The Daily Mail's Robert Hardman goes behind the scenes at Britain's Royal Mint, the organisation that produces the coins for the Great British pound () and pence (p).

The Royal Mint is the world's oldest financial institution. Not only does it produce 1.3 BILLION British coins a year, from the 1p coint to the 2 coin, but it also produces 2.6 billion foreign coins, including the dreaded Euro because the French and Belgians cannot produce enough of the coins for themselves.

The first "mints" in Britain were established at the time of King Alfred the Great, but there were many of them throughout the land. There became a single Royal Mint during the reign of King Henry II (1154-1189). He brought all the mints together as one under pain of castration!

Until as recently as the 1960s, Britain's coins were produced on Tower Hill next to the Tower of London,, though nowadays the Royal Mint is situated in a modern establishment in Wales.

Absolutely minted! Robert Hardman escapes the credit crunch to explore the Royal Mint

By Robert Hardman
03rd October 2008
Daily Mail

You could win the biggest jackpot on the fattest fruit machine in the land and never see a payout on this scale.

This contraption is pinging forth 20 pence pieces at the rate of 725 a minute - or 8,700 an hour. That's even more than the average City spiv earned in the good old days.

In fact, if you kept it running round the clock and switched over to pound coins, this machine would pump out nearly 400 million in a year.

Making a mint: Robert Hardman's visit turned out to be a money spinner

And this is just one of 31 identical machines rattling away next to each other in a heavily-guarded fortress in South Wales.

Money doesn't grow on trees. It grows here in the Coining Press Room of the Royal Mint - 24,000 tons of it every year.

And with hard cash back in fashion as savings go back under the mattress, business is booming at the world's oldest financial institution.

This is a place where none of the 738 staff is allowed to bring a single piece of money into work and normal vocabulary does not apply. They don't say 'heads' or 'tails' round here. They talk about 'obverses' and 'reverses'.

Coins do not become old or damaged but 'garbled'. And the whole complex is patrolled by the Ministry of Defence Police.

Nothing is allowed off the site from the moment it arrives (as a lorryload of metal) until the moment it leaves for a bank.

An entire range of industrial skills must be housed on one 30-acre plot, from furnace workers to engravers touching up the Queen's hairdo.

It is not Fort Knox but it is still a major security operation simply to progress beyond reception.

Entering the storage area, I imagine that this is what life must have looked like at the court of King Midas.

There are bags of money, sacks of money, wooden boxes of money and great cardboard crates of money.

There is a warehouse full of money piled as high as a five-storey house.

Because there is not actually anywhere to sit down, I rest myself on a pile of newly-minted silvery coins, all wrapped in plastic - about a ton of them.

Suddenly, I have the urge to lie down. We hear of people being 'made of money', 'awash with money' and so on.

I wonder what it's like to sleep on a bed of money. It's actually quite comfortable; firm, obviously, but a lot nicer than, say, a pebble beach.

There is a label on the side of my 'mattress' which tells me that this is a pallet of 100,000 coins destined for a Middle Eastern economy (I am not allowed to say which one). The coins are the local equivalent of a 5p piece, so this little heap is worth about 5,000.

The Royal Mint does not just produce the 1.3billion new coins - from the penny to the 2 piece - which Britain requires every year to keep the cash economy ticking over.

It makes a staggering 2.6 billion coins for 50 other countries all over the world, too. It even makes the dreaded euro, for Heaven's sake, because the French and Belgians cannot produce enough of the single currency themselves.

In addition to the big circulation stuff, the Mint's most profitable business is producing special editions and bullion coins for collectors - and now, increasingly, for those who would rather invest 100 in a gold coin than in the Bradford & Bingley.

Crisis: The abdication of King Edward VIII in 1936 because of the Wallis Simpson affair caused a crisis at the Royal Mint

Another department cranks out medals and decorations for royal investitures. A sudden need for Iraq and Afghanistan campaign medals is pushing up production there, too.

