Back in 1857 the biggest change in the circulating coinage of the United States took place and the Flying Eagle Cent was at the center of all the activity. Since the early days of the country the circulating coinage was a chaotic system where virtually any precious metal coin from any country could be found. Silver was typically encountered with the Spanish and Mexican coinage being the most prevalent. Many of these coins were heavily worn or had been subjected to some indignity that kept it in circulation, bouncing from person to person like a hot potato. The Federal coins were seen to be sure, but only issues minted after 1853 when the specifications were lowered. The debased three cent silver piece, nicknamed "fishscales" circulated, but were a nuisance because of their small size. Chronically underweight issues would be accepted at a discount by merchants and not at all by the government, except that the Mint would purchase it at a fixed rate related to the bullion value and only in quantity. This was a new concept for the Mint since the passage of the Act of 1853 which stopped direct conversion of silver received at the Mint into coin. Due to all this chaos, an old profession regained prominence: The Coin broker.
These brokers would act in a fashion similar to the bullion dealer of today, advertising rates at which the various coins would be exchanged. Between 1853 and 1857 their role was mainly limited to discounting underweight foreign coins presented by merchants and exchanging them for coins that would be readily accepted by wholesalers and manufactures and of course, The Government.
The other undesirable coins in circulation were the copper cent and half cent. Regardless of how collectors love these coins today, at the time they were held in very low regard. They tended to accumulate and could not be exchanged in any kind of quantity. Merchants unlucky enough to get stuck with a load of these dreadful dirty copper pieces would take them to brokers in an attempt to get them exchanged.
All this would slowly change starting on May 25, 1857. On that day the Mint was to begin a major transformation of the coinage in daily use. The old copper cents and half cents would be exchanged for a convenient new coin made out of a new alloy never seen in our coinage previously. The new nickel cent was going to cure the ills of the currency and bring the nation's coinage into the modern era, or so it was hoped. In addition to exchanging copper cents and half cents at par for the new nickels, the old foreign silver was to be withdrawn and replaced with new federal issues. Within a short period it was hoped that all foreign coins could be outlawed from circulation.
To get the foreign silver out of circulation quickly, a generous exchange rate was offered to the public. Spanish silver coins could be exchanged for Federal silver coins at 80 cents for each Spanish Dollar or its fractions. If you wanted a better deal, your old Spanish silver dollar could be exchanged at the Mint for a 100 new nickel cents! In 1857, Mint Director Snowden had estimated that about $3,000,000 worth of foreign silver was in circulation. This may have been so at the time, but soon millions of dollars of additional silver coins were smuggled into the country, mostly through southern ports. New Orleans was inundated with Spanish silver and made a good job of cranking out coins (mostly half dollars) throughout the period.
The cent exchange went along quite well with record numbers of nickel cents being made each year. On that first day of the redemption in Philadelphia, a structure was set up in the Mint yard offering Cents for Cents and Cents for Silver. Bags of 500 bright new Flying Eagle cents were exchanged for piles of the dirty old coppers and worn foreign silver. The rush to exchange the coins was enormous. So maddening was the crowd that the first people in line could do a brisk business with brokers in the streets making as much as 20% instantly.
The old coppers were turned in at a frantic pace. I estimate that 3/4 of all nickel cents issued up to 1861 were redeemed for old copper rather than Spanish silver. If this is so, then fully half of the entire mintage of large cents and half cents were melted up during this period. The Report of the Director of The Mint for 1861 stated that in that year the entire mintage of 10 million nickel cents was generated by copper coin redemption.
Soon the novelty of the nickel cent wore off and they too started to accumulate in the same fashion as the old coppers. Small bags of 10, 20 and 50 pieces would commonly trade in place of larger denomination coins. By the 1860's there was a glut of nickel cents in the economy. Like the old coppers before them, the nickel cent had no legal tender status, so they could be refused if so desired. What was once a cure was now a curse. Of course this would all change with the outbreak of the Civil War in 1861.
