One means by which the government can maintain public confidence is to limit the number of coins issued; the number of any particular coin issued bears a somewhat steady relation to the volume of transactions conducted with it at the existing price level. The number of dimes, for example, which are needed is determined by the social and business activities and methods of the community under the prevailing price level. So long as the mint uses discretion and increases the number of these coins only in conformity with the people's needs, the coins will be generally acceptable however high the seigniorage. Excessive or too sudden issues may shake the popular faith in the future general acceptability of these coins and lead either to refusals to accept or to acceptance only at a discount.
It is evident that the government could not control the issues of these coins at a fixed seigniorage if there were free coinage, for free coinage throws the control of the coinage supply into the hands of bullion-holders. Consequently when the United States government gave up bimetallism but continued to coin silver, a new system for regulating silver coinage was adopted. Since 1853, whenever any subsidiary coins have been minted they have been made from bullion bought by the government on the market at the prices prevailing there, the difference between the market value and the coined value constituting the seigniorage.
A second method of maintaining public confidence in high seigniorage coinage is to fix its legal-tender quality. To give the recipient confidence in his ability to get rid of it, it is made legal tender, but to protect the creditor from inconvenience and great loss, the legal tender is limited to certain maximum amounts in any one payment. A third method is to make it by law convertible into, or redeemable in, standard money, and for this purpose to maintain a reserve as evidence of the government's ability and willingness to carry out its promise.
In summary, the characteristics of a subsidiary, token, and fiduciary coinage are high seigniorage, limited issue, limited legal tender, convertibility into standard money, and public confidence in the issuing government.