With the economic downturn, however, comes an upturn in crime. Last week, it was announced that forgeries now account for an alarming 2 per cent of the 1.5 billion 1 coins in circulation.

Down here in South Wales, this lot can spot a dud at a glance and are working on ways to flush the bad stuff out of the system.

There can be few institutions which touch on the lives of quite so many with such little noise.

The Bank of England - which, along with its Scottish cousins, produces our bank notes - is under 24-hour siege from financiers and the media.

But the coin brigade just carry on quietly behind their barbed wire, their watch towers and their concrete walls on the edge of the old town of Llantrisant.

'We like to say we are "making money for everyone" and no mint in the world exports like us,' says Andrew Stafford, chief executive.

His customers stretch from Iceland to New Zealand and his biggest foreign market right now happens to be Egypt.

Andrew answers to a single shareholder, the Treasury, and carries the title of Deputy Master of the Royal Mint. By modern convention, the Master of the Royal Mint is the Chancellor of the Exchequer, not that anyone has seen Alistair Darling round here.

But it was a Labour Chancellor who turned the Royal Mint into what it is today.

The Mint's royal origins date back to Alfred the Great. But there were many different mints (the word stems from a Latin word for 'money') until Henry II reduced them down to a single body, on pain of castration.

Made in Britain: The Royal Mint even churns out Euros as the French and Belgians cannot produce enough

In 1279, Edward I moved this mint to a permanent home between the inner and outer walls of the Tower of London and there it stayed for more than 500 years.

Such was the prestige and power of the place that Isaac Newton was appointed Master of the Royal Mint in 1699 (his knighthood came later and was actually conferred for his stewardship of the Mint, not for being the greatest scientist in British history).

In 1812 it moved out of the Tower to a very grand new building on Tower Hill where it remained, right through the Blitz and on into the Sixties. But decimalisation was looming.

The shilling and the sixpence were on the way out. An entirely new coinage was required and the Labour Chancellor of the day, Jim Callaghan, decided that a much larger Royal Mint was going to be needed.

Relocation to the regions was the order of the day and a 30-acre site was established in South Wales where former miners were retrained to make money. In 1968, the first coins started rattling off the production line and, today, there are second-generation workers here.

To mark 40 years in Wales, the Mint has just put a new set of reverses ('tails' to the rest of us) on the back of every single British coin. Look at any new coins and you will see a jigsaw-style chunk of the Royal Arms on the back.

Every coin, though, starts its life in the Engraving Department, where I expect to meet a collection of half-blind old men in white coats designing unicorns.

Instead, I find a small team of art graduates led by the Chief Engraver, Matt Bonaccorsi, who is only 35 and wears jeans and an earring.

His team work on around 500 designs a year. Today, one of them is busy engraving Edward II for a new silver coin for the collectors' market.

Another is preparing an engraving of Lord Trenchard, father of the Royal Air Force, which will be stamped on a special 5 RAF commemorative coin for St Helena (even though it has no airport or planes).

Every proposed coin must go before an eminent body of experts and aesthetes called the Royal Mint Advisory Committee before being approved by the Treasury and the Queen herself.

The whole process usually takes nine months. 'We think of it on the same time scale as having a baby,' explains Graham Dyer, retired curator of the Royal Mint Museum.

The actual manufacturing process only takes a couple of weeks. Trucks deliver metal to an enormous shed called the Melting, Rolling and Blanking Unit where four furnaces melt it all down to the requisite recipe.

For a 5 or 10p piece, you need 75per cent copper and 25 per cent nickel. For a pound, you chuck zinc into the mix. The result is then flattened into long strips and rolled up like Sellotape.

It is quite extraordinary to stand next to a warm 2.5 ton coil of metal that will shortly become 200,000 in loose change.

The rolls are fed into 'blanking' machines which chop out plain metal discs with no printing on them.

These are then passed to another plant for the 'annealing and pickling' process which softens and shines the coins before they reach the Press Room.

Here, they are poured - in their tens of thousands - into machines which can be set to 'strike' any sort of currency.

