When a Nickel Wasn’t a Nickel
07.03.08 By Derek Dahlsad
I’ve been amused by the names of American money for quite a while. Of course, we acquired the practice from the British, but it’s what I know, so I’m entitled to be entertained the fact that the dime doesn’t even say what it’s worth on the back. We did better with the penny and the nickel, though — they both list their value instead of their common name, which helps unfamiliar people make change easier. The dime and the penny have their name origins rooted in history, the ‘dime’ has the same root as ‘decimal’, or a tenth part, and the penny has been the name for a copper one-cent coin for centuries. A nickel, however, is named after its manufacturing material, so having “five cents” written underneath Monticello on the reverse is a necessary move to identify the coin’s value. This gulf between value and name makes for an interesting historical sidenote, and we can blame the Civil War for these collectible coins.
Leading up to the Civil War, people foresaw the financial ruin due to the war and began to hoard coins that contained precious metals like silver, gold, and copper. Small-denomination coins had never used much precious metals to begin with, to avoid what we’re seeing today where the metal in a coin is worth more than its face value. However, due to the reduced amount of precious metals in circulation, in 1859 a new penny was minted that was 1/8th nickel. These “Indian Head” cents weren’t the rich, dark bronzey color of a full-copper penny, having a paler, whitish-goldish hue due to the nickel content. Because they were the only coin with a significant nickel content, and to distinguish them from the other ‘penny’ coins, they got the nickname “nickel” or “nick”. The War continued to build, and eventually even nickel became valuable enough as a precious metal that the Mint turned to bronze for pennies in 1864.
The next year in 1865, however, the US Government was still struggling to straighten out its coinage problem. In addition to coins, a variety of fractional currency were used. These were essentially paper versions of the common coins of the time, ranging from dollar-bill sized paper worth a few cents, to using 3-cent postage stamps as currency. Merchants disliked the small-denomination paper because it wore out quickly and was harder to manage in volume compared to pennies and dimes. Nickel was brought to the forefront again, much due to the ‘nickel lobby’ in Congress, this time as part of a three-cent piece. A three-cent silver coin had been minted since 1851, but had encountered the hoarding along with other silver pieces. The three-cent nickel was still mostly copper, but the percentage was now 25% nickel, twice as much as the nickel cent and the same as our current five-cent nickel. These lasted for twenty-five years, until the US Coinage Act of 1890 called for revisions for 
several US coins. It was determined at that time that a three-cent coin was not necessary, so it was removed from the Mint’s circulation list. The coin was recalled and was melted to produce a new coin: a five-cent coin, composed of the same 75% copper - 25% nickel alloy as the three-cent coin. Five-cent nickels had been around since 1866, with the Shield Nickel minted of the same metal as the three-cent nickel, but as of 1890, the only ‘nickel’ coin was the Liberty Nickel.
Since 1890, our coin denominations and format haven’t changed significantly, despite redesigns and new president’s heads. While our Civil War-era friends might not have readily answered ‘five cents’ when asked how much a nickel was worth, the variety of coins during the mid-19th-century has created an abundance of interesting coinage to collect — even if you stick to just nickels.
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Article Tags: coin collecting, nickel, numismatism================
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