U.S. coin history question

Good thread

 

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They only did in fact. They didn't really circulate side by side.

This is by no means definitive, or all-inclusive as an answer, but it helps explain things.

In the western US, money was more the gold and silver coins. There, the people wanted hard money and it was more available because it actually circulated.

In the eastern US, people hoarded hard money and most of what was able to circulate were coins like the copper nickel cents, three and five cent pieces.

The Mint made them side by side until the copper nickel pieces began to circulate everywhere. If you look at the mintages of the coins, all of the copper nickel pieces were made (by law) at Philadelphia only and many of the silver coins were made at San Francisco and Carson City and this follows their circulation patterns.

 

All that is true, but there was also the logistic reality. Quite simply with the post war coin shortage it was easier for the East Coast to get the Nickel than the Silver in the first years after the Civil War. So what we mostly had was five cent (Shield) Nickel pieces being made exclusively at the Philadelphia Mint, and all of the variety IV (1860 - 1873) silver 5 cent Half Dime pieces being made in San Francisco. Outside of places like Chicago for about a decade you got just one or the other as your local change, not both.

This was also true of the 3 cent piece. Originally made everywhere, but after 1865 only the nickel version was available on the East coast while the West coast mints could still get silver so they made the silver 3 cent coin and not the nickel one.

The Great Crime of 1873 (Coinage Act) eliminated the Silver Dollar, the Half Dime, and the silver 3 cent coin, leaving the Nickel and the Trade Dollar (and for a few more years the nickel 3 cent coin) as the survivors. By then the railroads had already started bringing the nickel coins West.

 

As I mentioned during the war and up until the early 1870's precious metal coins did not circulate in this country. They were either hoarded or exported. This left the country with practically no circulating money smaller than a five dollar note. (close to the purchasing power of $100 today) Into that void the mint poured the coppernickel cent then new bronze cent, two cent, then eventually the nickel three cent and five cent pieces. These new coins were convenient in size and have metal values well below their face value so they circulated and were not hoarded. The silver coins were still struck in small quantities because they were still authorized and people did order proofs. Business strikes were also struck to try and keep the coins from being rarities, but for the most part were not released until later.

 

BTW, we all know that the question came up because the fact of the two coins circulating at the same time seems to violate "Gresham's Law." In fact the so-called "law" is only a general conjecture. Many examples of apparent violations of it are known. Some are so obvious, we never think about them.

For instance, why are one-third of all Morgan and Peace silver dollars uncirculated coming from a time when silver prices were falling and you could get gold for silver? Why didn't people hoard gold and spend silver? Gresham's law would predict an abundance of uncirculated small gold.

The 3-cent silver versus 3-cent nickel versus fractional currency is another case. Moreover, Gresham's "law" would make the paper notes rare as they would have been turned in for silver as soon as that was possible.

Wider still, why would any minor silver circulate along with base metal equivalents? Why not turn in your cents for dimes and quarters?

I believe that two factors are at work. Work is the first - it is not worth your time when you can make more at other labor. Underlying that is confidence. If you know that you can always exchange coins with no cost, then the nominally more valuable gold but readily available gold actually gives confidence to the holder of the silver and base metal minors.

 

I know that is what we say. It is the common story. I just wonder if it is true or not.
At the wage level of 1860, $5 was more like $500 today. Depending on your craft and place an unskilled workman got 10 cents an hour for a 10 or 12 hour day. Farmers made less cash and 90% of the people lived on farms or rural villages, not in cities.

Moreover, we have the contrasting stories from England before the Conder Tokens when workmen would go in a gang to the mercer's (grocer's) with one large coin. Other solutions were for the shops to carry the tab until payday. It is all in George Selgin's book on the Birmingham button makers and the first modern coins. But we have no stories like that from the Civil War.

Yes, we have postage stamps for small change and Gault's holders in NYC, but that is an isolated case. And speaking of "cases" why are those Gault cases not more plentiful? It was an expediency, only, and never was needed much wider.

Again, I know what the standard references say, or some of them, anyway. I just hold reserved judgment on it.

 

The last 90% silver Quarter Dollars were struck in Jan 1966, the last Dimes in Feb 1966, and the last 90% silver Half Dollars in April 1966.

 

For general circulation that is true. However silver proof quarters continue to be available. I have seen such circulating too at 7-11s and similar so some folks are spending coin collections.

Wonder how Gresham would feel about 2013 with at least 12 different $1 coins having been released by the US Mint (commeratives, etc.) in 2013?

 

We were specifically speaking of the 1964 dated coins whose manufacture was terminated in the months I stated.