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The State Grants No Quarter to Freedom

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Tags Free MarketsWorld HistoryInterventionismMonetary Theory

02/25/2010Christopher P. Casey
"To the August Roman Hercules"

To promote his own divinity, the Roman emperor Commodus issued coins with his image in the lion-skin headdress of Hercules on one side, and the bow, club, and quiver of Hercules on the reverse. So that the message would not be lost on anyone, an inscription on the reverse dedicated the coin "to the August Roman Hercules."1

History has a proxy in coinage, whether it's deliberately conveying the fantasies of rulers or subtly reflecting the prevailing sentiments of a people. If symbolism, inscriptions, and metallurgical content convey meanings, what story is told by an examination of the United States' coinage?


Portraits are obvious symbols. Today, former presidents adorn almost all US coins, but this is a relatively new phenomenon. As the accompanying table illustrates, not until 1909 was a president (Lincoln) displayed. Interestingly, 23 years passed before another president was so anointed. From then the trend accelerated. By 1948, all coinage displayed a former president or other statesman (Benjamin Franklin). The dollar coin did not then exist. It was reintroduced in 1971 — and was promptly assigned to President Eisenhower.


Prior to the imperial trend of glorifying former heads of state, the obverse of coins portrayed the imagery of liberty and the likenesses of Native Americans. This contrasted starkly with European coinage featuring princes and potentates. US coinage was graced by the beautiful (Saint Gaudens double eagles) and the austere (buffalo nickels); and each conveyed the ideas of peace, earned pride, and adventure. The uniqueness of US coins matched the distinctiveness of its people and their freedom. Idolatry remained a foreign concept.

A related trend may be developing on the reverse sides of coins. Historically, this domain was claimed by images of eagles. The nickel and the penny, in 1938 and 1959, respectively, forsook such images. Each now displayed a building: Monticello on the nickel and the Lincoln Memorial on the penny.2 Never before had a building been displayed on a US coin. These images reinforce the power and mythology of the obverse-sided presidents, Jefferson and Lincoln.3 This trend may continue and accelerate in the future.


Inscriptions reveal a similar insidious trend. With free-market coinage, inscriptions may exist to distinguish the issuer and value (a product of fineness and overall weight). However, state-issued money also requires denomination (due to its value being determined by tale, or count, instead of metallurgical content) and generally includes a mint date. In addition to these functional inscriptions, US coinage has also frequently included the following words:

  • "Liberty"
  • "E Pluribus Unum"4
  • "In God We Trust"

Although these inscriptions are now ubiquitous on US coinage, this has not been the case throughout US history. The following graph displays the frequency of the inscriptions "Liberty" and "E Pluribus Unum".5, 6


After originally appearing on all US coinage, the frequency of "Liberty" fell off dramatically in 1808. The inscription appeared on 50–70% of US coinage until 1914, when its frequency reached 80%. A few years later, its appearance reached 100% of US coinage, where it remains to this day.

Why did "Liberty" seemingly fall out of favor, or at least lose its overwhelming popularity, until 1913? The reduction in frequency of appearance may have mirrored a change in the primary interpretation of its definition. Upon the immediate secession from England, "liberty" conveyed both individualistic as well as nationalistic meanings. That is, "liberty" meant an individual's freedom from an oppressive government as well as the new American government's freedom from England. However, by 1809, "liberty" lost the immediate urgency of its nationalistic meaning.

If individual liberty was then the primary definition of the word, why the resurgence of the inscription by 1913, just when the liberties of Americans began the their steep decline? The resurgence of terms extolling and immortalizing liberty can be best explained by Murray Rothbard in Anatomy of the State:

Through the centuries men have formed concepts designed to check and limit the exercise of State rule; and, one after another, the State, using its intellectual allies, has been able to transform these concepts into intellectual rubber stamps of legitimacy and virtue to attach to its decrees and actions. Originally, in Western Europe, the concept of divine sovereignty held that the kings may rule only according to divine law; the kings turned the concept into a rubber stamp of divine approval for any of the kings' actions.… Similarly with more specific doctrines: the "natural rights" of the individual enshrined in John Locke and the Bill of Rights, became a statist "right to a job"; utilitarianism turned from arguments for liberty to arguments against resisting the State's invasions of liberty, etc.7

And form followed substance. Just as checks and limits became rubber stamps, so terms and phrases were usurped to cloak state actions. Notable examples within American history include the labels "federalist" and "liberal."

