U.S. coin history question

Why did the half-dimes and the shield nickel coexist?

 

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transition period so the public had time to get used to the new coin before they got rid of the old one.

 

It was that simple?

 

i think so. another reason is that the public didnt trust coins that were worth less than their intrinsic value, same reason that "1964" dimes, quarters, and halves were made until 1967

 

And also to see if people would accep the new coins that was a period 1850-75 that had all kinds of new denominations some were popular (nickel 5 cents small cents $20 gold) others were duds (2 cents $3 gold 20 cents 3 cents both kinds etc ) that didn't last they kept making the tried and true half dimes until the nickels proved popular I just wish the Stella had been minted in some quantity

 

Sorry, but I don't quite understand what you mean by worth and intrinsic value.

 

I believe he means the difference between face value and value of metal content.

 

Metal worth less than face value before coin was worth its weight in copper silver gold etc now their worth face value only

 

The value of the piece (coin) as opposed the the metal content value.......

 

Sorry for being dense, but I thought that is what he meant. But then how does that explain the continued minting of 1965-1970 silver-clad halves and the 1965+ clad dimes, quarters?

 

I apologize for missing the obvious.

 

Actually much had to do with Joseph Wharton 1826-1909.
He owned and/or managed zinc and nickel mines. By 1863 he had become the single largest owner of nickel mines. He had access to legislators in the states where his mines were located.
One of his childhood friends was James Pollack, director of the mint. Through his connections and his money, he got Congress to authorize the 5 cent piece in 1866.
The government was now required to purchase nickel.

 

During the Civil War all of the silver and gold coins were disappearing from circulation. Uncertainty over who would win and wartime shortages forced up the value of the metals and they were worth more as metal than the face value of the coin. The bronze cent, two cent and later the copper nickel three and five cent pieces were some of the first coins with a metal value well below the face value of the coin. In the case of the shield nickel it was originally intended to be a TEMPORARY coinage until the metal prices dropped enough that large scale coinage of the silver half dimes could recommence. Some small coinage of the half dimes continued simply because the authorization for the half dimes had never been rescinded. Therefore some proofs were made and the mint also struck a modest amount of business strike because they didn't want to create rarities. Most of these were probably not release until the early 1870's when silver resumed parity with gold and paper. In the meantime though the public found the shield nickel was a much more convenient size and weight than the tiny half dime. So when the weights of the silver coins were increased in 1873 the half dime was simply discontinued in favor of the five cent piece.

 

The government was in denial. Silver coins dated 1964 were produced through 1965. The simple fact of fiat money inflation was being denied and "coin collectors" were being blamed for "hoarding" coins.

Also, the Kennedy Half Dollar was considered a memorial to the slain President. The silver-clad coins had most of the appearance of the 1964 coins. And at 40% silver, they were not immediately "hoarded" by "collectors."

This sort of thing has happened often in European history. See The Big Problem of Small Change by Sargent and Velde reviewed here:
http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=3374
Just to say, during the Middle Ages, by weight and fineness a grosso coin might be "worth" six penny coins, but the six pennies have more utility for small purchases, so in the marketplaces people were loathe to give them up and might offer only four or five for a grosso.

If any prince, bishop, or city struck pure silver, the coins went for exports and did not circulate at home, so there would be a shortage no matter how many were struck. So, the solution was to reduce the fineness, making "base silver" the common coins at home.

The prince or bishop or city strikes a few tens of thousands of grossi to buy the things they need like armor, food, or ships. That's fine but eventually those suppliers to the authority need to buy beer, bread, cloth, shoes, etc., and if shoes cost four pennies and the supplier to the city hands over a grosso, he does not get any money back: the shoes just cost him six pence. Then 500 years later, economists scratch their heads over "silver inflation" at a time of "silver famines."

As this was really a US History question, see The U.S. Mint and Coinage by Don Taxay. We read elsewhere that at various times in the 1800s US coins were exported for their silver, causing shortages at home. Newspaper stories are sometimes cited. Taxay denies them, pointing to the utility of coinage, downplaying the temporary nature of news, and citing other stories of merchants having to sell their change at a discount to get rid of it. I believe that both stories are true depending on time and place and realizing that conditions go back and forth.

 

Silver 1964 dated coins were made well into 1966, Michael.

 

actually the last 90% dimes were made in early '67

 

Ah, the '67 makes sense now.

 

do you have a reference that gives the dates that they stopped minting the silver coins? Because your answer doesn't jive with my research.

According to my facts, July 7, 1966, the date freeze was ended effective August 1, 1966, and any coins manufactured after August 1st would be dated 1966 and on January 1, 1967 current dating of coins would be resumed.

 

i read it somewhere, but i dont remember what book.

 

I seem to remember reading that for some reason, they wanted to get a lot of coins into circulation back in the time around the Civil War. Nickel three- and five-cent pieces came into existence and the two-cent piece. There were already 3-cent silver pieces. 20-cent pieces would come around in 1875.