Moments later, these plain discs are stamped on the front, back and side and then, hey presto, they pop forth into the world as legal tender.

Then they are packed into bags and boxes for shipment to banks around Britain and the world. Until they get there, none of these coins will have been touched by human hand.

Every time I handle any, I have to throw them in a bin - after which they are smelted down and recycled. Talk about chucking money away...

It is utterly compelling to watch all this going on, just as it has gone on in various forms for more than 1,000 years. In the main office building, Graham Dyer shows me round the museum, home to one of the finest coin collections in the world.

It is all in various unmarked wooden chests so that a would-be thief would have no idea where to find anything.

Graham and a handful of trusted employees know what's what, of course, and he suddenly produces a tray of George V pennies.

In among them is a 1933 penny, one of the rarest coins in the world. No pennies were due to be produced that year, as there were deemed to be enough already in circulation.

But the Mint agreed to make a few for a handful of public bodies which wanted to follow the tradition of placing a new penny in the foundation stone of a new building.

No one knows how many were made and, for years afterwards, the public lived in hope of finding a 1933 penny in their change.

Today, fewer than ten are known to exist anywhere. Graham lets me hold this one. It feels strange to handle something so ordinary but which, for generations, was akin to the Loch Ness Monster.

Another unmarked drawer is home to the unused coinage of Edward VIII's brief reign.

These coins were almost ready for mass production when the King abdicated and the Mint had to work flat out to get George VI into people's pockets.

'The Government wanted the Abdication erased from memory,' says Graham, 'and the quickest way to do that was to get the new King on to the coins as soon as possible.'

We tend to forget the way that the contents of a purse or pocket underline the bond between the Crown and the people.

The Queen certainly takes her coinage very seriously; she has had her effigy updated four times during her reign. It is also the Royal Mint which produces the Great Seal with which she gives her 'seal' of approval to legislation.

In another corner of this site, I find a workshop full of MBEs and other medals which the Monarch will soon be pinning on a queue of worthy recipients.

I am glad to say that this is no mass production line. A team of cheerful Welshmen are sitting in a row with drills and rivets, attaching every last mount and clasp to every last medal by hand.

Before I leave, I ask for a crash course in spotting fake pound coins. Paul Morgan, product development manager, produces a good one and a bad one and asks me to tell the difference.

I haven't a clue until Paul advises me to study the colour. The fake is darker and almost stained.

Then he points out that the design and the year do not match (different years should have specific designs; for example, the Forth Bridge is only on the 2004 coin).

Different years also have different inscriptions on the side. The 'm' on 'Decus et Tutamen' ('an ornament and a safeguard' - Virgil) looks as if it has been scratched on by a child. In fact, there are many clues for the knowing eye.

But how many of us have the time to scrutinise Latin inscriptions when we are handed our change? Do we not need a new pound in our pockets?

Andrew Stafford says that there are secret techniques in place to find the forgeries, not least in vending machines.

'We are managing the situation, but changing coins is a decision for the Treasury, not us,' he explains. 'But if you are unsure about a coin, take it to a bank.'

Here, I might disagree. If you take it to a bank and it's a dud, the bank has a duty to confiscate it. I would rather leave the balance of judgment to, say, a parking meter.

The Royal Mint could certainly do without an order for 1.5 billion brand new 1 coins, because it is about to get even busier.

The 2012 Olympics mean a bumper payday because of the millions of people around the world who collect Olympic coins.

The Mint will pump out limited editions every few months for the next four years and it will earn a small fortune as a result.

How much we all actually pay for our day-to-day coins is always a secret, however. Under the ancient system of 'seignorage', the Government makes a profit from us all because our coins cost less to produce than the value on the front of them. That amount, though, is strictly classified.

What I do discover, however, is that at this very moment there are 28billion coins rattling around Britain.

Despite our love of credit cards and notes, that still works out at half-a-million tons of loose change in our pockets. And if you add up the whole lot, it comes to a grand total of just over 3.5 billion.

Not exactly petty cash.