Saturday, May 14, 2016

Coins You Can Find - Indian Head Cent - Civil War Years

During the Civil War cents were snatched up as quickly as they could be minted.

1863 Indian Head Penny

The surplus of cents was relieved in 1861 by the economic chaos fueled by the American Civil War. At the end of that year, the banks stopped paying out gold, which thereafter commanded a premium over paper money. These greenbacks, beginning in the following year, were issued in large quantities by the federal government. Silver vanished from commerce by June 1862, as its price rose, leaving the cent the sole federal coin that had not entirely vanished from commerce through hoarding. Back when there had been a glut of cents, merchants had quietly tucked them away in bulk. One story tells of a New York City floor that collapsed beneath the weight of stored pennies. But even these caches didn't last forever, and soon NYC was running dry of cents.

There were other means of making change which passed in the emergency, from postage stamps to privately issued tokens, but the public demand was for the cent. The Philadelphia Mint struck record numbers, and set aside part of the production to be transmitted to other cities. Nevertheless, by July 1862, the cent, in quantity, could only be purchased at a premium of 4% in paper money in major cities in the East. The copper-nickel pieces were nicknamed "nickels", or "nicks". Presentation of coins in payment carried with it no obligation to make change in the same. Accordingly, with a small quantity of "nicks", a shopper could make purchases with exact change, without receiving such makeshifts as merchants' credit slips, that others might not accept at the stated value.

Civil War Token

By 1863, The Bankers' Magazine reported that the premium for cents in Philadelphia had risen to 20%. Thereafter, the premium decreased as there was a flood of metal tokens issued by merchants, which were widely accepted (and are widely collectible today). Other war expedients, such as fractional currency, lessened the demand for the cent by taking the place of missing silver coinage.

Government officials saw that the public readily accepted the merchant tokens. Many of these tokens were made of bronze, and when, in 1863, they attempted to restore coins to circulation, the use of bronze coins, which would not contain their face values in metal, was considered. In his annual report submitted October 1, 1863, Mint Director James Pollock noted that, "Whilst people expect a full value in their gold and silver coins, they merely want the inferior [base metal] money for convenience in making exact payments." He observed that the private cent tokens had sometimes contained as little as a fifth of a cent in metal, yet had still circulated. He proposed that the copper-nickel cent be replaced with a bronze piece of the same size.

The copper-nickel cents from early in 1864 were generally bought up by speculators and did not circulate in large numbers. The Mint began producing bronze cents on May 13, three weeks after the passage of the Coinage Act, and they were released into circulation on May 20. Dies prepared for copper-nickel pieces were used to strike bronze. Sometime during 1864, Longacre sharpened his design for use in striking the softer bronze pieces, and also added his initial "L". It is not known when this was done; it may have been as early as May, with the new dies used alongside the old. These bronze pieces are often referred to as "1864-L" and "1864 No L". The "L" is known on 1863-dated pieces, in both metals, and on 1864-dated copper-nickel pieces.

Up Next: Later Years and Beyond

Photo courtesy of Coin HELP!
Brief history of IHC from Wikipedia - Used under CC BY-SA license

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