Back in 1857 the biggest change in the circulating coinage of the
United States took place and the Flying Eagle Cent was at the center
of all the activity. Since the early days of the country the circulating
coinage was a chaotic system where virtually any precious metal
coin from any country could be found. Silver was typically
encountered with the Spanish and Mexican coinage being the most
prevalent. Many of these coins were heavily worn or had been
subjected to some indignity that kept it in circulation, bouncing from
person to person like a hot potato. The Federal coins were seen to be
sure, but only issues minted after 1853 when the specifications were
lowered. The debased three cent silver piece, nicknamed "fishscales"
circulated, but were a nuisance because of their small size.
Chronically underweight issues would be accepted at a discount by
merchants and not at all by the government, except that the Mint
would purchase it at a fixed rate related to the bullion value and only
in quantity. This was a new concept for the Mint since the passage
of the Act of 1853 which stopped direct conversion of silver received
at the Mint into coin. Due to all this chaos, an old profession
regained prominence: The Coin broker. These brokers would act in a fashion similar to the bullion dealer of
today, advertising rates at which the various coins would be
exchanged. Between 1853 and 1857 their role was mainly limited to
discounting underweight foreign coins presented by merchants and
exchanging them for coins that would be readily accepted by
wholesalers and manufactures and of course, The Government..
The other undesirable coins in circulation were the copper cent and
half cent. Regardless of how collectors love these coins today, at the
time they were held in very low regard. They tended to accumulate
and could not be exchanged in any kind of quantity. Merchants
unlucky enough to get stuck with a load of these dreadful dirty
copper pieces would take them to brokers in an attempt to get them
exchanged.
All this would slowly change starting on May 25, 1857. On that day
the Mint was to begin a major transformation of the coinage in daily
use. The old copper cents and half cents would be exchanged for a
convenient new coin made out of a new alloy never seen in our
coinage previously. The new nickel cent was going to cure the ills of
the currency and bring the nations coinage into the modern era, or so
it was hoped. In addition to exchanging copper cents and half cents
at par for the new nickels, the old foreign silver was to be withdrawn
and replaced with new federal issues. Within a short period it was
hoped that all foreign coins could be outlawed from circulation.
To get the foreign silver out of circulation quickly, a generous
exchange rate was offered to the public. Spanish silver coins could
be exchanged for Federal silver coins at 80 cents for each Spanish
Dollar or its fractions. If you wanted a better deal, your old Spanish
silver dollar could be exchanged at the Mint for a 100 new nickel
cents! In 1857, Mint Director Snowden had estimated that about
$3,000,000 worth of foreign silver was in circulation. This may have
been so at the time, but soon millions of dollars of additional silver
coins were smuggled into the country, mostly through southern
ports. New Orleans was inundated with Spanish silver and made a
good job of cranking out coins (mostly half dollars) throughout the
period.
The cent exchange went along quite well with record numbers of
nickel cents being made each year. On that first day of the
redemption in Philadelphia, a structure was set up in the Mint yard
offering "Cents for Cents" and "Cents for Silver". Bags of 500 bright
new Flying Eagle cents were exchanged for piles of the dirty old
coppers and worn foreign silver. The rush to exchange the coins was
enormous. So maddening was the crowd that the first people in line
could do a brisk business with brokers in the streets making as much
as 20% instantly.
The old coppers were turned in at a frantic pace. I estimate that 3/4 of
all nickel cents issued up to 1861 were redeemed for old copper rather
than Spanish silver. If this is so, then fully half of the entire mintage
of large cents and half cents were melted up during this period. The
Report of the Director of The Mint for 1861 stated that in that year
the entire mintage of 10 million nickel cents was generated by copper
coin redemption.
Soon the novelty of the nickel cent wore off and they too started to
accumulate in the same fashion as the old coppers. Small bags of 10,
20 and 50 pieces would commonly trade in place of larger
denomination coins. By the 1860's there was a glut of nickel cents in
the economy. Like the old coppers before them, the nickel cent had
no legal tender status, so they could be refused if so desired. What
was once a cure was now a curse. Of course this would all change
with the outbreak of the Civil War in 1861.