"E Pluribus Unum" originally appeared in 1796. In 1807 it jumped to 43%. But this trend reversed as the inscription fell from 50% in 1837 to just 11% a year later. By 1839, no US coinage contained the inscription until 1872.

Why the sharp reduction in frequency? With tariff controversies fueling nullification theory and talk of secession, the motto "from many, one" would have been a contentious statement. And even after force ended nullification theory in the War of Southern Secession, the wounds were too fresh for the federal government to coin the motto.8

By the time of President Theodore Roosevelt's reign, the supremacy of the federal government was undisputed and far less offensive. As such, "E Pluribus Unum" steadily increased in frequency from 30% in 1906 to 70% by 1909. By 1934, all US coinage contained the motto.

In contrast to "Liberty" and "E Pluribus Unum," the frequency of appearance for the inscription "In God We Trust" displayed no volatility and followed a consistent increase that tracked the American people's degradation in liberty. First appearing in 1864 as a result of that year's Coinage Act, its appearance reached 100% of all US coins by 1938. Presidents Lincoln and Roosevelt held office during those key years. They oversaw the modern claim to the divine right of kings.

Metallurgical Content

To avoid abrasion, coins typically consist of an alloy with the precious-metal component constituting approximately 90% of the coin's overall weight. Any decrease in this percentage represents monetary inflation (as measured by tale), or stated alternatively, a shift of wealth to the mint (the state) and the early users of the recently debased coins.

Historically, whenever a state controls the money supply, the debasement of coinage forces nondebased coins out of the system. This phenomena is commonly stated as Gresham's law, "bad money drives out good money."

In truth, Gresham's law is merely a simple application of the principle of arbitrage. Murray Rothbard succinctly exposed the true nature of Gresham's law in The Case for a 100 Percent Gold Dollar:

The standard argument against private coinage is that the minting business operates by a mysterious law of its own — Gresham's Law — where "bad money drives out good," in contrast to other areas of competition, where the good product drives out the bad. But Mises has brilliantly shown that this formulation of Gresham's Law is a misinterpretation, and that the Law is a subdivision of the usual effects of price control by government: in this case, the government's artificial fixing of an exchange rate between two or more moneys creates a shortage of the artificially under-valued money and a surplus of the over-valued money. Gresham's Law is therefore a law of government intervention rather than one of the free market.9

An understanding of Gresham's law leads to at least two conclusions. First, to avoid or minimize the market's response to debasement, the state must debase (inflate) all or nearly all coinage. Second, debasing the highest-value coins produces the largest windfall for the state.

Historically, the quarter, half, single and double eagles represented the highest values of US coinage (equivalent in nominal terms to $2.50, $5, $10, and $20). Debasing these coins, but not the lower denominations (the large cent, or penny, through the dollar coin), creates an arbitrage opportunity as the eagles would be exchanged for lower denominations. That is, the overall metallic value of eagles would be exchanged for the higher overall metallic value of lower-denominated coins.

Faced with such obstacles, the US Mint pursued a different tactic: in April 1933, Presidential Executive Order 6102 effectively eliminated the entire class of eagles. Rather than circumventing or solving the dilemma, the state simply abolished it. Subsequently, the US Mint was free to debase lower-value coinage en masse.

And so it began. Like all effective state intervention, the origins of debasement were at first mild and seemingly innocuous. Given the nickel's relatively large mass but low value (in tale), initial debasement targeted this coin. In 1866, nickels were debased from 90% silver to a mix of 75% copper and 25% nickel. All other coins retained their relatively standard 90% silver component.10

En masse debasement occurred with the Coinage Act of 1965, which eliminated silver from the circulating dimes and quarter dollars and diminished the silver content of the half dollar from 90% to 40%. From then on, all dimes and quarters consisted of 75% copper and 25% nickel.11

Consider this example of how little the value of the new metallurgical content compared with the stated denomination of the coin: After 1965, both the nickel and the dime consisted of the same relative proportion of base metals. As the dime's mass is exactly one half that of the nickel, despite having twice the stated value, the underlying value of its base metals cannot exceed 25% of a its stated value of 10 cents. Otherwise, an arbitrage opportunity would develop leading to the disappearance of nickels.12 Simply put, US coinage was debased by over 75%. Rulers from antiquity, laboring to achieve debasement by clipping coins, would be envious.


