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Shield nickel makes ugly design a favorite

If you picked just one coin as your favorite, what would it be? That is a hard question to answer for collectors because we tend to want them all over the years, finding something new to love about each and every federal issue since 1792.

However, if pressed, I will admit that one of my favorites – not my only favorite – is the Shield nickel.

However, there is little evidence in the marketplace that other collectors feel the same way I do. They seem rather to be focused on James Earle Fraser’s Buffalo nickel if they care about the denomination at all.

So for the time being, the most historic or at least the first nickels ever issued by the United States seem to continue with relatively little collector interest or attention.

Whether the current interest level will eventually rise remains to be seen, but if that happens they will find that the Shield nickel is a collection many can complete and it involves some very interesting coins.

The idea of a nickel did not come naturally to the United States. After all, back in 1792 when the first denominations were authorized, there was concern that Americans might not trust their new federal coins because they had been less than fully trusting in paper obligations called Continental Currency.

Americans of the time had good reason to be skeptical. The paper that had burned them was only 16 years in their past. Officials of the three-year old federal government could not afford another situation where Americans lost money accepting coins from the national government.

If anything, these officials went too far to be sure that the metal value of the coins was very close to their face value. In that atmosphere, it was probably natural that a denomination of five cents would be made of silver and not some form of base metal.

For many years, the silver half dime had rather sporadic mintages as the Mint allowed the people who supplied the silver or gold to choose their denominations and that was almost never the half dime. People apparently opted for a bag of silver dollars rather than half dimes.

Eventually the half dime would see regular and increasingly larger mintages as the denomination was one that would see a good deal of use in commerce despite its very tiny and inconvenient size.  The half dimes, however, ran into a problem in the 1850s as did other silver issues.

The discovery of gold in California had upset the traditional gold to silver ratio, making the cost of producing silver coins rise to a point where it was higher than their face value. The public understood the situation and began hoarding silver coins, causing a national coin shortage.

Congress would eventually act in 1853, slightly reducing the silver content of silver issues but the hoarding had exposed the fact that even the small half dime was subject to being saved in quantity because of its silver content.

Things were fine for a few more years, but before a decade had passed, there was a new crisis that was a blow to the half dime and all federal coinage. It was a crisis that the Congress could not solve. The Civil War, which began in 1861, was only going to be settled on the battlefield and that was going to take years.

Moreover, the first months of the war did not give anyone who wanted to preserve the Union much cause for optimism. In that atmosphere of defeats and discouraging news, people once again began to hoard coins. Moreover, a lot of coins were in what was now the Confederate States of America, so they were out of reach of the federal government and so were three branch mints.

Had the war taken three months, it might have been no problem, but that was not going to happen, and the hoarding this time involved not only gold and silver but ultimately even copper-nickel cents. 
The situation was going from bad to worse with people using encased postage stamps, tokens and just about anything of value to make change. Fractional Currency was introduced and it worked but it was not popular. The situation continued to get worse as cents, too, vanished.

This produced a couple emergency ideas regarding coinage, the first being to change the cent to bronze and to that idea was added a bronze two-cent piece. Both of these were accomplished in 1864, the fourth year of the war.

At least one person was probably not too happy with the change in the cent composition from copper-nickel to bronze and that person was a man named Joseph Wharton from Lancaster Gap, Pa.

Wharton in the best tradition of the day was the leading advocate for the use of nickel in coins. At other times the gold interests had successfully gained approval of a new gold dollar and double eagle, with a $3 coming along a few years later. They did not get everything they wanted as proposals for gold $25, $50 and $100 were not approved, but they did get some new denominations. Years later silver interests would make similar efforts through the coinage of large numbers of regular silver dollars and the addition of the 20-cent piece and Trade dollar.

In the case of Joseph Wharton his interest in nickel was easy to understand as he owned the only operating nickel mine in the United States at the time. If he had his way the United States would have only copper-nickel coins. As it turned out, his proposed alloy for the five-cent coin turned out to be amazingly durable. Once produced, the nickel has had no alloy change except for the emergency World War II issues since it first appeared in 1866, right after the Civil War.

