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my biggest contention is that he approached you to USE your coins ... it's just too much of a grey area for myself personally.
This is my problem as well, you don't abuse the power of authority to even ask something like this for materials that may have value to your students. I remember in elementary school a teacher had a record palyer and it broke from normal use before she was going to need it for a class thing that came with a record to be played along with it. She asked anyone if they had one at home to borrow, and being the only one that did, I just said "NO. I don't have one." Even at that age I knew that trust must be earned and there was no guarantee that it would be returned after a day of exposure to that kind of jungle it would even work after.
There is 2 things a teacher on any level should do if they need materials for the course, provide them or ask EACH student to bring their own. Obviously you cant ask every student to bring in Buffs. To provide them their-self the teacher should requisition the materials in advance from the school, or go buy them their self!
There is just the respect factor in the whole thing. You are a teacher with a paying full time job, and you want to try something new and cannot provide the materials yourself or convince the school to put it in the budget?
40 nickels to a roll, that is enough for a whole class right? $2 cost of materials.
the most offensive part of this is the abuse factor by this teacher:
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He just walked up to me and asked me if he could borrow 20 silver coins
Hey why doesn't he just ask to borrow the class members credit cards too while he is at it! If he really needed silver coins that badly, everyone knows about
ebay, so he should have been going on and bidding on some for what he could afford to do the thing with.
Teacher: Hey student I know you have some precious metal, can I borrow it form you to use chemicals on it?

How are you going to instill respect for others in the classroom if the teacher doesn't even show respect to the students.
The who line above just rubs me the wrong way.