Though the early United States was theoretically on a bimetallic standard – with both gold and silver legal tender – the actual use of gold and silver coinage fluctuated with the prices of those metals. The California Gold Rush of the late 1840s brought a great deal of gold onto the market. This increased the price of silver relative to gold, and much American silver coinage was exported or melted during this period.
As a result, there was a dearth of circulating small denomination coinage. Copper one cent coins were not legal tender and were unpopular in commerce, especially in the South and West. Old Spanish silver coinage – one real and half real coins, specifically – were often accepted as replacements for the dime and half dime. Spanish dollars were also known as “pieces of eight” because they were eight-real coins. The one real and half real coin were close in value to twelve and six cents, respectively (even if they were accepted in commerce at slightly lower values). These amounts would be easy to exchange for three-cent silver pieces.
In 1850, legislation was introduced by New York Senator Daniel Dickinson for a three-cent silver coin, but the bill languished until the following year. During this time, the Mint prepared pattern coins in preparation for an eventual production run.
Two designs were prepared: one by Franklin Peale, the Mint’s Chief Coiner, and the other by James B. Longacre, the Mint’s Chief Engraver. The two men had an ongoing rivalry. Even though Mint Director Robert M. Patterson was considered an ally of Peale, Longacre’s design was selected shortly before authorizing legislation was signed by President Millard Fillmore in March 1851. The legislation removed provisions for the exchange of Spanish silver, so the primary use of the three-cent coin was for postage – the price of a stamp was simultaneously reduced from five cents to three.
Unlike other American silver coins, which were 90% silver and 10% copper, the three-cent silver would be 75% silver and 25% copper. It was the first US coin to contain less silver than its face value. The lowered silver purity of the three-cent silver piece would ensure that it circulated and would not be melted down. Because of its low silver content, the authorizing legislation capped its legal tender value at thirty cents.
In 1852, Congress reduced the silver content of other US coins to help keep them in circulation and drive the old Spanish coinage out of circulation. At the same time, the three-cent silver piece became .900 fine silver (like other US coins) at the expense of some thickness; the 1854 and later coins (Type 2/3) actually contain slightly less silver than the earlier coins (Type 1).
With other small denomination silver coins back in circulation, the three-cent silver piece saw less widespread use. It was hoarded along with other silver coins during the economic chaos of the Civil War. Mintages were very low after 1862. The coin was finally abolished in the Coinage Act of 1873 which effectively put the country on a gold standard. The series is not popular among collectors.