This week in history delves deep into the history of American currency, with special focus on the nickel, America’s lost coin.
May 16, 1866
Coins have become somewhat neglected these past few decades. I don’t need to tell you that, of course.
It used to be that you couldn’t find a quarter or dime just lying about anywhere – children at least would pocket them and if not them then some thrifty senior citizen walking along. Now, even a handful of quarters elicit barely a “gee, thanks,” from a kid.
Abject neglect is one thing, but some coins have even come under threat of a full blown pogrom.
For years economists and everyday people have been braying for the blood of the penny. It’s true that the penny costs more to produce than its actual value (1.8 cents). But, to be fair, the penny isn’t alone.
In a field of overlooked coins, perhaps the one buried deepest is the nickel.
It wasn’t long ago that the nickel stood supreme among its peers as the coin of choice. A nickel could get you a Coke, play a song on a juke box, buy fists-full of candy and so much more. There were even stores full of things priced at a nickel!
Now, the nickel is so scorned that no one seems to notice that it actually costs twice as much to produce than a dime (9.4 cents for a nickel and less than five for a dime). If the penny haters were to find out, they might turn their torches and pitchforks in a different direction.
To be fair, the nickel has never been a straightforward coin. In fact, our first nickel was worth just three cents (rather than five today), was made with a large portion of copper and came about because of one man’s hubris and another’s guile.
We take it for granted that the denominations of our currency have remained relatively stable for decades now. Try handing someone a two-dollar bill at McDonald’s and I guarantee you they will hesitate in accepting it (if they do at all).
But during the American Civil War, minted currency was scarce and fakes were a dime a dozen (pun intended).
Not only did the Confederate States of America start printing its own paper currency, but federal currency became so limited that Congress allowed for stamps to be used for small transactions.
We forget how critical a constant stream of coins and paper money are to our economy. Imagine going back to that McDonald’s and, after handing over that two dollar bill, (and after an argument with the cashier over said bill), the teenager behind the counter didn’t have coins in his drawer to make change. Not only wouldn’t you be walking away with your McChicken, but the whole economy would come to a screeching halt (especially in an age before credit and debit cards and checks!).
A similar problem happened throughout the duration of the Civil War, causing further stress in towns and cities that were already buckling under the strain of the conflict. It was for this reason that issuing new coins and other forms of currency was placed on Congress’s already sizable “to-do” list following the war.
For over half a century by that time America had already been using a coin for the five cent denomination. This small silver coin was called a half disme (pronounced “dime”). The half disme, however, frequently got lost in circulation as a result of people hording them.
People held onto these coins because the federal government started debasing the value by adding less silver in the mix (making the earlier coins with higher silver contentment more valuable). This, coupled with the price of silver itself increasing following the glut on the gold market after the Gold Rush, made for a huge scarcity of the coin during the war.
Amid the debate over what to do with the coinage system, the industrialist Joseph Wharton entered with an idea that could fix the problem. Why not add more nickel into the mix of all coins?
It shouldn’t surprise us that Wharton was heavily invested in the nickel production industry. Through political maneuverings, Wharton gained a victory with the minting of the first “nickel” for the three-cent denomination.
These three-cent nickels began production in 1865 and continued for a few decades before being overshadowed by their successor, the five-cent nickel.
Our very own five-cent nickel came into being on this day in 1866 when Congress passed the bill for its creation.
Wharton’s political lobbying alone was not responsible for the passing of the bill, although he should receive a gold (or nickel) star for his timing. You see, just a few months earlier, the mint had printed a five-cent paper note in hopes of solving the half disme issue. It didn’t go over very well.
Then, as now, Americans were very particular about the designs chosen for their coins.
In the same year that the five-cent nickel was unveiled, a new paper currency was printed for the five-cent denomination as well.
At the time, the gentleman in charge of the National Currency Bureau was a white-bearded gent named Spencer Clark. When the first five-cent notes slid off the press people were shocked to see the face of a man who looked suspiciously similar to Mr. Clark at the center of the new note. Chaos ensued.
Congress debated on the floor of the house what to do with Clark for his unbelievable gall. How dare this upstart bureaucrat put his own face on the bill, without even going through the time-honored tradition of bribing and otherwise “convincing” congressional representatives to vote on it!
Amid the hubbub, Wharton found his opening and our nickel was born.
For a few years following its first minting, the five-cent nickel still competed with the five-cent half disme, until it was finally discontinued in the early 1870s. From that moment onwards, the five-cent nickel reigned supreme. So integral to our lives did this nickel become that it was featured in several of our favorite quips.
“Don’t go picking up any wooden nickels.”
“If I had a nickel for every time …”
“Here I sit, brokenhearted, paid a nickel and only …” Well, you get the idea.
Antone Pierucci is the former curator of the Lake County Museum and a freelance writer whose work has been featured in such magazines as Archaeology and Wild West as well as regional California newspapers.
