Uncovering America's Heritage... Coin by Coin
The Three-Cent Nickel
Here's a cool item from coin history: the 3-cent nickel! This coin, like the 1-cent nickel we looked at in August 2005, was called a nickel back in the day before the 5-cent nickel had been created. So the penny was the first coin to be called a nickel (during the Civil War), then the 3-cent coin, then one year later, the 5-cent coin. This was the shield nickel that I told you about in May 2002.
For a while, both the 3- and 5-cent coins were made with nickel. I've drawn up a little chart to show when the various "nickels" were made.
The three cent coin was an easy way to pay the new 3-cent postage rate (lowered from 5 cents). The first 3-cent coin was made of silver and some copper (as Peter explained in October 2005). But the coins were so small that people called them "fish scales." The coin, smaller than today's dime and weighing only 4/5 of a gram, was easy to lose.
When people hoarded coins during the Civil War, creating a shortage, the Treasury issued paper notes valued at between 1 and 50 cents. These small notes were also easy to lose and hard to handle in large numbers. The lowest paper denominations, which people called "shinplasters," wore out quickly. Sometimes they circulated in tatters.
Enter the 3-cent nickel in 1865.
This copper-and-nickel coin was larger than the silver 3-cent coin and was easier to handle. People could exchange their 3-cent paper notes for these "nickels" after the war. What's more, 3-cent nickels were legal tender (which the one-cent coin was not).
As the chart shows, the nickel version was made for 16 years after the silver version was discontinued. In 1883, the letter postage rate dropped to 2 cents, making a 3-cent coin less necessary, so the nickel version was eventually discontinued as well.