In addition to eviscerating hundreds of thousands of lives, the Civil War devastated the monetary supply of the United States as fearful Americans hoarded gold and silver coins for the value of their metals. So many coins were taken out of circulation that Congress responded by authorizing the production of fractional currency notes, some with denominations as low as three cents. The paper money, however, proved difficult to manage, and Congress soon turned to a less expensive metal for minting its coins—nickel.
America’s first “nickels” were actually pennies. Starting in 1859, the United States Mint used a nickel and copper blend to produce its one-cent pieces, and in 1865 Congress authorized the federal government to use a similar composition for its new three-cent coin.
The following year, Congress began to debate whether to mint a nickel-based five-cent coin even though the United States already had a five-cent coin in circulation—in fact, it had been minting one for seven decades. The silver “half-disme” (pronounced “half-dime” from an Old French word meaning a “tenth”) was the first coin produced by the federal government, and according to the United States Mint, the metal for the initial pieces struck in 1795 may have come directly from George and Martha Washington’s melted silverware.
The small silver coins were difficult enough to keep track of in good times, let alone when they began to vanish from circulation. As American industrialist Joseph Wharton argued, by using cheaper nickel and copper, the new five-cent coins could be bigger than the half-dismes. Wharton doggedly lobbied his many friends in Congress to begin striking a second five-cent coin made from nickel.
Of course, the businessman had just a bit of a vested interest in the issue considering that he held a virtual monopoly on the production of nickel in the United States. He had taken over a nickel mine outside of Lancaster, Pennsylvania, in 1863, and refined the metal at his American Nickel Works in Camden, New Jersey. Wharton’s friends in Congress not only agreed to the proposal on May 16, 1866, but even increased the weight of the new five-cent coin so that it required even more nickel. Not surprisingly, Wharton ultimately made plenty of coin from the new coin, so much so that in 1881 he donated money to establish the first business school in the United States—the Wharton School at the University of Pennsylvania.
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Several designs were proposed for the original nickel, including one with a bust of Abraham Lincoln that was rejected out of concern that it wouldn’t be particularly popular in the South. The approved design—with a Union shield surrounded by laurel wreaths on the front and a large numeral “5” surrounded by 13 stars and bands of rays on the back—hardly received praise itself. The August 1866 edition of the American Journal of Numismatics referred to it as “the ugliest of all known coins,” which was actually a kinder assessment than that rendered by a reader in the following month’s issue who wrote, “The motto ‘In God we Trust’ is very opportune, for the inventor of this coin may rest assured that the devil will never forgive him.” For some, the stars and bars on the “Shield Nickel” evoked the Confederate “Stars and Bars” flag, and the intricate design caused production problems as the hard metal damaged the dies used in the minting process. Only months after the nickel’s introduction, the rays were removed.
For seven years, the federal government minted two five-cent coins before finally retiring the half-disme in 1873. A decade later, the nickel received a makeover as the goddess of Liberty appeared on the front of the coin. Counterfeiters, in particular, liked the new design since it closely resembled that of the gold five-dollar coin and the word “cents” appeared nowhere on the piece. By gold-plating the “cents-less” coins, entrepreneurial thieves could pass the nickels off as five-dollar pieces. Once the fraud came to the government’s attention, it added the word “cents” on the coin’s back.
The next overhaul of the nickel came in 1913 when James Earle Fraser, a student of famed sculptor Augustus Saint-Gaudens who grew up on the prairie, designed a coin that celebrated the American West. For the front, Fraser sculpted the head of a Native American, which he said was a composite based on models that included Chief Iron Tail of the Lakota Sioux and Chief Two Moons of the Cheyenne. On the back of the “Buffalo Nickel” was a mighty bison. Although Fraser grew up where the buffalo roamed, the model for the great beast of the West was reportedly “Black Diamond,” the largest bison in captivity who grazed in more urban surroundings at New York’s Central Park Zoo.
As the bicentennial of Thomas Jefferson’s birth approached, the Treasury Department decided to honor him on the nickel. It staged a public competition for the coin’s redesign, and German immigrant Felix Schlag bested 390 artists to win the competition and the $1,000 prize in 1938. Schlag based his left-facing profile of the third president in period coat and wig on the marble bust sculpted by Frenchman Jean-Antoine Houdon. The reverse featured Jefferson’s home, Monticello.
To commemorate the bicentennial of both the Louisiana Purchase and the Lewis and Clark Expedition, the nickel underwent its first facelift in 66 years in 2004 when two new designs were used on the back as part of the United States Mint’s Westward Journey series of nickels. The buffalo also returned to the coin’s reverse in a 2005 edition. New images of Jefferson also appeared, and the current coin features a new front designed by Jamie Franki based on a Rembrandt Peale portrait. The coin depicts Jefferson facing forward and marks the first time a presidential bust on a circulating American coin has not been shown in profile.
In spite of their names, nickels today are only 25 percent nickel, with the remaining 75 percent copper. The story of the nickel has come full circle from the days when Americans hoarded silver and gold coins for the value of their metals. Today, due to the prices of nickel and copper, the U.S. Government Accountability Office reports that it costs eight cents to produce every five-cent piece. Don’t think about melting your hoarded nickels down for their metals, though. That practice has been illegal since 2006.