In Idaho Territory in the 1860s and 1870s, gold dust, extracted from sand and gravel by the use of water, was a common medium of exchange, and it was trusted more than U.S. paper currency.

Thomas Donaldson, who held several important government positions in Idaho from 1869, when he arrived in Boise as register of the U.S. Land Office, devotes a section of his delightful book "Idaho of Yesterday" to money and its fluctuation.

He notes that in 1868 the Idaho Supreme Court tried to stabilize the territory's monetary system, but in spite of it, national currency, commonly called "green backs," continued to be unstable, and apt to have varying values daily.

Donaldson recalled: "Gold and silver were called 'coin.' Gold dust was also a legal tender and was receivable at $10 and $16 the ounce. The Owyhee dust, owing to its debasement with silver, was receivable at the lower price. Bullion was taken at par. Currency was taken at 80, 78, 76, or 75 cents on the dollar as against gold coin. ... From 1863 to 1868, taxes were collectable in gold coin or its equivalent."

If you find this confusing, think what it must have been like for merchants and their customers. Donaldson describes how the process of handling gold dust worked: "Our bankers, merchants, hotel keepers, and traders always kept at hand a pair of small brass balances, or scales, with necessary weights and brass or copper pans. ... These balances were known as dust scales and were for weighing gold dust, the gleanings of placer mining. The scales usually rested upon a piece of carpet. I saw one carpet strip, not more than fifteen inches square, yield nearly one hundred dollars from dust which had fallen or blown from the pans in the course of a year. Customers usually presented their dust in buckskin bags 6 or 8 inches long by 2 in diameter, with a drawstring at one end. These sacks were made in California and sold as a regular commodity.

"The buyer or weigher turned the dust into the pans of the scales and then blew smartly on the mass to weed out all valueless light stuff. At the same time, he juggled the pans so as to free all parts of the mass. Dishonest buyers were very apt to blow much harder than was warranted in order to scatter bits of gold into the waste heap and so cheat the seller."

There were many ways to cheat when dealing in gold dust, and enterprising crooks knew than all, from outright counterfeiting to mixing iron and lead particles with the real thing.

Mike Dakis, who researched the subject in depth in the 1960s, wrote "The prevalence of bogus gold dust eventually caused merchants to raise the price of their goods by twenty-five to fifty percent. Some saloon owners compensated for adulterated dust by providing their scales with heavier weights. The honest purchaser, who refused to adulterate his gold dust, saw the value of his earnings rapidly dwindle. In addition to the possibility of being cheated by false weights, he was forced to purchase goods at an elevated price."

Fake or adulterated gold dust was so common in the 1860s that it was called simply "bogus." Legend has it that Bogus Basin takes it name from a band of counterfeiters who operated from there.

To read the complete article, see:Idaho History: Gold dust was once a common medium of exchange(www.idahostatesman.com/2012/02/19/2000927/gold-dust
-was-once-a-common-medium.html)