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January 6, 2023 | 18th Century Copper Riots & Private Money

Martin Armstrong

Martin Arthur Armstrong is current chairman and founder of Armstrong Economics. He is best known for his economic predictions based on the Economic Confidence Model, which he developed.

During the reign of King George III (1760–1820) the first issue of halfpennies actually was not issued until 10 years after his accession to the throne in 1770. Consequently, the vast number of halfpennies in circulation were actually all counterfeits. Indeed, counterfeiting became rampant at first because there was a coin shortage. In 1771, it was declared that counterfeiting copper coins was to be a serious crime. Nevertheless, this really made no difference. Over the course of the next twenty years, the majority of copper coins in circulation were forgeries. Even in the American Colonies, a favorite pastime was to counterfeit British halfpennies.

Coppers of this type are thought to have been minted from mid-1787 through 1788 and probably into 1789. Interestingly, it appears Thomas Machin first produced a halfpence dated to the contemporary year as well as examples backdated to 1778. As the mints in Connecticut, New Jersey, and Vermont failed, their equipment ended up at Machin’s Mills. Along with imitation British halfpence, Machin’s Mills also produced illegal Connecticut coppers and some legal Vermont Coppers, with most of their Vermont coins being struck over counterfeit Irish halfpence. The illegal coining operation continued at Machin’s Mills until around early 1790, which was longer than any of the legal mints in New England.

John Adams wrote to John Jay on April 10. 1787

“There is a vast sum in Circulation here of base Copper: to the amount of Several hundreds of thousands of Pounds. very lately these half Pence are refused every where: I suppose in Consequence of some Concerted Scheme. and it is supposed that they will be all purchased for a trifle and Sent to the United States where they will pass for good metal, and consequently our Simple Country men be cheated of an immense sum. The Board of Treasury, may be ordered with out the avowed Interposition of Congress, to give the alarm to our Citizens. and the seperate States would do well to prohibit this false Money from being paid or received.

There was religious tension in Britain that still lingers to this day against Catholics. The Gordon Riots of 1780 took place over several days instigated by the anti-Catholic sentiment that again erupted with the passage of the Papists Act of 1778. That was an attempt to reduce official discrimination against British Catholics with the first legislation of the Popery Act of 1698. At the time, Lord George Gordon was the head of the Protestant Association. He argued that the law would enable Catholics to join the British Army and once in they would then use the army to plot treason. The protest became the excuse to burn people’s possessions, engaged in widespread rioting and looting, and they even used the opportunity to attack both Newgate Prison and the Bank of England. This was by far the most destructive riot in the history of London.


From the mid-1600s, the world money supply was increased largely with copper coins. Russia, in particular, began to overvalue the copper coins. Money is always fiat for its value is typically dictated by the government. Overvaluing copper as in the 17th and 18th centuries, led to the same trend of overvaluing silver during the 19th century. The result of this monetary manipulation by the Russian government led to what became known as the Copper Riots of 1662.

The Russian government began producing copper coins and monetizing them to be of equal value to silver Kopek currency with an average weight of about half of a gram to meet expenses during the mini-Ice Age. The effort failed and silver vanished from circulation as people began hoarding them causing the entire economy to collapse. The copper money was naturally devalued in purchasing power and then there were widespread counterfeiting operations since the official value of the copper coinage became far in excess of the cost of production. The economy collapsed into a deflationary black hole as businesses shut down and unemployment rose dramatically. This erupted into what has become known as the Copper Riots of 1662.

The German bankers, the Fuggers, emerged as the leading Augsburg merchant-banker, who then provided loans to local rulers secured with the silver produce of their mines. The discovery of vast silver mines eventually led to the development in 1525 of the one-ounce silver coin that was the thaler from which we derive the name “dollar” as the alternative to the British pound after the American Revolution. The Joachimsthaler of the Kingdom of Bohemia was therefore the first thaler ideally with a weight of 31 grams or one troy ounce.


As the silver mines were declining, the decline in the supply of silver led to the rise of copper coinage during the next century. This was not an isolated incident confined to Russia. There was a shortage of precious metals going into 1662. It was most profound in Russia. Nevertheless, the price of gold rose sharply from the low of 1655 in a 7-year bull market. This also reflected the deflationary atmosphere that was emerging thanks also to the mini-Ice Age which was peaking during the 17th century yet would last well into the mid-19th century.

It was Spain’s silver mine known as the great red Cerro Rico or ‘Rich Hill’ that towered over the city of Potosí in Bolivia. It had been mined since 1545 by drafted armies of natives. The great silver boom of c1575-1635 was when Potosí alone produced nearly half the world’s silver. But the mine’s yield was starting to decline. By 1678, native workers became scarce and the output of the mines began to dwindle. This was the royal mint that produced vast amounts of ‘pieces of eight’, which became the precursor of the American dollar. The shortage of labor ended up being augmented by purchasing African slaves from the Dutch who were buying them under the pretense that they were the spoils of war, which had been the justification for slaves from ancient times.

