Privately Issued Coins
Throughout American history, citizens have preferred to use federally-issued money over currency issued by foreign or private entities. Since the 1790s, the U.S. government has a reputation for issuing coins of unquestionable purity, weight and metallic composition. As a result its coins have always been universally accepted and trusted.
However, there have been periods in American history where there was a shortage of federally-issued coins. During periods of rapid population expansion—especially into new territories—there have been severe coinage shortages. In these situations, private individuals and firms filled the monetary gap with their own forms of currency.
Perhaps the earliest examples of this phenomenon took place in the 1830s. When gold was discovered in the hills of North Carolina and Georgia, local assayers decided to create their own coins rather than ship the yellow metal to the U.S. Mint in Philadelphia. The federal government would eventually respond by establishing official branch mint facilities in Charlotte NC and Dahlonega GA, but before then, private-issued coins filled the void.
Similar circumstances existed in the remote territories of Oregon, Utah and California in the late 1840s. Gold was being discovered on the West Coast, but the closest federal Mint was in New Orleans! For a settler in Utah or Oregon, travelling a couple hundred miles was an epic challenge—let alone a couple thousand miles. The notion of shipping gold cross-country seemed highly impractical, so private firms began issuing their own coins in California, Oregon and Utah. This practice continued until the San Francisco Mint began operations in 1854.
When the Civil War began, no area of the country was immune from coin shortages. The turmoil pushed the prices of gold, silver and copper into record territory. This meant that many coins had a higher melt value than face value. Coins immediately vanished from circulation and U.S. Mint production levels tumbled. Eventually the government started making coins in bronze and nickel to help address the coin shortage, but before then, privately-issued coins served as a temporary solution.
Many Civil War-era merchants began issuing bronze tokens as a stand-in for federal coinage. These tokens had the same general appearance as one-cent coins, but would display the name of a prominent merchant or store. They were especially common in large cities like Philadelphia. While they did not have the universal acceptance of a federally-issued face value coin, they were the next best thing and saw extensive use from 1861-1865. Today they make for fascinating and affordable collectibles; many can be had for under $100 per token.