Right, why is it illegal to deface coins?  One of the reasons was 
because of 'clipping' which was prevalent in during Tudor and Stuart 
England (actually clipping was also illegal during the Romans and on 
wards but as I understand it the main law we have now was passed during 
the Tudor and Stuarts - sorry digressing).

Right, clipping was where a small amount of the edge of a coin was 
clipped off and put to one side.

Up until recently (mid 1700s if I'm right but don't shout at me), coins 
were made of semi-precious and precious metals.  So, if you clipped a 
small amount from each coin you could end up with some metal which was 
commercially resellable.

Clippers got greedy and would clip off too much of the metal at one time 
so that that the coin was severely mis-shaped and as the value of the 
coin was in the metal - it was now no longer worth the face value.

This and the eventual fall in metal prices moved the UK to change the 
metal that it used for it's coins to base metal as a silver sixpence was 
then worth more than sixpence and either they devalued the coinage or 
they reduced the size of the coin to meet the value which meant we would 
have had really small coins.

So, that's one of the reasons why it was illegal to deface a coin.

If I remember rightly, clipping was punishable initially by removal or 
breaking of fingers, then briefly by removal of hand, then 
transportation or death.  It was taken that seriously.

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