Nickel (United States coin)
A nickel is a five-cent coin struck by the United States Mint. Composed of cupronickel, the piece has been issued since 1866. Its diameter is 0.835 inches and its thickness is 0.077 inches. It is the second-lowest face-value physical unit of U.S. currency, after the penny.
The silver half dime, equal to five cents, was issued from 1792 to 1873 before today's cupronickel version. The American Civil War caused economic hardship, driving gold and silver from circulation; in response, in place of low-value coins, the government at first issued paper currency. In 1865, Congress abolished the five-cent fractional currency note after Spencer M. Clark, head of the Currency Bureau, placed his own portrait on the denomination. After the successful introduction of two-cent and three-cent pieces without precious metal, Congress also authorized a five-cent piece consisting of base metal; the Mint began striking this version in 1866. The initial design of the Shield nickel was struck from 1866 until 1883, then was replaced by the Liberty Head nickel. The Buffalo nickel was introduced in 1913 as part of a drive to increase the beauty of American coinage.
The nickel is minted in its modern form as the modification of the Jefferson nickel, which was first introduced in 1938. In 2004 and 2005, special Jefferson nickel designs in honor of the bicentennial of the Lewis and Clark Expedition were issued. In 2006, the Mint reverted to using Jefferson nickel designer Felix Schlag's original reverse, although a new obverse, by Jamie Franki, was substituted.
As of 2024, nickels cost $0.1378 per coin to produce and distribute. The 2024 production of nickels was 112,800,000, resulting in an annual cost to taxpayers of $17.7 million. The current purchasing power of a nickel is also well below that which the last remaining lowest-denomination coin held at the time of the half-cent's elimination in 1857. This has led to proposals to eliminate the nickel along with the penny.
Silver half dime
The silver half disme was one of the denominations prescribed by the Mint Act of 1792; its weight and fineness were set by law. The first pieces under federal authority were half dimes, struck in 1792 in the cellar of John Harper, a saw maker; as the first federal mint was still under construction in Philadelphia, this took place locally at Sixth and Cherry Streets. The dies were engraved by Adam Eckfeldt, who a half-century later recalled that the silver for the half dimes was supplied by President George Washington, and that the 1,500 coins struck from the bullion were given to Washington's Secretary of State, Thomas Jefferson, for distribution to important people, both in the US and overseas. By legend, President Washington supplied silverware from his home, Mount Vernon, to provide bullion for the coins. In his annual message to Congress in late 1792, Washington noted the ongoing construction of a mint building and stated: "There has also been a small beginning in the coinage of half dimes, the want of small coins in circulation calling the first attention to them."In 1793, the newly established Philadelphia Mint began striking cents and half cents. Coinage of precious metal was delayed; Congress required the assayer and chief coiner to each post a security bond of, a huge sum in 1793. In 1794, Congress lowered the chief coiner's bond to, and the assayer's to ; President Washington's appointees to those positions were thus able to qualify and take office. Subsequently, silver coinage began that year.
The half dime was originally struck from 1794 until 1805, though none were dated 1798, 1799, or 1804. By 1804, silver US coins were heavily exported, as they could be exchanged at par in the West Indies with heavier Spanish coins, which were then imported as bullion and deposited at the Mint for melting and restriking. In response, in 1804 the US stopped striking silver dollars; issuance of the half dime was discontinued from 1805 until 1829. In 1807, mint Director Robert Patterson in a letter explained to Jefferson "nearly the whole of our Silver Bullion come through the Banks, and it is very seldom that they will consent to take any coin less than half dollars."
Beginning in 1829, the silver five-cent piece was again struck; beginning in 1837, its fineness was increased from.8924 to.900. Also in 1837, the half dime's obverse design changed from one by William Kneass, depicting a bust of Liberty, to one that featured a seated Liberty by Christian Gobrecht; until its abolition in 1873, the half dime would bear modifications of this design. In 1851, it ceased to be the smallest US silver coin as a three cent piece was issued by the Mint.
