Even more amazing that people tend to ignore that at one time silver was used to replace lowly copper in 5 cent pieces. Metal is metal, value is only demand at the time.
Wasn't there a trial piece that to increase the actual metal value to one cent that they had a silver plug in the center?
There were always some in Congress pushing for this, but if I recall correctly it never actually was the case. This would have been a very bad thing for the economy. Before the 1860s, the US was always struggling to keep sufficient coinage in circulation to supply the markets. If a copper cent were fixed at $0.01 in copper, it would cause dramatic shortages every time the price of copper reached a level sufficient to prevent the mint from making a profit on the coins, thus preventing them from striking them and further limiting the amount of small change in circulation. For a fascinating and in depth review of the economics behind small change, check out: Carothers, N. (1930). Fractional Money. New York: John Wiley & Sons.
Ever since the world's very first mint the concept of seigniorage has been in place. In other words, coins were never supposed to be worth their actual face value. The minting of coins was and always has been a business, a way for the minter to make money.
They weren't intended to be, because the profit from the cents were supposed to pay the expenses of the free coinage of gold and silver. But it did approach the face value in 1795 which was why the weight was reduced that year, and it also reached as sometimes exceed the face value in the mid 1850's hence the size reduction. The copper nickel cent while subsidiary did have some intrinsic value. The nickel was more expensive than the copper so the metal value was maybe half to three quarters of a cent. The civil war tokens showed the government that the nickel and the relatively high metal content were not need to keep the coins in circulation and they went to the bronze cents that were about .1 cents each in metal value. The metal value may have approached the face value agian in 1974 and then again in the early 80's. Currently the metal value is around .5 cents Yes because that was when they thought that all coins should have close to their face value in metal. The problem was a cent of copper with the full value would have weighed 264 grains (17.6 grams, a clad half dollar is 11.34 grams, a clad Ike is 22.7) and would have been close to the size of a silver dollar. The silver plug with 3/4 cent of silver would have reduced the size down to closer to that of today's quarter. The silver center cent idea was scrapped as too unworkable, and the weight of the cent was reduced from 264 grains to 208 grains and then in 1795 to 168 grains. I'll second that, excellent book, have read it twice and several sections several more times.
If the price of one cent in copper exceeded the face value, this wouldn't prevent minting them as you stated at end of paragraph. Obviously it hasn't these past several years. If anything perhaps it increased. And even far back with large cents, as now, the govt makes money (seniorage) with the other higher denominations and this more than offsets the loss from lowly cents. I'd assume seniorage overall was lower when silver was in our coins but I'm sure it still more than offset cent production losses
Yes, but they will not continue this indefinitely. These are market forces at play, and they do not always act instantly. Its also slightly different now than it was in the 19th century, when the mint was not required to produce a large quantity of every denomination every year.
Depends on when you are talking about. Up until 1853 the silver coins DID contain almost their full face value in metal content as did the gold coins. In fact at times they contained MORE than their face value. During those periods coinage levels would drop. Remember until 1837 all the silver and gold for the coins was provided by depositiors and the metal was turned into coins at no charge. AND the depositors got back all the bullion the deposited. It was the seigniorage from the COPPER coins that paid the expenses. After 1837 the mint had it's own bullion fund and could buy bullion on the open market for it's own account as well. But that was mainly used to have coins on hand for immediate payment of depositors rather than having them wait until their bullion was coined. It also let the mint stockpile deposits until they could be processed more efficiently. In 1853 the silver coins were made subsidiary and then there was a small seigniorage profit on the silver (except for dollars, they had $1.04 worth of silver in them) but the gold coins still contained full face value. (And depositors could no longer deposit silver to be made into coins. All seigniorage on silver coins was now the governments.) But the government still didn't make that much seigniorage profit on the silver until after the Comstock lode caused the market price of silver to drop. At the time the gold coins were discontinued a double eagle contained $19.98+ in gold. When the silver ended in the 1960's it too contained its full face value in metal, and once again the lowly copper coins were carrying the load. No for most of the Mint's life up until the introduction of clad coins it was the cent that paid the mints expenses. For the past 12 years or so that hasn't been the case and the cent has been the source of most of the losses, and that is not going to change in the future.
