The five cent denomination is one of the oldest (if not the oldest) of all American coins. It has been produced since 1792 and has long been a staple of our country’s currency. What some people may not realize, however, is that the five cent piece was not always a “nickel.” In fact, this denomination was first made out of silver, then concurrently struck in both nickel and silver for a brief period of time. This article described how the five cent piece’s composition shifted metals in the 1860s and 1870s.
The Civil War had a deep effect on United States numismatics—and the five cent nickel is just one example. During this wartime period, most Americans hoarded coins and refused to part with them. Citizens were terrified during this wartime period and clung to hard money. Furthermore, the melt value of silver and gold often eclipsed the face value of coins; this resulted in the melting and/or export of many US coins.
The federal government responded with two solutions: fractional currency and coins made of base metals. Fractional currency, as the name implies, was paper money issued in denominations less than one dollar. During the Civil War, the Bureau of Printing and Engraving issued notes in values of 3c, 5c, 10c, 25c and 50c. While the notes circulated to some degree, the average American still preferred to use coins over paper money. This is why the latter solution of base metal coinage proved more successful.
To lower their “melt” value, the US Mint changed the composition of the one cent coin from copper to bronze in 1864. They also began releasing a bronze two cent coin, which was rather successful initially. Encouraged by these successes, the Mint then began reevaluating the three cent coin, which has been made exclusively of silver since 1851. A new 25% copper / 75% nickel version of the three cent coin was introduced in 1865 and Americans responded positively.
Realizing that base metals helped restore the 1c, 2c and 3c denominations to everyday circulation, the Mint then looked to do the same with the five cent coin. Rather than phase out the silver half dime altogether, the Mint decided to strike the copper / nickel 5c piece simultaneously with the silver version. Eventually the silver half dime was discontinued in 1873 while the base metal 5c “nickel” remains in production to this day.
The Mint clearly favored the copper / nickel five cent coin; after all, it was cheaper to make and less likely to vanish from circulation. The public, meanwhile, disliked the new coins and did everything possible to avoid them or exchange them for silver. Furthermore, the coins were only legal tender up to certain quantities; consequently large hoards of nickels often traded for a discount to face value! This situation was resolved in 1933, when nickels were made legal tender in any quantity—which remains the case to this day.