Indian Head cent

Production of the Indian Head cent for commerce began at the start of 1859. As issued for circulation, the pieces differ in some particulars from the pattern 1858 cent of similar design; Longacre sharpened some details. The pattern coin had the laurel leaves in the reverse wreath in bunches of five leaves; the issued 1859 cent has them in bunches of six. Cents dated 1858 with the adopted reverse (with six-leaf bunches) are known, were most likely struck in 1859, and are extremely rare.[17]

In 1860, the reverse of the cent was changed to feature an oak wreath and a narrow shield; such reverses are also known on 1859-dated pieces struck as patterns. According to Richard Snow in his guidebook to Flying Eagle and Indian Head cents, this was not due to problems with the "Laurel Wreath" reverse design used in 1859, as full details survive on many extant pieces.[13] Walter Breen, however, suggested that the feathers and curls on the obverse did not strike as well as they would later, and that "this may account for Snowden's decision to change the design again".[18] David Lange, in his history of the Mint, states that it was to give the coin, quoting Snowden, "more National character".[6] All 1859 cents and some from 1860 have the cutoff of Liberty's bust on the obverse end with a point; most 1860 cents and all later issues have it rounded.[19]

Tens of millions of Flying Eagle cents had been issued in exchange for the old American coppers and small Spanish silver. The Spanish silver was still flowing into the Mint in early 1859 and, at Snowden's urging, Congress on March 3 of that year extended the redemption of these foreign coins, legal tender in the US until 1857, for another two years. Neil Carothers, in his work on small-denomination currency, challenged this decision as unnecessary—deprived of legal tender status, the remaining Spanish silver would have been eliminated through sales to banks for their bullion. Those who brought the old coins to the Mint received cents for them, at first Flying Eagle, and then Indian Head. In the year following the renewal, some forty million Indian Head cents were issued, meaning nearly a hundred million copper-nickel cents had entered commerce since 1857. As the coin did not circulate in the South and West due to prejudice against base-metal money, they choked commerce. No one had to take them; no law made them legal tender. At Snowden's urging Congress in June 1860 ended the exchange. Nevertheless, as Snowden admitted in his annual report that year, there were too many cents in circulation.[20] In October 1860, The Bankers' Magazine and Statistical Register reported that there were ten million cents in commerce in New York City above what was needed, and if anyone wished to order in bulk, they could be purchased at a discount.[21]

The surplus of cents was relieved by the economic chaos engendered by the American Civil War, which began in 1861. 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 in June 1862, as the price of that metal rose, leaving the cent the sole federal coin that had not entirely vanished from commerce through hoarding. The glut of cents had by then abated, as merchants had stored them away in quantity—one New York City floor collapsed beneath the load. 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.[22][23]

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. Other war expedients, such as fractional currency, lessened the demand for the cent by taking the place of missing silver coinage. Small quantities of cents circulated among them, though many were still hoarded.[24]

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, Lincoln Administration 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".[25] 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.[26] Pollock also wanted to eliminate nickel as a coinage metal; its hard alloys destroyed dies and machinery.[27] On December 8, Pollock wrote to Treasury Secretary Salmon P. Chase, proposing a bronze cent and two-cent piece.[28]

Cent-sized Civil War token, which was issued privately as federal coinage and was hoarded.

On March 2, 1864, Pollock wrote urgently to Chase, warning him that the Mint was running out of nickel and that demand for cents was at an all-time high. He also informed the Secretary that the United States Assay Commission, composed of citizens and officials who had met the previous month to test the nation's silver and gold coinage, had recommended the use of French bronze (95% copper with the remainder tin and zinc) as a coinage metal for the cent and a new two-cent piece.[29] Three days later, Chase sent Pollock's December letter and draft legislation for bronze one- and two-cent pieces to Maine Senator William P. Fessenden, chairman of the Senate Finance Committee. Fessenden took no immediate action, and on March 16, Pollock wrote again to Chase, warning that the Mint was going to run out of nickel, much of which was imported. Chase forwarded his letter to Fessenden. Legislation was finally introduced by New Hampshire Senator Daniel Clark on March 22; Pollock's letters were read and apparently influenced proceedings as the Senate passed the bill without debate.[26]

The domestic supply of nickel was at that time produced by a mine at Gap, Pennsylvania, owned by industrialist Joseph Wharton. On March 19, Pollock wrote to Chase that they had no more nickel, nor was any available from overseas; "we are thus shut up to the home supply; from the works of Mr. Wharton".[30] Opposed to the removal of nickel from the cent, Wharton published a pamphlet in April 1864 proposing coinage of one-, two-, three-, five-, and ten-cent pieces of an alloy of one part nickel to three of copper, doubling the percentage of nickel used in the cent. Despite Wharton's efforts, on April 20, a select committee of the House of Representatives endorsed the bill. It was opposed by Pennsylvania's Thaddeus Stevens, who represented the mining area from which Wharton extracted his nickel. Wharton had spent $200,000 to develop his mine and ore refinement machinery, Stevens related, and it was unfair to deprive him of the major use of his metal. "Shall we destroy all this property because by coining with another metal more money may be saved to the government?"[31] Besides, he argued, the copper-nickel alloy for the cent had been approved by Congress, and the new metal, which he termed "brass", would show rust. He was rebutted by Iowa Congressman John A. Kasson, chairman of the House Committee on Coinage, Weights, and Measures, who stated that the bronze alloy did not resemble brass, and he could not support the proposition that the government is bound to purchase from a supplier because he has spent money in anticipation of sales.[32]