As the quantity of new silver in the world monetary system was declining, we begin to see the rise of copper coinage make its first appearance under James I of England (1603-1625). Due to a shortage of small coins, James I authorized John Harrington to issue tin-coated bronze farthings in 1613, and three main types were minted – the last being a slightly larger copper farthing without the tin coating. The first halfpenny was introduced in 1672 by Charles II (1660-1685). Charles II issued some copper halfpennies and farthings in 1672 for a single year but issued farthings again in 1873. The next issue of a farthing was struck in a tin but during 1684 and 1685.

However, in 1694 the Bank of England was established to raise money for King William III’s war against France. The Bank started to issue notes in return for deposits. Therefore, the money supply for the first time began to include paper currency. By 1695 the first fraud took place. The authorities prosecuted Daniel Perrismore for forging sixty £100 notes. This incident caused the Bank of England to introduce a watermark in the paper to prevent such fraud. This was further enhanced by making counterfeiting subjected to the death penalty as a felony resulting in the confiscation of all your wealth and throwing your family out of the street as well. Pictured here, is a protest imitation note. The law was being prosecuted on the mere possession of a forged note. The complaint here was that these one-pound notes were easily forged and innocent people were duped, thereby committing a felony by mere possession. They were being hanged with no proof that they created the forgery – merely that they possessed one. This was creating an incentive not to even accept the notes in transactions.

George I, II, and III all issued copper halfpennies. George III’s halfpennies were dated 1770 to 1772. The economic hard times no doubt contributed to the riots of 1780. After those events, at Newgate Prison in March 1782 a female alleged counterfeiter of halfpennies was hanged. She was then fixed to a stake and burned before the debtor’s door at Newgate prison in London as a further example of not to counterfeit.

In a letter to Lord Hawkesbury on April 14th, 1789, Matthew Boulton, who is considered the Grandfather of modern coinage,  commented

“In the course of my journeys, I observe that I receive upon average two-thirds counterfeit halfpence for change at toll-gates, etc., and I believe the evil is daily increasing, as the spurious money is carried into circulation by the lowest class of manufacturers, who pay with it the principal part of the wages of the poor people they employ”.

Boulton’s contract in 1797 to produce the Cartwheel pennies and twopences, thwarting the counterfeiters, did not extend to producing the halfpenny, though Boulton had expected that it would, and had prepared patterns of the appropriate size and weight in accordance with his ideas on the intrinsic value of copper coins. The reason the government gave for the omission of the denomination from the contract was that a large number of de facto halfpennies (including tokens and fakes) would be driven out of circulation and Boulton would be unable to produce enough coins to meet the demand that would ensue.

To avoid being hung for counterfeiting and burned at the stake, there was a multitude of halfpenny tokens. Many were of a political nature as this one complaining about the cost of bread. The government yielded to the private halfpenny tokens which became the majority of the small change. The overall public demand for legal halfpennies soon forced the government to change its mind, and in 1798 a contract was issued to Boulton for him to produce halfpennies and farthings dated 1799.

Interestingly, it was also at this time when inflation sent the price of copper rising, and consequently, the weight of the coins was reduced slightly, which resulted in them not being as popular as expected. In 1806 a further 427.5 tons of copper was struck into halfpennies by Boulton, but the price of copper had risen again and the weight was even less than the 1799 issue. This time, however, there was no unfavorable reaction from the public, so perhaps the national obsession with “intrinsic value” had run its course.

This was a very curious period where private money dominated the money supply for halfpennies. There are other periods where this has emerged in history primarily due to the shortage of real official money. One of the earliest such periods was during the reign of the Roman Emperor Tiberius (14-37AD).

Tiberius was legendary to be a frugal emperor. His deliberate contraction in creating new money led to the Financial Panic of 33AD. As far as Quantitative Easing, that too was nothing new. Tiberius offered loans INTEREST-FREE, but they had a limitation of three years. This was to prevent people from being forced to sell their estates further depressing land values.

There was a major earthquake in Asia, modern Turkey, and this was so devastating, he issued coins stating they were for the relief of Asia. He also waived all taxes in the region for 5 years – something our modern-day politicians would never dream of.

The lesson from history reveals that at times there emerges the acceptance of private money. During the 1870s, we also see private tokens circulating as money in the United States. Collectors call them the Hard Times Tokens. The very same thing took place during the American Civil War.

During the Great Depression, the shortage of money led to more than 200 cities issuing their own paper currency. As long as everyone in town accepted it, these Depression Scrips enabled people to work and to be paid locally when there was simply not enough federal money to go around.

During the Hyperinflation in Germany of the 1920s, there again we see private currency being printed known as NOTGELD. Therefore, in the end, when the confidence in government declines, society is compelled to return to a barter-based society and that is when we begin to see private forms of money take hold.

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January 6th, 2023

Posted In: Armstrong Economics

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