At the time, however, Wharton was probably not thinking about how long his proposed composition would be useful, but rather he needed to do something as the change in the composition of the cent would hurt nickel demand. He countered with proposals which were passed for a copper-nickel three-cent piece in 1865 as well as a five-cent coin of the same copper-nickel alloy.

Approval for the new five-cent coin came on May 16,1866, and the bill went further allowing the newly authorized coin to be used in retiring Fractional Currency of that denomination.

Because the Fractional Currency notes were unpopular, it was certain to help the new coin in gaining acceptance. That might have been needed as both it and the copper-nickel three-cent piece were in addition to silver coins of the same denomination, so the struggle for acceptance might well have been a tough one. Silver coins in those early months of peace were still being hoarded. Paper money, both Fractional Currency and the higher denominations, kept commerce going. Both silver and gold coins sold at a premium price in terms of federal paper money.

The nickel five-cent piece made it much easier to make change for paper money. It did not trade at a premium price.

In terms of the design, officials were not as helpful in getting the new coin off to a good start. There were some patterns, which were interesting in that one depicted George Washington, but the eventual decision was to simply modify the design from the two-cent piece, which had managed to impress very few at the time.

Certainly if anyone should have been happy with any new design, it would have been Wharton, but he ended up being one of the most outspoken critics suggesting that it was a “curiously ugly device.” He was not done, adding that the obverse resembled an “old-fashioned tombstone.” He had company as the American Journal of Numismatics called the new coin the “ugliest of all known coins.”

Despite the reviews the new Shield nickel received a warm welcome from the public who would have been happy with just about anything that would circulate. Considering there was well under a year to produce the new coins, the initial 14,742,500 mintage of the Shield nickel has to be seen as a heavy.

That 1866 mintage makes the 1866 Shield nickel an historic but available coin today with a price of $27.50 in G-4, $260 in MS-60 and $2,700 in MS-65. The prices actually reflect a certain amount of type demand as the 1866 and a small amount of the 1867 mintage would be the only two years of the that used rays on the reverse that radiate from the numeral “5.”

The problem at the time was that dies were cracking too often producing Shield nickels. In addition, the strikes were weak and that creates a problem today for collectors desiring a top quality example even in the case of proofs. An 1866 Shield nickel proof is $3,850, but they are very hard to find in that grade with most falling below Proof-65 by a point or two.

The Mint staff discovered what they believed to be the problem as the reverse with the rays required a high degree of metal flow that they were not usually getting. In an attempt to better fill the cavities of the design, it was decided to remove the rays, but before that could be done just over two million 1867 Shield nickels were created with the rays and they exhibit the same problems as the  1866. With their lower mintage, they are naturally more expensive at $37.50 in G-4, $350 in MS-60 and $4,150 in MS-65.

The real story in terms of the 1867 with rays comes in proof where it is a major rarity. The proof mintage of the 1866 is estimated at 500 pieces, but there was supposed to be no proof 1867 production until the rays were removed, according to research by R.W. Julian. This suggests that Chief Coiner Archibald Loudon Snowden wanted to make no proofs, believing the design would soon be changed. Someone, however, went ahead anyway. The number is unclear with some suggesting just 30 pieces.

The precise availability of the 1867 with arrows proof is hard to determine. Walter Breen had suggested 12-15 examples, but the grading service totals paint a different picture as at the Professional Coin Grading Service they have seen 45 examples of which 25 were called Proof-65. At the Numismatic Guaranty Service the total is 12 more, with six of them being called Proof-65 or better.

The totals tell us a couple of things. The first is that the 1867 continued to present striking problems based on the relatively low percentage of coins making Proof-65 or better. The other thing is that the Breen estimate is not likely to be correct as while some coins have doubtless been submitted more than once, a combined total of 57 is far too high to suggest fewer than 15 coins exist. The number, however, is small, resulting in a price of $75,000 for a Proof-65.

