THE MANY COINS OF 1873 and Ed Reiter Article about pocket change and how it has changed over the years.
1st American Reserve finds Ed Reiter's article about change very apropos for the problems America is facing during our current pandemic and change shortage.
The “small change” jingling in Americans’ pockets today is small in more ways than one. There are only four denominations in the current lineup of circulating U.S. coins – the smallest number in the nation’s coinage history. And two of those coins – the cent and nickel – are in danger of being discontinued, which would leave just dimes and quarters to supplement paper money in U.S. commerce.
Things were much different in 1873 – the high-water mark for diverse U.S. coinage. In that single year, the United States Mint issued coins meant for circulation in 13 different denominations ranging from the cent through the $20 gold piece. In addition to the Indian Head cent and Liberty Head double eagle, these included the two-cent piece, two different kinds of three-cent pieces (silver and copper-nickel), two different five-cent pieces (silver and copper-nickel); the silver dime, quarter, half dollar and dollar; the gold dollar; and four other gold coins in denominations of $2.50, $3, $5 and $10.
That’s a total of 16 different circulating coins – four times as many as today. All were minted 1873 – some of them for the last time.
This dizzying array of “change” – enough to fill the pockets of Paul Bunyan – resulted from a combination of historical events, economic conditions and political intrigue. And the 16 different coins on this list don’t even include the Trade dollar, a coin introduced that year for use in foreign trade, rather than domestic commerce.
The original lineup specified in the Coinage Act of 1792, which established the U.S. Mint and the nation’s coinage system, called for 10 different denominations: the pure copper half cent and cent; the silver half dime, dime, quarter, half dollar and dollar; and three different gold coins – the eagle ($10 gold piece), half eagle ($5 gold piece) and quarter eagle ($2.50 gold piece).
Though all 10 denominations were part of the coinage lineup, only the cent and half cent were issued in 1793, the first year of production at the Philadelphia Mint, the nation’s only mint until 1838. The dollar, half dollar and half dime made their debuts in 1794, followed by the eagle and half eagle in 1795 – and by 1796, when the quarter eagle, quarter dollar and dime first appeared, all 10 denominations were available to merchants and consumers.
No new denominations were added for more than half a century, though the original 10 all underwent design modifications during that period and some were issued sporadically, even going decades between appearances.
The California Gold Rush led directly to two new denominations. As a torrent of newly mined gold began pouring eastward, the need arose for coinage to serve as both an outlet for the metal and also a convenient medium of exchange for the miners and local merchants in California.
On March 3, 1849, Congress passed legislation authorizing both the gold dollar and the double eagle – the diminutive dollar as an affordable form of spending money and the hefty double eagle as a way to soak up large quantities of gold in compact form. In this way, the nation’s smallest and largest regular-issue gold coins emerged from Washington’s womb as fraternal twins. Gold dollars were issued in 1849, but double eagles didn’t reach the public until 1850, though one and perhaps two 1849 double eagles exist and would bring spectacular sums if offered for sale.
In a real sense, the Gold Rush was indirectly responsible for two other new denominations: the silver three-cent piece (or “trime”) and the $3 gold piece. The oddly valued $3 gold piece was yet another vehicle for utilizing the vast new supply of California gold, and to some extent the trime was the modest opening shot in a years-long battle to discourage the hoarding of silver coins triggered by the flood of new gold.
Some suggest that both coins also shared a more mundane purpose: providing convenient ways to purchase first-class postage stamps, which cost three cents apiece at the time. The trime was perfect for buying a single stamp, while the $3 gold piece was just right for buying 100 stamps.
At that time, the United States had a bimetallic monetary system in which the value of gold and silver – and gold and silver coins – depended on the relative scarcity and prices of the metals themselves. Under normal circumstances, that ratio was approximately 16 to 1 prior to the Gold Rush, so one ounce of gold had roughly the same value as 16 ounces of silver.
The huge new stores of gold depressed the price of that metal in response to the law of supply and demand. Silver, which had had no corresponding infusion of newly mined metal, rose in value in relationship to gold. And seeing this, astute individuals started hoarding silver coins, assuming correctly that they would soon be worth more as metal than as money.
Unlike other silver U.S. coins, which had a silver content of 90 percent, the trime had only 75 percent during its first three years, 1851-53. Starting in 1854, its fineness was increased to 90 percent, but that was offset by a slight reduction in its weight. The lower initial fineness reduced the coin’s intrinsic value and deterred speculators from hoarding it. But its small, thin size – likened by many to that of a fish scale – made it increasingly unpopular after a hopeful beginning. The $3 gold piece also fell out of favor not long after its first appearance in 1854.
The trime was the first step toward curbing the intrinsic value of U.S. coinage. Under the Coinage Act of 1853, the precious-metal content of all other silver coins except the silver dollar was lowered enough to make further hoarding impractical. Then, four years later, the cent was debased far more dramatically.