Birth of the nickel
The Civil War caused most American coins to vanish from circulation, with the gap filled by such means as merchant tokens, encased postage stamps, and United States fractional currency, issued in denominations as low as three cents. Although specie was hoarded or exported, the copper-nickel cent, then the only base metal denomination being struck, also vanished. In 1864, Congress began the process of restoring coins to circulation by abolishing the three-cent note and authorizing bronze cents and two-cent pieces, with low intrinsic values, to be struck. These new coins initially proved popular, though the two-cent piece soon faded from circulation. On March 3, 1865, Congress passed legislation authorizing the Mint to strike three-cent pieces of 75% copper and 25% nickel.In 1864, Congress authorized a third series of fractional currency notes. The five-cent note was to bear a depiction of "Clark", but Congress was appalled when the issue came out not with a portrait of William Clark, the explorer, but Spencer M. Clark, head of the Currency Bureau. According to numismatic historian Walter Breen, Congress's "immediate infuriated response was to pass a law retiring the five-cent denomination, and another to forbid portrayal of any living person on federal coins or currency." Clark kept his job only because of the personal intervention of Treasury Secretary Salmon P. Chase.
Mint Director James Pollock had been opposed to striking coins containing nickel, but in view of the initial success of the copper-nickel three-cent piece, he became an advocate of striking five-cent pieces in the same metals. In his 1865 report, Pollock wrote, "From this nickel alloy, a coin for the denomination of five cents, and which would be a popular substitute for the five cent note, could easily be made ...
Industrialist Joseph Wharton had a near-monopoly on the mining of nickel in the United States, and sought to promote its use in coinage. He was also highly influential in Congress. His friends there, though they had failed to obtain the metal's use for the two-cent piece, had been more successful with the base-metal three-cent coin. Pollock prepared a bill authorizing a five-cent coin of the same alloy as the three-cent piece, with a total weight not to exceed 60 grains. At the committee stage in the House of Representatives, the weight was amended to, ostensibly to make the weight equal to five grams in the metric system but more likely so that Wharton could sell more nickel. This made the new coin heavy, in terms of weight per $.01 of face value, compared to the three-cent copper-nickel coin. The bill passed without debate on May 16, 1866. The new copper-nickel coin was legal tender for up to one dollar and would be paid out by the Treasury in exchange for coin of the United States, excluding the half cent, cent and two-cent. It was redeemable in lots of $100 for banknotes. Fractional currency in denominations of less than ten cents was withdrawn.
Shield nickel (1866–1883)
In anticipation of the approval of the new five-cent coin, the Mint's chief engraver, James B. Longacre, had begun preparing designs and pattern coins in 1865. After rejecting pieces showing deceased presidents George Washington and Abraham Lincoln, Treasury Secretary Hugh McCulloch decided on a design similar to Longacre's two-cent piece, with a shield on the obverse and a numeral 5 surrounded by stars and rays on the reverse. This has come to be known as the Shield nickel.The new coins proved difficult to produce; owing to the hardness of the planchet, the coins were not of high quality and the life of the striking dies was brief. The design was widely criticized; Wharton described the obverse as suggesting "a tombstone surmounted by a cross and overhung by weeping willows." The American Journal of Numismatics described the Shield nickel as "the ugliest of all known coins". The rays were eliminated from the reverse design in 1867, in the hope of eliminating some of the production problems. The design change created confusion among the population—many people assumed that one design or the other was a counterfeit—and the Mint briefly considered abandoning the shield design entirely. After heavy production in its first years, by late 1869, enough nickels had been struck to meet the needs of commerce; fewer were coined in the following years.
The new coins tended to accumulate in the hands of merchants beyond the legal tender limit, but banks refused to accept them beyond the one-dollar maximum. Storeowners were forced to discount the coins to brokers. Postmasters, compelled by law to accept the coins, found that the Treasury would not accept them as deposits except in lots of $100, in accordance with the authorizing statute. In 1871, Congress alleviated the problem by passing legislation allowing the Treasury to redeem unlimited quantities of nickels and other low-denomination coins when presented in lots of not less than $20. It was not until 1933, long after the shield design passed from the scene, that the nickel was made legal tender without limit.
Half dimes continued to be struck, at both the Philadelphia and the San Francisco Mint, until the series was ended by the Coinage Act of 1873. Despite the abolition, the silver pieces continued to circulate in the West, where silver or gold coins were preferred, throughout the remainder of the 19th century. Improved economic conditions, combined with low silver prices, brought large quantities of hoarded silver coinage, including half dimes, into circulation beginning in April 1876. In late 1876, production of the Shield nickel was halted. No Shield nickels were struck in 1877 or 1878, excepting proof specimens for collectors. As the Treasury had a large stock of nickels in storage, only small numbers were struck over the next few years; full-scale production did not resume until December 1881.