A while back I stumbled across this article at British newspaper The Guardian‘s website. It’s a filler piece written by a young man named Richard Morris. In it, he discusses the “five best” and “five worst” things about the year he spent studying at the University of West Georgia in the United States. One of Morris’ “worst things” was American coinage:
I’m not very good with numbers, so maybe this didn’t help me, but I still cannot understand American coins after living here for 10 months. One of the coins which is larger actually has a lower value than a coin which is smaller (and of the same colour), go figure. “Dimes” and “nickels,” still mean nothing to me.
Of course, to many of you the real mystery might be why anyone would travel 4,270 miles to go to West Georgia! SERIOUSLY: THOUSANDS OF UNIVERSITIES IN THE UNITED STATES, AND YOU CHOSE THAT ONE?? But that’s neither here nor there. And it is true that many foreign visitors have trouble with American coins. So let’s take a look at the history of American coinage and see if we can make sense of it all.
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Modern American coins go back 221 years, to the Coinage Act of 1792. The act authorized the construction of the US Mint in Philadelphia, the very first building erected by the federal government under the new Constitution. The act also made the dollar the national currency of the United States, finally abolishing the hodgepodge of British and Spanish coins that had been used before. The act also defined several types of coin, which I’ll summarize below:
THE MILL
A mill is a thousandth of a dollar, or, to put it another way, a tenth of a cent. The name comes from the Latin millesimum, which means “thousandth part”. The funny thing is, even in 1792 mills were useless as a unit of currency. One couldn’t buy anything with a mill coin, so the Mint never bothered to make any. A few states made mill coins out of cheap materials like tin or paper for the purpose of paying taxes, but for the most part, mill coins have never existed.
But just because mills don’t exist as coins doesn’t mean they don’t exist as units of currency. In most American locales, property taxes are calculated using mills. Counties assess the value of each property in their jurisdiction and apply a millage rate to calculate the amount of tax a landowner owes. For example, a county might assess a piece of property as being worth $250,000. If the tax rate is 5 mills, then the homeowner owes $1,250 in taxes ($250,000 x .005 = $1,250). Mills are also used in a couple of industries: electric power is usually measured internally in mills, and stock brokers often charge their clients in mills rather than percentages.
But outside property taxes, the average American sees the mills most often with gasoline prices. In every US state, gas prices have nine mills tacked on the end, so that gas might cost $3.109 per US gallon. Why this is so is a mystery. Some say it came about thanks to a 1933 increase in the gas tax from 1¢ to 1.5¢ per gallon. Others say it’s just “charm pricing”, which is to offer an item for $1.99 instead of $2.00, because our brains process the former as being significantly cheaper than the latter. Still others believe a more likely story: that back when gasoline emerged as a consumer item in the early 1900s, it was sold in such small amounts and at such low prices that mills actually mattered.
But gas prices reveal something else about American culture: the universal dislike of mills. With the exception of property taxes, most every American will discuss such small units of currency as fractions of a cent instead of mills. No one ever thinks of a gallon of gas costing $3.10 and 9 mills… it’s $3.10 and 9/10 of a cent. And this might be because of trading stamps.
For almost a century, retailers across the United States offered trading stamps with every purchase. You’d save the stamps and redeem them for things like clocks, toasters and lamps. You may even remember the “54-40 and Fight” episode of The Brady Bunch, in which the kids agree to pool their saved trading stamp books, but chaos breaks out when the boys want to use the stamps to get a “boy’s item” (a row boat) while the girls want to use them for a “girl’s item” (a sewing machine).
Of course, the stamps weren’t free. Companies like Sperry & Hutchinson charged retailers to join their programs, and charged for each roll of stamps the retailer ordered. And retailers, not surprisingly, passed these costs on to consumers as higher prices. In 1904, the state of New York passed a law requiring trading stamp companies to offer cash rebates in addition to housewares and sporting goods. Companies like S&H placed a value of one mill on each stamp, meaning that one could trade a book of 1,000 stamps for a dollar. But here’s the thing: almost no one took them up on the offer, because it was almost always a better deal to redeem stamps for goods instead of cash.
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