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From Half Dimes to Nickels
 | By R.W. Julian, Coins Magazine
June 16, 2008 |
Beginning collectors often are confused by the lowly half dime as it is sometimes difficult to believe that we once had a silver five-cent piece. Yet we did, and it was a very useful coin for the common people as it purchased many of the staples of everyday living.
This small coin was first suggested by Thomas Jefferson in 1784 but was not put into law until 1792 when the new federal government created both a mint and coinage. There was a trial striking of half dismes (as this denomination was first spelled) in 1792 but it was not until 1795 that the regular coinage began, using dies of 1794.
Minting was fitful over the next several years and was in fact stopped in October 1805 due to a lack of demand. Too many small Spanish silver coins were circulating in this country during the 1790s and early 1800s for the half dime to be of any real use in the marketplace.
The suspension of 1805 lasted for more than 20 years and it was not until 1828 that Mint officials began to consider striking these coins again. By that time the supply of Spanish silver had begun to dwindle and similar coins issued by Mexico, after independence from Spain, were sometimes viewed with suspicion by the general public.
In July 1829 coinage did resume and the issues gradually grew in size over the next few years. During the 1840s the half dime began to be more widely used than in the 1830s but at the end of the 1840s a disruption of the monetary system resulted in silver coins being bought up by bullion dealers and shipped to Europe for melting. By 1851 few were to be seen in the marketplace.
All of this was to change in the spring of 1853 when a new law took effect. By lowering the weights of the silver coins by about six percent, the government was able to put silver into circulation that was not bought up by bullion dealers.
The new silver coinage was marked by arrows at the date, a practice which continued through 1855. During this time half dimes were struck by the millions at the Philadelphia and New Orleans mints. More than 13 million came from the Philadelphia Mint in 1853 alone.
Heavy mintages of silver coins from 1853-1855 essentially solved the coin shortage but the Philadelphia Mint continued to strike large numbers of such coins, the half dime not being an exception. During 1856 and 1857, for example, Philadelphia presses churned out more than 12 million additional half dimes, for which there was no real public demand.
The reason for this odd surplus of coinage came from the views of Mint Director James Ross Snowden. The law of 1853, in order to make certain that too many silver coins did not clog the arteries of commerce, stipulated that minor silver coins could be paid out only for gold coins. Snowden felt that this congressional edict unduly slighted the Philadelphia Mint and proceeded to ignore the law.
Although the mints were supposed to pay out silver only for gold, Snowden circumvented this rule by distributing such coins for silver at a rate above the going market price. (However, there was no loss to the Mint or public.) This effectively forced up the price of silver and Snowden was thus subsidizing the silver industry as well as striking far too many silver coins for the marketplace.
By early 1858 complaints from angry merchants and banks were beginning to arrive at the Treasury in ever-increasing numbers. Treasury officials looked into the complaints and Treasury Secretary Howell Cobb brought the matter to the attention of President James Buchanan. The two agreed that the complaints were valid and Cobb issued an order to Snowden to follow the law by paying out silver coins only for gold.
As result of the Treasury ruling, there was a dramatic fall in the number of half dimes struck during 1858 and in 1859 only 340,000 pieces were made. There was a recovery of sorts at Philadelphia in 1860, with about 800,000 produced, while New Orleans continued simply to meet Southern demand for the half dime.
The year 1860 proved something of a watershed for the half dime as it was the last year of peace before the outbreak of the Civil War in April 1861. In an effort in the spring of 1861 to keep small silver coins in daily use, the government ordered a massive increase in striking when compared to 1859-1860. During all of 1861 some 3.4 million half dimes were put into the marketplace while 1862 would see a further 1.5 million.
The 1862 half dime coinage would have been much heavier except that mintage abruptly slowed down to a crawl in the summer of 1862. The preceding December had seen the sudden hoarding of gold coins by the public and silver's turn came in June 1862. The half dime would never again circulate in large quantities in the United States.
In California the situation was entirely different. Due to the distance which separated the West coast from the well-populated areas in the Midwest and East, gold and silver coins continued to be used by the public on a daily basis. Prices were higher in California than in the rest of the country, however, and half dimes had not been struck at San Francisco before the opening of the Civil War.
As time went on the lack of small change began to be felt and in 1863, at the request of San Francisco Mint officials, permission was granted by Mint Director James Pollock in Philadelphia for half dimes to be struck. About 100,000 were coined each year, enough to meet local demand.
One rumor, which may or may not be true, was that such coins were sometimes used as buttons on fancy dresses, this being a style of the 1860s in California. Whatever the use to which these coins were put, today the San Francisco half dimes of the 1860s are not all that difficult to obtain for a collection.
On the other hand, Philadelphia mintages after 1862 were very close to non-existent. In 1867, for example, only 8,000 half dimes were made, primarily for use in paying off the odd amounts of gold deposits. Many of the half dimes, and other silver coins for that matter, made after 1862 were melted for their bullion content. One year (1864) saw an abnormally high 48,000 half dimes from Philadelphia but today non-proofs of this issue are very rare as most of the coins were melted long ago.
What then did the public use in the marketplace after the silver coinage was hoarded? The government responded to this crisis by printing large numbers of Fractional Notes, ranging in value from three to 50 cents. They were issued with little regard for counterfeiting and did not even carry serial numbers. Forgers had a field day with these issues during the Civil War and afterward.
