USA Coin Album: It's the Law! Lesser-known Passages Relating to United States Coinage: Part Three

Posted on 12/12/2017

Learn how legislation shaped the circulation of US coins in the mid-nineteenth century.

The important Mint Act of February 21, 1853 addressed the absence of fractional silver coins in circulation by lowering the weights of the half dime through half dollar. These "subsidiary" coins were thus free to circulate, as their face value was no longer exceeded by their bullion value. Because they were now worth less than an equivalent face value in gold coin, Congress had limited their legal tender value to no more than five dollars in any one transaction. Another provision was they were to be paid out solely in exchange for gold coins at par in amounts not less than one hundred dollars. Finally, it was clearly stated that "no deposits for coinage into [fractional silver] shall hereafter be received, other than those made by the treasurer of the Mint...upon account of the United States." These were to protect against the coins becoming an overabundant nuisance that could not be redeemed in gold.

Since the need for replacement silver coins was so urgent, Mint Director James R. Snowden found it expedient to simply ignore the safeguards, and he began paying out new fractional silver coins in exchange for outside deposits of silver bullion! This action accounts for both the very high mintages of 1853-57 and the sudden drop off in 1858 when Snowden was finally chastised by his superiors in response to complaints of a redundancy in fractional silver coins.

The numbers would have declined sooner, were it not for the Act of February 21, 1857 which, among other things, provided for the redemption of Spanish-American coins. It's likely that millions of these pieces were exchanged for new federal coins at the reduced rate of five cents per half real. This was an acknowledgment of the foreign coins' diminished value from wear and clipping, and it protected the Treasury against losses. Not well known to numismatists, however, is that the Spanish-American coins could be redeemed at their higher nominal values when exchanged for the new small cents first issued that year. Thus, a two-reales piece exchanged for federal silver brought only 20 cents, while one exchanged for Flying Eagles rewarded the holder with a full 25 cents. This program was set to expire after two years from passage of the law, but it was later extended when it became evident that foreign coins were still circulating in places.

The Act of April 22, 1864 authorized the coining of bronze cents and two-cent pieces, but it also included a provision prohibiting the making and/or passing of any object intended to be valued at one or two cents. This was a direct attack upon the small copper and bronze tokens today known collectively as Civil War tokens. The very success of these pieces had prompted the Mint to request of Congress such a composition to replace the copper-nickel cents issued since 1857, but the Mint didn't want to face any further competition in the marketplace. To make or pass the tokens was punishable with a fine of up to $1000 and a prison term of up to five years. As with so many such laws passed since 1792, this one was not 100% effective, and collectors were still recovering Civil War tokens from circulation decades later.

The bronze cents and two-cent pieces originally possessed a legal tender limit of ten times their face values, but this was reduced just a year later by a little known provision of another coinage bill. The Act of March 3, 1865 authorized the coining of copper-nickel three-cent pieces and provided for the redemption of the unpopular three-cent notes issued over the previous two years. It also, however, reduced the legal tender limit of both the cent and two-cent piece to just four cents in any transaction. This was clearly an indication that these coins were already becoming an overabundant nuisance in circulation, and it helps to explain why their production dropped so rapidly after 1865.

The April 22, 1864 law also had stated that the new coins provided for therein were not to be exchanged for the old half cents and large cents, and this carried over to the laws authorizing the copper-nickel three-cent (March 3, 1865) and five-cent (May 16, 1866) pieces. It's interesting to note that two-cent pieces were likewise not to be accepted in exchange for the three-cent and five-cent coins. It's not stated why these restrictions were in place, but it seems likely that Congress wanted to limit the distribution of minor coins (one through five cents) to exchanges for gold and silver coin. This would assist in preventing the minors from becoming overabundant in circulation. It seemingly failed in that respect, and it was necessary to pass another little-known act on March 3, 1871 that provided for the redemption of all minor coins when presented in quantities not less than 20 dollars. This law also mandated that these denominations were to be suspended or limited in production whenever a redundancy was evident. Thus did the mintages of cents through nickels plunge in 1871, not rising again until more such pieces were needed. Production of nickels rose the following year, but it was not until 1873 that significant numbers of cents and three-cent pieces were coined once more.

David W. Lange's column, “USA Coin Album,” appears monthly in The Numismatist, the official publication of the American Numismatic Association.

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