At first the hostilities between the Southern states and the North were believed to be short-lived. In early 1862 Gold payments were suspended by the Government. In its place a new paper currency, or "Greenback" as they were called, started to be placed in circulation to finance the war. These held their value as long as there was little worry about the war widening. But by the middle of 1862 after a year of fighting, both sides began to worry. This worry brought about widespread hoarding of silver coins. Ever increasing rates were made for gold and silver in terms of the greenback. The nickel cent, although not a precious metal, also garnered a premium. By 1863 hard money was a real rarity. In addition to greenbacks, private script and notes of dubious origin circulated. These were derisively called "shinplaster" - better to line your boots with them then to take them as currency!
The Mint, believing that the cent would circulate if more and more were produced, set about producing record numbers of nickel cents during the war years. The truth of the matter was obvious in the larger cities. The nickel cent was too good to circulate while there was a war on. In place of nickel cents, private manufactures were commissioned by merchants to produce tokens to fill the void left by the disappearance of the cent. These thin copper tokens were successful for a time, but when news of larger issuers failing to redeem them surfaced, they started to lose favor. The government reacted in 1864 and made the issuance of tokens for circulation illegal. Not unaware of their initial success, Mint Director James Pollack recommended also that the official cent should be made in a similar format of the tokens. The bronze cent and its sister coin the Two Cent piece made its appearance in mid-year. The new coin stayed in circulation. Record numbers were made in 1864 and again in 1865.
After the war ended in 1865 the nickel cents began to flood back into circulation along side the newer bronze cents. The nickel cents were slowly culled from circulation by banks and redeemed by the Mint. All that got turned in were remelted and recoined into three cent and five cent nickel pieces. The need for additional pieces slowed during this period as there were plenty of cents to go around.
The perennial problem of cents accumulating was dealt with in 1871 in a rather unusual way. To move the coins out of the sub-treasury were they accumulated, the Mint would buy in the coins, melt them down and issue new ones. Millions upon millions of bronze cents and two cent pieces saw their demise in this way. This accounted for a large portion of the mintage of cents between 1871 and 1873.
As the redemption continued it was realized that the Mint could save itself much work by simply reissuing most of the coins it received alongside the newly struck cents. The Mint acted as a clearinghouse for cents, taking in unwanted hoards from the Treasury and redistributing them back out to the banks.
The total issuance of cents from the Mint in 1875 was over 17 million pieces, of which 13.5 million were new coins. In 1876 13 million were issued of which almost 8 million were new. In 1877 only 10 million cents were shipped out with only a little over 850,000 of them newly minted. If you were a collector in 1877 waiting for your bank to get in its new cent shipment, you had a 1 in 10 chance that you get the new issue. Most banks got the reissued coins that year.
In 1878 the entire process of cent making was changed. Private firms were contracted to produce cent and nickel planchets for the Mint. The bidding process was carried out each year. When collusive bidding was detected in 1885, the Mint simply did not order any planchets, creating lean mintages.
During the 1880's the economy recovered from the burden of the war and reconstruction period only to fall into a deflationary spiral which eroded the value of land and tangible items. The price of silver fell to record lows. Cents were abundant in circulation as were silver coins. The Mint produced mainly cents and five cent coins throughout the decade as there was little need for any other coins. Of course the Mint was under pressure from the 1878 Bland-Allison Act at the time which forced The Mint to purchase 2 million dollars worth of silver per month to help prop up the silver value, but the dollars minted from this silver was hardly needed for actual circulation purposes.
Cent production continued strong though the rest of the century. Although mintage of cents are high, their survival in high grade is very low. Cents were made to be spent, not saved. Prior to the 1930's well worn Indian Cents were common in circulation, and until that time collectors had no inclination to save specimens other than the yearly proof emission. They were all put into circulation and mostly all stayed there.
In 1908 the San Francisco Mint began minting cents in quantities of a fraction of what was being put out in Philadelphia. The design was changed to the Lincoln head in 1909. The Flying Eagle and Indian Cents were a witness to some of the most important events in our nation's history. They were handled and saved by virtually everyone who lived in this country through those exciting times.
By Richard Snow, Eagle Eye Rare Coins
Copyright 1999 Rick Snow & Eagle Eye Rare Coins, Inc.
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