At first the hostilities between the Southern states and the North
was believed to be short-lived. In early 1862 Gold payments were
suspended by the Government. In its place a new paper currency, or
"Greenback" as they were called, started to be placed in circulation
to finance the war. These held their value as long as there was little
worry about the war widening. But by the middle of 1862 after a year
of fighting, both sides began to worry. This worry brought about
widespread hoarding of silver coins. Ever increasing rates were made
for gold and silver in terms of the greenback. The nickel cent,
although not a precious metal, also garnered a premium. By 1863 hard
money was a real rarity. In addition to greenbacks, private script and
notes of dubious origin circulated. These were derisively called
"shinplaster" - better to line your boots with them then to take them
as currency!
The Mint, believing that the cent would circulate if more and more
were produced, set about producing record numbers of nickel cents
during the war years. The truth of the matter was obvious in the
larger cities. The nickel cent was too good to circulate while there
was a war on. In place of nickel cents, private manufactures were
commissioned by merchants to produce tokens to fill the void left by
the disappearance of the cent. These thin copper tokens were
successful for a time, but when news of larger issuers failing to
redeem them surfaced, they started to lose favor. The government
stepped in 1864 and made the issuance of tokens for circulation
illegal. Not unaware of their initial success, Mint Director James
Pollack recommended also that the official cent should be made in a
similar format of the tokens. The bronze cent and its sister coin the
Two Cent piece made its appearance in mid-year. The new coin
stayed in circulation. Record numbers were made in 1864 and again in
1865.
After the war ended in 1865 the nickel cents began to flood back into
circulation along side the newer bronze cents. The nickel cents were
slowly culled from circulation by banks and redeemed by the Mint.
All that got turned in were remelted and recoined into three cent and
five cent nickel pieces. The need for additional pieces slowed during
this period as there were plenty of cents to go around.
The perennial problem of cents accumulating was dealt with in 1871
in a rather unusual way. To move the coins out of the sub-treasury
were they accumulated, the Mint would buy in the coins, melt them
down and issue new ones. Millions upon millions of bronze cents
and two cent pieces saw their demise in this way. This accounted for
a large portion of the mintage of cents between 1871 and 1873.
As the redemption continued it was realized that the Mint could save
itself much work by simply reissuing most of the coins it received
alongside the newly struck cents. The Mint acted as a clearinghouse
for cents, taking in unwanted hoards from the Treasury and
redistributing them back out to the banks.
The total issuance of cents from the Mint in 1875 was over 17 million
pieces, of which 13.5 million were new coins. In 1876 13 million were
issued of which almost 8 million were new. In 1877 only 10 million
cents were shipped out with only a little over 850,000 of them newly
minted. If you were a collector in 1877 waiting for your bank to get in
its new cent shipment, you had a 1 in 10 chance that you get the new
issue. Most banks got the reissued coins that year.
In 1878 the entire process of cent making was changed. Private firms
were contracted to produce cent and nickel planchets for the Mint.
The bidding process was carried out each year. When collusive
bidding was detected in 1885, the Mint simply did not order any
planchets, creating lean mintages.
During the 1880's the economy recovered from the burden of the war
and reconstruction period only to fall into a deflationary spiral which
eroded the value of land and tangible items. The price of silver fell to
record lows. Cents were abundant in circulation as were silver coins.
The Mint produced mainly cents and five cent coins throughout the
decade as there was little need for any other coins. Of course the
Mint was under pressure from the 1878 Bland-Allison Act at the time
which forced The Mint to purchase 2 million dollars worth of silver
per month to help prop up the silver value, but the dollars minted
from this silver was hardly needed for actual circulation purposes.
Cent production continued strong though the rest of the century.
Although mintage of cents are high, their survival in high grade is
very low. Cents were made to be spent, not saved. Prior to the 1930's
well worn Indian Cents were common in circulation, and until that
time collectors had no inclination to save specimens other than the
yearly proof emission. They were all put into circulation and mostly
all stayed there.
In 1908 the San Francisco Mint began minting cents in quantities of a
fraction of what was being put out in Philadelphia. The design was
changed to the Lincoln head in 1909. The Flying Eagle and Indian
Cents were a witness to some of the most important events in our
nations history. They were handled and saved by virtually everyone
who lived in this country through those exciting times.
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