The Founding Fathers felt that skeptical Americans would demand full value in their coins – including a cent’s worth of copper, or very close to it, in the cent. By the 1850s, confidence in the federal government had allayed such concern and this – combined with complaints about the unwieldy size of the aptly named large cent – emboldened the U.S. Treasury to discontinue the bulky coin in 1857 and replace it with a much smaller cent with much less intrinsic value: the copper-nickel Flying Eagle cent. After just two years of circulation, that trailblazer gave way to the Indian Head cent. The half cent, too, was discontinued in 1857 – but unlike the large cent, it was not replaced and this lowest-ever U.S. coin denomination was relegated permanently to the scrap heap,
In 1859, the rich Comstock Lode was discovered in Nevada and soon began disgorging tons of new silver. This restored the relative equilibrium between gold and silver that had existed prior to the California Gold Rush. But that became moot two years later, when the Civil War began and Americans started hoarding gold and silver coins – and eventually even the base-metal cents.
The Civil War spawned a wave of new base-metal coins. In 1864, to counteract the hoarding of copper-nickel cents, the Mint reduced the thickness and weight of the “penny” and changed its composition to the less expensive bronze. At the same time, it introduced a bronze two-cent piece – and together, these coins established a beachhead in circulation.
At that point, political intrigue came into play. Joseph Wharton, owner of a Pennsylvania nickel mine that had been supplying nickel for the copper-nickel cents, was stung by the loss of this lucrative account and lobbied influential friends in Congress to authorize a new coin containing nickel. The result was the nickel three-cent piece, which was first issued in 1865 – not as a replacement for the silver three-cent piece, but rather as a co-existing bedfellow.
The nickel three-cent piece had barely hit the streets when Wharton came back for a second helping of congressional largesse. This time, he wanted a nickel five-cent piece – and once again, Congress acquiesced. The new coin, the Shield nickel, made its debut in 1866, launching a series of coins known as “nickels” that continues to this day, more than 150 years later, with virtually the same specifications, including its copper-nickel composition.
As the 1870s dawned, the Treasury faced nagging problems involving the nation’s coinage. The lineup of circulating coins was a crazy quilt including both traditional and odd denominations, duplications and coins that were seeing little or no use in daily commerce. Although the Civil War had ended five years earlier, some coins – especially those made of silver – were still in short supply because so many had been shipped to Europe, Canada and Mexico during the four-year conflict to cover war-related debts and relatively few had returned.
Legislation was drafted in 1870 to eliminate duplication in two denominations and discontinue coins that were seeing limited use. For various reasons, though, Congress didn’t act on the matter until three years later, when it passed the comprehensive Coinage Act of 1873. That law essentially updated the Coinage Act of 1792 by consolidating it with all the revisions already made through the years.
The two-cent piece, silver three-cent piece, half dime and silver dollar were dropped from the coinage lineup because much of the public wasn’t using them. That reduced the number of denominations to a somewhat more svelte 12: the base-metal cent, nickel three-cent piece and nickel five-cent piece; the silver dime, quarter and half dollar; and six gold coins – the gold dollar, $3 gold piece; the eagle; and the quarter eagle, half eagle and double eagle.
The two-cent piece, trime and half dime were hardly missed and little mourned. But dropping the silver dollar had far-reaching ramifications, which weren’t generally noticed at the time – perhaps because the new Trade dollar created the illusion that the Mint would still be making silver dollars. It would, of course, since the Trade dollar also was a large silver coin and actually contained more of that metal than the standard silver dollar – but the Mint would be making them only for use abroad.
Though little used in commerce, the standard silver dollar had another significant role: For much of the nation’s early history, Americans could bring silver bullion directly to the Mint and receive silver coinage of equivalent value in exchange. The Coinage Act of 1853 limited such redemption to silver dollars – and by ending production of standard silver dollars, the Coinage Act of 1873 ended such redemption completely, forcing miners and others possessing bulk silver to sell it to refiners for less money.
Essentially, this ended bimetallism and put the nation on a de facto gold standard – though this wasn’t formalized until 1900, when the Gold Standard Act was enacted.
Once they became fully aware of the situation, outraged silver miners and like-minded Americans began referring to the coinage legislation not as the Coinage Act of 1873, but rather as the Crime of 1873.
The Trade dollar soon fizzled out and was unceremoniously dumped in 1878, though proof coins for collectors were struck for a few more years. In an effort to appease the silver interests, Congress revived the standard silver dollar in 1878 – and from then through 1921, hundreds of millions of Morgan dollars poured into the channels of commerce, where they were used extensively only in Western states. Nonetheless, gold reigned supreme until 1933, when President Franklin D. Roosevelt and his accommodating Congress took the nation off the gold standard.
In retrospect, 1873 was one of the most pivotal years in U.S. coinage history. And though the results were decidedly mixed, it can truly be said that Americans living then had a sprawling smorgasbord of coins from which to pick and choose – not the midnight snack they have today.
Trackbacks
No Trackbacks
Comments
Display comments as Linear | Threaded