The rest of the 1867 production saw no rays and that would be the design for the remaining Shield nickel production. The Shield nickel showed quickly that it was being used by the public. It helped that there were no silver coins in circulation in most of the country, but any fears that a copper-nickel five-cent piece might be rejected were quickly dismissed as large mintages continued until 1870 when the total for the first time dropped below five  million. That was followed by a 561,000 total in 1871, marking the first time the Shield nickel had a mintage of less than one million pieces.

The lower mintage 1871 was realistically the first tougher date in the series with a G-4 price of $70 while an MS-60 is $375 compared to an available date in the same grade, which is about $150-$160. In MS-65 the 1871 is currently $2,100 more than twice the available date listing of $750.

The 1871 is the first clear example of a pattern that shows that in some cases a proof example of certain dates is actually less expensive than an MS-65. The 1871 in Proof-65 is roughly one-half the price of the same date in MS-65. There is good reason as PCGS has seen just 25 examples it graded MS-65 but in Proof-65 the total stands at 126. That sort of situation exists with other dates as well as many of the collectors of the time simply collected by date. They would opt for a proof. They ignored the uncirculated. Even though the proof mintages might be low, the coins received better care and as a result exist in greater numbers today.

The 1873 is an interesting date as it came with either an open or closed “3.” The varieties are basically at the same price, although some suggest that the open “3” is about two-thirds of the total mintage, so potentially the closed “3” might prove to be better.  This is reflected in current prices. The differences were caused by an official  decision during the year that resulted in an order to make a more open “3” pieces. That was done leaving us with two types of “3” on the Shield nickel and other denominations as well.

The mintages in the early 1870s continued to be in the millions. Ironically there was a drop around 1873 when the silver half dime was officially eliminated. It was in all probability the economy, which was bad that year, that saw the mintages decrease at a time when they might have been expected to increase, but the situation continued on for a number of years, reaching a low in 1877 and 1878 when the only nickels produced were proofs.

The 1877 mintage was put at 900, and the 1878 at 2,350, resulting in Proof-65 prices of $4,300 for the 1877 and $2,150 for the 1878.

The next few years would see lower mintages for a different reason. The conversion of the economy from the three-tier gold, silver paper system of the post Civil War years was completed in 1879 when all forms of money were once again equal.

 That saw a period of low mintages with no date even reaching 100,000 until the 1881.

The low mintages make the dates of the period a challenge and that is especially true in the case of the 1880, which had a mintage of just 19,995, leading to a price of $560 in G-4. It is another case where a Proof-65 at $700 is a good deal when compared to a $3,450 MS-60 or $47,500 MS-65.

These prices, however, are justified as PCGS has seen only three examples of the 1880 in MS-65 or better while the total in Proof-65 or better is just under 200 pieces. Admittedly, the 1880 is an extreme example, but the pattern of lower priced proofs begins about 1870 and that makes a proof collection of Shield nickels an interesting alternative that every collector can consider.

In 1882 Shield nickel production would suddenly rise to almost 11.5 million pieces. It might well have been a case of catching up after years of low mintages. The 1883 would seem to argue the opposite as its mintage was only around 1.5 million, but in fact the 1883 was only produced for a short time before being replaced by the Liberty Head nickel.

The last two years of the Shield nickel are quite easily found and in almost any grade. It appears that there was significant saving at the time of the old Shield nickel as well as the new Liberty Head nickel and that makes the 1882 and 1883 very possible, with the 1883 being the least expensive Shield nickel in MS-65 at just $750.

It is hard to understand precisely why there was such heavy saving suddenly in 1883, as with the exception of some cents hoarded in the Civil War, there was not much indication of hoarding among lower denominations at the time. Perhaps the public had grown fond of their ugly coin and when news arrived of its replacement, they saved some.

The one significant Shield nickel error the 1883/2 was also from the period. It too is available probably thanks in part to the heavy saving and that makes it a $210 coin in G-4 with an MS-60 at $1,400 and an MS-65 at $4,000.

There are a lot of options in a Shield nickel set, but every one of them leads to a very historic collection of a coin whose importance is still being felt today as the nickel in your pocket may be a different design but it is really the same basic alloy that Joseph Wharton championed in the 1860s.           

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