A Primer on United States Coins, Part 2

Crossposted at Dailykos.com

This time we will talk a little more history, then about the alloys used in coins, past and present. Last time we discussed the problem with using both gold and silver for coins, and numerous attempts were taken to address that.

In concert with these changes, and partially because of them, the alloys in coins have changed over the years. In 1964, the last business strikes of silver coins were produced, and in 1965 all US business strike became tokens, worth less than their face value. Some collector strikes are still produced in precious metals.

In June of 1834 an act was passed that reduced the weight of standard gold, in an attempt to alleviate the problem of gold coin leaving the country mentioned last time. This boosted the amount of coins remaining in the United States, which helped commerce.

Another act was passed in early 1837 that redefined and clarified the entire operation of the Mint system, including alloy changes. The coinage system became much more stable and the gold eagle ($10) was resumed in 1838 and much larger quantities of silver dollars were minted beginning in 1840. Things went along fairly smoothly until gold was discovered in California in 1848.

The large amounts of gold coming onto the market again shifted the relative values of gold and silver, now making silver coins worth more than the same face value in gold. Then all of the silver disappeared from commerce channels, the opposite to what had happened last time, but a problem nevertheless.

In 1851 the postage rate was increased to 3 cents, and and act authorizing the minting of a 3 cent silver coin was passed, but with a twist: until then gold and silver coins were intended to be worth their face value (obviously the intention was not often realized), but the new 3 cent piece was designed to be worth less in silver than in face value. That coin stayed in circulation.

That worked so well that in 1853 all silver coins except the dollar were reduced in weight, making them “subsidiary” to gold. These stayed in circulation, too. To mark these coins so that speculators would leave them alone, arrows were added on either side of the date to identify them. This was the first significant move towards token coinage.

Also, remember that the Mint was required to accept silver and return an equal value of silver coin to the owner. Since the value of the coins was now greater than the value to the silver, the Act of 1853 eliminated that and authorized the Mint to buy silver, just like it already did copper. Finally, a stable circulation of coins was attained.

In 1857 another Act was passed that eliminated the half cent and reduced the size of the large cent to near what it is now. Because of the political influence of nickel producers, the cent became an alloy of 88% copper and 12% nickel. These “nicks”, as they were called, were produced in huge quantities (for the day) and thus began the disdain for the cent by merchants, since there were so many of them and they were worth so little. The Spanish silver dollar was also no longer recognized as legal tender.

Then the Civil War dried up the coin supply, since the Union printed so many paper dollars (because of the bright green ink of the backs of them, there were called “greenbacks”) and quickly deteriorated in value. Even the subsidiary silver coins were worth more than an equal face value of greenbacks, so they went out of circulation due to hoarding.

An Act was passed in 1864 that reduced the weight and size of the cent (and the alloy) to modern specifications. It also created a bronze 2 cent piece. Most significantly, it stated that these two coins were legal tender up to ten times face value, making them in a gray zone between subsidiary and standard. To this day many parties will not accept cents in payment for sums over a dollar or two. The 2 cent piece is noteworthy as being the first coin bearing “In God We Trust”, partially because of the religious fervor associated with the Civil War and the Abolition movement. So, the US had 1, 2, and 3 cent coins circulating at the same time.

The government had printed a bunch of 3 cent notes, and the nickel lobby successfully won the creation of a nickel-copper 3 cent coin (the same alloy as our modern 5 cent piece). Now we had 1, 2, and two different 3 cent pieces. The silver one was discontinued in 1873, the nickel-copper ones in 1889.

A nickel-copper 5 cent piece was also authorized in 1866, and was minted along with the silver one until the silver one was discontinued in 1873. The Comstock Lode in Nevada was discovered in this same era, and a new branch mint was established in Carson City to mint the silver. It closed in 1893 as the silver played out.

The 1870′s are significant because that era is the transition zone between early US coins and modern ones. More will be said in a future installment, in there is interest.

Now, lets us shift gears and discuss the alloys used in coins.

What makes a good coin alloy? Back in the old days, the first consideration was the alloy have intrinsic value. Obviously, this is not a factor, actually it is an anti-factor these days. The second factor is appearance. The alloy has to make an acceptable specimen. Copper, silver, and gold all do. The third factor is corrosion resistance. Those metals fill the bill there, too. They do not rust and last for years. Of the three, gold is most resistant, silver the next, and then copper. The forth factor is good wearing properties. Pure metals are not very good, at least of those three, so copper was alloyed with silver and gold to harden then. For example, pure gold is easily cut with a knife, but coin gold can only be scraped.

Originally, half cents and cents were pure copper (well, as pure as could be had at the time). Half cents weighed 6.74 grams, and cents weighed twice as much, 13.48 grams. A modern quarter weighs 5.67 grams and a half dollar 11.34 grams for comparison. Why did they use pure copper when I just told you that it was soft? Who knows! Brass and bronze were well known at the time. As far as I know, that is lost in history. One speculation that I will make is that half cents and cents were subsidiary coins (worth more in face value than in metal), so wear was not as much as a factor as with precious metal coins.

Early silver coins were 1485/1664 silver, or 892.43 fine. This is close to Sterling silver, at 925 fine. The remainder of each is copper. Why not pure silver? It is too soft and wears very quickly. Adding the little bit of copper does not change the color much, but significantly hardens the metal. The Act of 1837 changed the alloy to 900 fine, and that remains the definition of coin silver in the US to this day.

Early gold coins were 11/12, or 22 karat gold, which works out to 916.67 fine. Same as with silver, adding some copper hardens the metal without changing the color much. The Act of 1837 also changed the alloy to 90% gold, 10% copper.

After the half cent and the large cent were discontinued, the new cent was made of 88% copper and 12% nickel. These were almost golden in color, much more pale than newer cents. Later the formula was changed to bronze (95% copper, 3% tin, 2% zinc) and they wore well and have the appearance of modern cents. That formulation continued until 1962, when the tin was eliminated and the zinc increased to 5%, except for 1943 when the way effort caused the coin to be made from zinc-coated (galvanized) steel, and 1944 to 1946 when they were the same brass formula used after 1962, from salvaged shell casings. In 1982 the “alloy” was replaced with coins having a 99.2% zinc core electroplated with copper. These coins are fine until the copper plating is compromised, then they corrode rapidly in moist environments. I look for the cent to pass from production in the foreseeable future.

After the silver 5 cent piece passed, is was replaced with the 75% copper / 25% nickel alloy, which is what is used to this day. It is wear resistant, attractive, and was, until recently, cheap. However the cost of the metals now exceeds the value of the coin. They have not disappeared from circulation because a new, strict law provides fairly severe penalties for melting down US coins for metal.

This alloy is also the one used for the cladding on dimes, quarters, and half dollars at present. Over a core of pure copper, thin sheets are bonded to each side. Originally, the bonding was done by explosives. My research has not turned up the current process, but I strongly suspect that a hot rolling operation is now done, since explosive bonding is slow and expensive.

I had better cut this here, before it gets even longer. As always, questions, comments, and corrections are welcome.

Warmest regards,

Doc

Tags: Coins, Copper, Currency, Dies, Gold, History, Hubs, Intrinsic value, Learning, Money, Silver, Teaching, Token