The first five-cent notes saw the light of day in September 1862 and had been hurriedly prepared. The motif, however, was easily understood by all as it was just a five-cent postage stamp. These notes did yeoman service during the war but ran into political trouble after the end of the conflict. In the meantime, however, other forces were at work.
As noted above, gold and silver coins had been hoarded in the Eastern states by the summer of 1862, leaving the lowly copper-nickel cent as the only coin in circulation. The intrinsic value of the cent was low enough that mint officials felt that there would be a plentiful supply of them for public use. Oddly enough, however, in the fall of 1862 the citizenry starting hoarding these coins as well and by the summer of 1863 very few federal cents were to be seen anywhere.
The void in coined cents was soon taken up by the well-known Civil War Tokens, which were produced by the millions for private firms. These were of copper or bronze and the intrinsic value was so low that they easily passed for a cent among the public. These substitute cents hardly solved the coin shortage but at least helped.
Mint Director James Pollock constantly pushed for a new cent piece to be made of bronze, thus avoiding the costly nickel which had caused the hoarding. He also suggested a two-cent piece of the same alloy. In April 1864 Congress finally agreed with him, abolishing the copper-nickel cent alloy in the process.
There was only one working nickel mine in the United States at that time and it was owned by Joseph Wharton, a man with considerable political influence. The latter was not all that pleased at losing lucrative contracts for his metal and asked his supporters to persuade Congress to again use nickel in the coinage. In 1865 he succeeded when the legislators created a three-cent coin of copper-nickel. Although political pork for Wharton, the coin was actually well received by the public and large numbers were struck in 1865 and 1866.
Wharton was not satisfied with the amount of metal being sold for the three-cent piece and began agitating for a five-cent coin from the same alloy. The progress for this new coin was slow until a political fire storm erupted in Congress which aided Wharton immeasurably.
It was the Treasury Department's practice to change the designs of the fractional paper currency from time to time simply to stay a little ahead of the counterfeiters. In 1864 the National Currency Bureau (forerunner of the modern Bureau of Engraving and Printing) was ordered to prepare a five-cent note with the head of Clark. The Treasury intended this to be an honor for William Clark (of Lewis and Clark fame) but the superintendent of the Currency Bureau was Spencer Clark and he decided that it meant him!
Just when the Spencer Clark five-cent notes were first printed is not clear but it was probably by the middle of February 1866. One of the notes came to the attention of Pennsylvania congressman Russell Thayer, who made an issue of it on the floor of Congress in early March. He denounced the use of Spencer Clark's portrait and introduced legislation to ban the use of living portraits on currency.
The Thayer bill was somewhat controversial because other government officials, such as Treasury Secretary Fessenden, had appeared on the Fractional Notes. However, Fessenden was well liked, whereas Spencer Clark had numerous enemies, generally with good cause. In due course Thayer prevailed and his bill was passed in early April. A few weeks later Congress also decreed that the Treasury could not print Fractional Notes of less than 10 cents in value, deliberately limiting public use of the Spencer Clark five-cent issue.
All of the above came at the same time that Wharton and his congressional allies were pushing his copper-nickel five-cent piece. The uproar of the Clark portrait provided additional support for the new coin and it was in fact approved on May 16, 1866.
Several pattern pieces were executed at the Philadelphia Mint, including one with a portrait of Washington, but in the end a shield obverse was chosen. Coinage of the new coin began in mid-June 1866 and it proved to be immensely popular. Not only did the public want more coins but the larger value (five cents) meant that less small coins had to be used in obtaining the necessities of life.
The reverse was innovative for the time. Thirteen stars were separated by rays but some citizens at the time saw the stars and bars of the Confederacy in disguised form, certainly not the intent of the designer, chief engraver James B. Longacre.
When first issued in 1857 the copper-nickel cent had acquired the nickname of "nickel," but this was transferred to the three-cent piece in 1865. A year later the public promptly began calling the new copper-nickel five-cent coin a "nickel" and the name has stuck to this very day.
Mintage of nickels in 1866 was very heavy and in just over six months nearly 15 million pieces were struck. The coinage may have been a boon to the public but it certainly was not to the Mint.
The alloy of 25 percent nickel and 75 percent copper was very hard on the dies and they frequently cracked after only a few thousand pieces had been made. The engraving department had difficulties in keeping up with the demand, forcing chief coiner A. Loudon Snowden to use the damaged dies longer than should have been the case. For this reason the nickels of 1866 are often found with die cracks.
Snowden and engraver James B. Longacre had several discussions about the problem and decided that perhaps it was the rays weakening the reverse dies. Patterns were struck without the rays and it was decided that this was the way to go.
The Treasury was then asked to approve this relatively minor change and did so in January 1867. The new reverse dies were put into use at the beginning of February but the improvement in die life was not all that great, perhaps only a few thousand pieces per pair.
While all of this was going on, the half dime continued to be struck at San Francisco for use in that area while limited numbers were still made at Philadelphia. Silver coins were actually used in the Eastern and Midwestern marketplaces on rare occasion but at their values in paper. If, for example, a paper dollar was worth 75 cents in silver, the public would sometimes use such coins at one-third additional value. Three half dimes would then pass for 20 cents paper value at stores.
Beginning in 1870 Congress began to study the entire coinage question. At length, in February 1873, a revised coinage law was signed by President Ulysses S. Grant and it abolished the silver half dime once and for all. The "nickel" was here to stay.
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