California gold discovery in 1848 was responsible for an interesting series of private, state, and territorial gold issues in the western region, culminating in the establishment of a branch mint at San Francisco in 1854.
Two new regular gold issues were authorized in 1849. In that year the gold dollar joined the American family of coins, followed in 1850 by the double eagle. The California gold fields greatly influenced the world gold market, making the exportation of silver profitable. For example, the silver in two half dollars was worth $1.03-1/2 in gold. The newly introduced gold dollars soon took over the burden and hastened the disappearance of silver coins from trade channels. This was the situation when the new 3¢ postage rate brought about the bill authorized by Congress on March 3, 1851, calling for the coinage of a silver three-cent piece in 1851. This was the United States’ first subsidiary coin in precious metals, for its silver value was intrinsically 86% of its face value, as an expedient designed to prevent its withdrawal from circulation.
The California Gold Rush had a great influence on American coinage.
The $3 gold piece was authorized by the Act of February 21, 1853. It was never a popular or necessary coin because of the existing $2.50 and $5 coins; it nevertheless was issued regularly from 1854 until 1889.
On February 21, 1853, fractional silver coins were made subsidiary by reduction of their weights. As the coins’ face value now exceeded their bullion value, free coinage of silver was prohibited except for dollars, and the Mint was authorized to purchase its silver requirements on its own account using the bullion fund of the Mint, and, according to law, “the profit of said coinage shall be . . . transferred to the account of the treasury of the United States.”
To identify the new lightweight pieces, arrows were placed at the date on all silver coins except three-cent pieces, for which arrows were added to the reverse. Dollars, which were not reduced in weight, were not marked in any way. On the quarters and half dollars of 1853, rays were added on the reverse to denote the change of weight. In 1854, the rays were removed, and in 1856, the arrows disappeared from all but the silver three-cent coins. Large-scale production of silver coins during this period greatly relieved the demands on gold dollars and three-cent pieces, and for the first time in U.S. history, enough fractional coins were in general circulation to facilitate commerce.
The Coinage Act of February 21, 1857, was designed primarily to reform the copper coinage. Although large cents and half cents are interesting and valuable in the eyes of the modern collector, they were unpopular with the American public in the 1850s because of their size. They also cost the Mint too much to produce.
The new law abolished the half cent, and reduced the size and changed the design of the cent. The new Flying Eagle cent contained 88% copper and 12% nickel. Nearly 1,000 pattern cents were stamped from dies bearing the date 1856, although no authority for the issue existed before 1857. Other important effects of the law were the retirement of Spanish silver coins from circulation, and dispersal of the new cents in such excessive quantities as to create a nuisance to business houses, particularly in the eastern cities. The Indian Head design replaced the Flying Eagle in 1859, and in 1864 the weight of the cent was further reduced and its composition changed to a proportion of 95% copper and 5% tin and zinc. (This bronze composition was the standard for the cent except for the years 1943 and 1944–1946. In 1962 the alloy was changed to 95% copper and 5% zinc. In 1982 the composition was changed to a core of 99.2% zinc and 0.8% copper, covered with an outer layer of pure copper.)
An abundance of coins turned to scarcity following the outbreak of the Civil War. Anticipation of a scarcity of hard money, and uncertainty as to the outcome of the war, induced hoarding. The large volume of greenbacks in circulation caused a premium for gold. Subsidiary silver coins, as a result of the sudden depreciation, quickly vanished from circulation. As an expediency, some people made use of postage stamps for small change. Merchants, banks, individuals, and even some towns and cities produced a wide array of small-denomination paper scrip and promissory notes to meet their needs. In 1862 the government released its first issue of “Postage Currency” and subsequent fractional notes. In 1863 many privately issued copper tokens appeared to help fill the void. They are of two general classes: tradesmen’s tokens and imitations of official cents. Many of the latter were political or patriotic in character and carried slogans typical of the times. They not only served as a medium of exchange, but also often advertised merchants or products, and were usually produced at a profit.
The Civil War brought dramatic changes to our nation’s coins.
The Coinage Act of April 22, 1864, which effected changes in the cent, provided also for the new bronze two-cent piece. The act, moreover, provided legal tender status for these two coins up to 10 times their face value. The two-cent piece was the first coin to bear the motto IN GOD WE TRUST. The new coin at first was readily accepted by the public, but it proved an unnecessary denomination because of the competing three-cent coins, and production was halted after only nine years. The secretary of the Treasury had issued a great many currency notes of the three-cent denomination early in 1865. American nickel interests seized upon this circumstance to fight for a new three-cent coin for redemption of the paper money. A law was quickly passed and signed by President Abraham Lincoln on March 3, 1865, providing for a three-cent coin of 75%-25% copper-nickel composition. The United States then possessed two types of three-cent pieces, although neither was seriously needed. The nickel three-cent piece was struck continuously until 1889, the silver three-cent piece until 1873.
The new copper-nickel alloy ratio was selected for the five-cent coin, adopted May 16, 1866, and thereafter known as a nickel. Again, the people had a coin denomination available to them in two forms. The silver half dime, like the three-cent piece, was retired from service in 1873 to curb the use of silver.
The great influx of silver from the Comstock Lode in Nevada, mainly in the 1860s and ’70s, increased the nation’s supply of silver for coins and taxed the Philadelphia Mint’s capacity for production. Pressure from silver-mine interests in Nevada influenced the opening of a special mint in Carson City to assay and mint silver locally, rather than having it shipped to Philadelphia or San Francisco. Production was inefficient, costly, and slow. By 1893 the lode was virtually depleted, and minting activities at Carson City ceased.
The Law of March 3, 1871, was a redemption measure and was passed to provide the United States Treasury with means for the disposal of millions of minor coins, which had accumulated in the hands of postmasters, merchants, and others. Small-denomination coins, because of this new law, were placed on an equal footing with silver and could be redeemed when presented in lots of $20.
There was a general revision of the coinage laws in 1873. Several years of study and debate preceded the final enactment. The legislative history of the bill occupies hundreds of pages of the Congressional Globe, and the result was considered by many a clumsy attempt and a failure. The law has sometimes been referred to as the “Crime of ’73.” One consequence of the bill, which achieved final enactment on February 12, 1873, was the elimination of the silver dollar. In its stead, the trade dollar of greater weight was provided for use in commerce with the Orient in competition with the Mexican dollar. The legal tender provision, which gave the trade dollar currency within U.S. borders, was repealed in 1876 to avoid profiteers’ buying them at a reduced rate. The trade dollar was thus the only United States coin ever demonetized. (Through an oversight, the legal tender status was reinstated under the Coinage Act of 1965.)
It may be a surprise to some collectors to learn that silver dollars did not circulate to any great extent after 1803 (except in the 1840s). The coin was turned out steadily since 1840, but for various reasons (such as exportation, melting,
