Mr. James Jarvis to make the copper Fugio.   Jarvis absconded with the metal and left the contract unfulfilled. This left our US Congress to eventually mint more money. They would not make more hard currency until 1792. Congress was too conservative to print more money at all.

That was not enough to consider. The lack of honest monetary calculation for recognition of the need for increased circulation began chipping away at our single most important coin: the penny, later considered one cent.

Since commerce was more successful due to a growing population and growing need for affordable goods and services, which were not payable without a reasonable small denomination coin, this 19th Century economical dilemma did not differ much from the same problem that exists today, in the 21st Century.

In the New York Times, May 4, 2011, a political cartoon on the editorial page illustrated a failing economy and workers chipping away at the Lincoln one cent coin.

In between the beginning of the economic problem of 1833 and a solution, by 1837, the hard times of this country demanded more coins because our US Congress, in a conservative and penurious policy decision failed to meet that demand. This ignorance plunged the country full on into a depression by 1837.

The rich people of that time, such as the druggist Dr. Feuchtwanger of New York, took it upon themselves to mint what were called tokens. These tokens were used as coins for the common citizen to spend as hard earned money.

The Feuchtwanger one cent token made with silver worth in the metals market today, the 21st Century value at three dollars US, aided to relieve the deficit and stalled the hard times. By 1857, this revised coin and currency law lead to the voluntary social responsibility of our Coin and Currency act. By this law, which returned the complete authority exclusively to the United States Government, the responsibility to mint more money fell upon the economic understanding to our US Congress once again.

The lesson for today is missed in the lapse of historical knowledge, mixed with the lack of consistent understanding that economics is not finance and that government monetary aggregate and especially the copper penny is an historic coinage of numismatic principle. Economics remains different from the principles of finance and instead is part of the discipline of understanding economics.

Knowing the difference between the respectable hobby of "coin collecting" and numismatics, as a science, which includes the "numerical matter" of the values of metal and alloy, the art and sculpture for the security of that metal representative of monetary exchange, aids in understanding the history of advancing the understanding of economics. Specifically, numismatics study offers an understanding of the economy as it couples with finance; too often confused by legislators. They are not just confusing the economy of the United States, but especially today, the understanding of the economy of the whole world.

During the realm of King George III of England, it was a given that commerce would stand still without a copper penny, considered the "staple" of commerce because it was the amount which enabled access to the lowest wage earner with the lowest purchasing power. Since colonial times it was understood that, without activity from the lowest common denominator, commerce would suffer. With poor coinage laws, Congress refused to issue coins as the population grew. The same conservative downfall recurs today in the Space Age.

The depression of 1837 gave way to prosperity once again, when the rich realized their responsibility to the greater good and offered into circulation tokens as coins to spend. Today we do this by an act of the US Congress and respecting that each country subject to a global economy has its own system for the manufacture of money.   However, we are still asking for a sense of responsibility from the rich.

For, as the wealth changes hands, so does the responsibility to the people who aided in the building of that wealth and therein is found the reason to tax those who earn more than $250,000.00 US to contribute back into the flow of our economy at a greater proportion than those who earn less than $250,000 US per year. Today, they cannot mint their own coin.

It is important to have an understanding of the seven levels of our Monetary Aggregate system that offers a break of M3, holdings of up to $250,000 when the holder of that amount must work to sustain that, from M4, holdings of more than $250,000 who can let that money work for them. It is because of this difference that the workers, in this case simply the money that is part of the economy, must rebuild the economy and we do this by calculating a global statistical model forsaking the circulation of coin and currency.   We call for responsibility from the wealthy that, through taxation, can reinstate that difference to curtail any deficit in the economy.

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Steve Shapiro is a journalist, author, and screenwriter. As the Charter President of the Jr. United Nations, my motto against autocracy by siblings, parents, local constabulary or governments is 'in liberty is luxury.'

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