The story told by the debasement, degradation in symbolism, and changes in the inscriptions of US coinage is one of decline in prestige, prosperity, and purpose. US coinage mutated from being a beautiful and sound medium of exchange into the state's cheap change. In many ways, the story is a remake of the decline of the Roman Empire. The United States of America is simply newer to the scene. The lessons provided by the story of US coinage apply to all state-issued money.

Thomas Paine's eloquent and insightful comment on monarchy is equally apt for state-issued money: "'Tis a form … which the word of God bears testimony against, and blood will attend it" (the "blood" in the case of state-issued money having been provided wholesale via business cycles, inflation, and their geopolitical ramifications).13, 14, 15

A remarkable footnote in Anatomy of the State asserts:

The State always makes sure that it seizes and retains certain crucial "command posts" of the economy and society.… In the modern economy, money is the critical command post.16

State-issued money, as the "critical command post," serves to subtly reinforce the authority of the state, insidiously plunder the savings and purchasing power of its subjects, and massively manipulate the economy.

No current US coin conveys the ideas of peace, earned pride, and adventure — or freedom. As it treats its subjects, so it mints its money: the state grants no quarter to freedom.

  • 1. Gibbon, Edward. The History of the Decline and Fall of the Roman Empire.
  • 2. In 2009, for the bicentennial of Lincoln's birth, the reverse side of the penny was changed to reflect four separate designs. Interestingly, three of the four designs reflect buildings: Lincoln's apocryphal boyhood log cabin, the Illinois state- capitol building in Springfield, Illinois, and the half-completed U S Capitol Dome.
  • 3. This remains true despite the fact that Thomas Jefferson was a true libertarian. In fact, he has often been co-opted to serve as a justification for state action. For proof, see the cleverly edited writings chosen as inscriptions for the Jefferson Memorial (which, rather than serving as a monument to his life and legacy, is a desecration of his name). Accordingly, the imagery of Monticello is a cleverly expressed reinforcement of the state's interpretation of Jefferson.
  • 4. Latin for "out of many, one."
  • 5. Travers, Scott A. The Insider's Guide to U.S. Coin Values 2009. (New York, New York: Bantam Dell, 2008).
  • 6. Frequency has been measured as a percentage of the various types (e.g., dime, quarter, etc.) of coins minted in each year without regard to relative circulation or usage.
  • 7. Rothbard, Murray. Anatomy of the State. (Auburn, Alabama: Ludwig Von Mises Institute, 2009), pp. 30– 31.
  • 8. The term "War of Southern Secession" seems far more apt that some of the other names to describe this war, including Civil War, War Between the States, War of Rebellion, War for Southern Independence, War of Northern Aggression, and Freedom War. Of these alternative names, "Civil War" is by far the most inaccurate as each side to the war did not fight over control of the same central government.
  • 9. Rothbard, Murray. The Case for a 100 Percent Gold Dollar. (Auburn, Alabama: Mises Institute, 15.
  • 10. Large cents experienced a similar debasement, albeit on a slightly different timetable. Initially composed of 100% copper from 1793 to 1856, pennies were (for most years) slightly reduced to a 95% copper and 5% zinc blend until 1982 when they became 97.5% zinc with a patina of 2.5% copper.
  • 11. From 2000 (with the Sacagawea coin) to date, the dollar has consisted of 88.5% copper with the remainder composed of miscellaneous base metals.
  • 12. Perhaps, however, the U S Mint should have debased coinage with an even less valuable metal. In 2007, due to the rising price of copper and zinc, the United States banned the melting and mass exportation of pennies and nickels.
  • 13. Paine, Thomas. Common Sense.
  • 14. As for the "word of God" arguing against State-issued money, is interesting to speculate what misery could have been spared Western civilization had theologians better grasped its negative implications. The Bible reports Jesus as stating, "Render unto Caesar the things that are Caesar's, and unto God the things that are God's." Many interpretations have been offered for this quote, but unfortunately it was never accepted as a rebuke to State-issued money.
  • 15. The "geopolitical ramifications" are beyond the scope of this article, but surely would include, inter alia, the rise of Nazism and the salvation and later ascendancy of Mao's communist insurgency — in short, scores of millions of deaths.
  • 16. Anatomy, pp . 54.

Contact Christopher P. Casey

Christopher P. Casey, CFA®, CPA is a Managing Director at WindRock Wealth Management.

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