The legislation passed the House, and the Coinage Act of 1864 was signed by President Abraham Lincoln on April 22, 1864. The legislation made base metal coins legal tender for the first time: both cents and two-cent pieces were acceptable in quantities of up to ten.[32] The government would not, however, redeem them in bulk.[33] The act also outlawed the private one- and two-cent tokens, and later that year Congress abolished all such issues.[34] The legislation did not allow for the redemption of the old copper-nickel cents; it had been drafted by Pollock, who was hoping that the seignorage income from issuing the new coins would help finance Mint operations, and he did not want it reduced by the recall of the old pieces.[35] Wharton and his interests were appeased by the passage of a bill for a three-cent piece in 1865 and a five-cent piece in 1866, both of his proposed alloy, out of which the "nickel", as the latter coin has come to be known, is still struck.[36][37] Despite this, Wharton and his nickel interests made repeated attempts to return nickel to the cent, each time failing, both as part of the deliberations over what became the Coinage Act of 1873,[38] and in the early 1880s.[39]

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".[40] The "L" is known on 1863-dated pieces, in both metals, and on 1864-dated copper-nickel pieces—some of these issues, all extremely rare, were likely struck at a later date.[41] The bronze cent was immediately accepted by the public, and heavy production of the issue soon alleviated the shortage of cents.[42]

The rare 1877 Indian Head cent

In the postwar years, the heavy production of cents was scaled back, as hoarding ceased and some of the slack was taken up by other base-metal coins.[43] Nevertheless, the various issues of small coins, at that time not redeemed by the government, caused another glut in commerce, which was not completely broken until the Act of March 3, 1871, allowed redemption of cents and other minor coins in lots of $20 or more.[38] Pursuant to this act, over thirty million copper-nickel cents, of both the Indian Head and Flying Eagle designs, were redeemed; the Mint melted these for recoinage. Fifty-five million bronze cents were also sold to the government; beginning in 1874, the Mint re-issued these in response to commercial requests for cents, lowering the demand for new coins.[44] Drops in the price of silver brought coins of that metal, hoarded for a decade or more, back into commerce, also decreasing demand. Between 1866 and 1878, production only occasionally exceeded ten million; the 1877 coin, with a circulation mintage of 852,500, is a rare date for the series.[43] After 1881, there were few redemptions of bronze cents, due to high demand for the denomination, though copper-nickel cents continued to be redeemed and melted.[45]

With the discontinuance of the two-cent piece and three-cent silver in 1873, the cent and the three-cent nickel were the sole survivors of the coins valued at less than five cents. The three-cent nickel, by this time, was unpopular because of its odd denomination and (with the return of silver coinage) its similarity in size to the dime. A three-cent postage rate had been one of the reasons why that denomination had begun, in the 1850s; in the early 1880s, the Post Office decreased the basic rate for letters to two cents. This change both increased demand for cents, and decreased the demand for the three-cent nickel, which was abolished in 1890. In most years of the 1880s, there were large issues of Indian Head cents.[46] The exception was in the mid-1880s when poor economic times led to less demand for minor coins.[47] No cents or five-cent nickels were minted after February 1885 until near the end of 1886. Production of undated dies into which the year of issue could be punched did continue, and during the hiatus in coin production, Chief Engraver Charles E. Barber modified the design, removing light outlines between the lettering on the obverse and the rest of the design, and making other changes. This led to two types for the 1886 Indian Head cent, which may be distinguished: on the Type I, the lowest feather on the obverse points between the I and the C in "AMERICA", while on the Type II it points between the C and the final A. Snow estimates that 14 million of the mintage of 17,654,290 were Type I, as were a majority of the 4,290 proof strikings.[48]

The economic Panic of 1893 again caused a decrease in the number of cents produced, as coins accumulated in private hands were spent, creating a surplus.[49] Aside from that, the final years of the series before its termination in 1909 were marked by large mintages, with 1907 topping the hundred million mark. A healthy economy in most years fueled demand, as did the increasing popularity of coin-operated machines, some of which could be found at penny arcades.[50] By the early 20th century, the cent was accepted across the nation, but by law production of the cent was limited to the Philadelphia Mint. Treasury officials sought removal of this restriction, and for an increase in the annual appropriation to purchase base metals for production of the cent and nickel—the amount expended had remained the same since 1873, although demand for cents had greatly increased. By the Act of April 24, 1906, the Mint received permission to strike base metal coins at any mint, and the appropriation was quadrupled to $200,000.[51] Small quantities of cents were struck at the San Francisco Mint in 1908 and 1909; the 1909-S cent, with a mintage of 309,000 pieces, is the lowest mintage of the series and commands a premium as a key date.[50]