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Three-cent victim of size, metal bias

This article was originally printed in Numismatic News.
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For many years there has been an obvious bias among collectors in favor of coins made of precious metals and coins of large diameter.

The winners of this set of preferences have been coins like Morgan dollars, Walking Liberty halves and American Eagles. In the case of the silver American Eagle, it copied the basic size of the Morgan dollar and swiped the design of the Walker.

To be technically correct, it should be noted that the Morgan dollar is 38.1mm and the silver American Eagle is 40.6mm. But that is close enough to make the point: Big and precious is good, small and base metal is, well, not bad but not quite as desirable, either.

Prior to the Coinage Act of 1965, it would not have occurred to those of us who grew up looking for rare Lincolns in change and in bank rolls to think this way, but as finds dried up and precious metals seemed ever more precious, the change of collector focus occurred.

Has the time come for the pendulum to swing back a little bit?

In the case of  the copper-nickel three-cent piece, it falls into the small and base metal categories, but before you dismiss the dime-sized coin, it should be noted that it was last produced in 1889, so that at least gives it the positive aura of a 19th century issue.

It is, indeed a classic, and with years if not decades of neglect, that means the copper-nickel three-cent piece is a great opportunity for those looking for an interesting collection at a good price.

In fact the story of the copper-nickel three-cent piece is one of the most interesting as the copper-nickel three-cent piece is really a true souvenir of the Civil War and the troubled times that followed. In fact, the denomination if not the composition stretches back even further and it can literally be said that the three-cent piece had its roots in the California Gold Rush. It served an important role in the events that followed, stretching right up to the end of the 19th century.

It might well be said that the three-cent piece emerged as nearly an accidental denomination. There had been no regular push for a three-cent piece until the late 1840s unlike the two-cent piece, which had been suggested and had patterns produced a couple of times going all the way back to the early 1800s, but the three-cent piece had no such regular pattern of consideration.

The late 1840s, however, saw a study by the Congress regarding possible new denominations. A two and one-half cent piece was considered, which actually made a certain amount of sense as the Spanish “bit” was still in circulation and it was valued at 12.5 cents. The two and one-half cent piece would make life much easier when it came to making change for the Spanish bit. As it turned out, it was probably easier to simply retire the bits from circulation than to introduce an unusual denomination.

The matter of new denominations was taking on an added urgency in the late 1840s because of the discovery of gold in California. All that gold would disrupt the traditional gold-to-silver ratio and that meant that silver coins would actually cost more than their face value to produce. The public was well aware of the situation and they began to hoard silver coins, thereby causing a national coin shortage.

The Congress did not want to reduce the amount of silver in the regular denominations if possible, so it members dragged their feet. They hoped to buy time, so 75 percent silver three-cent piece was authorized in 1851. As a new denomination, the debased silver coin might circulate without drawing too much attention to the fact that it contained less silver than normal.

In fact, the new denomination had an added advantage in that the postage rate for letters had just been lowered to three-cents so it could be promoted as a convenient denomination for the purchase of stamps. In fact, that was never really an issue, but at least for a time it was a good cover for the fact that in reality the Congress was stalling on taking an action that would eventually be required, but which they feared would be unpopular.

Finally in 1853 the Congress was forced to act and the amount of silver was reduced slightly in the regular coins. For its part, the three-cent piece had its silver content increased to 90 percent, bringing it in line with the other denominations.

The denomination had worked as a temporary stopgap measure at a time of a national coin shortage. Its silver composition, however, would ultimately prove to make it vulnerable to the very sort of hoarding that had brought it into being.

That hoarding did not take long to materialize as concern over the Civil War as well as the fall of three of the four federal branch mints to Confederate hands saw the nation gripped by a serious coin shortage. The amount of silver in the three-cent piece did not matter at that point as even copper-nickel cents were being hoarded. Everyone North and South was taking steps to provide for financial security no matter what the outcome of the conflict. Commerce was hampered as in circulation the desperate public was using a combination of postage stamps, tokens and later Fractional Currency. No one was happy about the situation, but no one had any good alternatives.

Officials went to work in an attempt to create coins that could circulate. The first step was to change the cent from a copper-nickel composition to bronze (to match the Civil War tokens) and that alloy also appeared promising for a new two-cent piece as small denominations were a particular problem.

The bronze cent and two-cent piece would work, but they were hardly ideal in the mind of Joseph Wharton, who would later be remembered for the Wharton School at the University of Pennsylvania. At the time, however, Wharton’s greatest interest was nickel and its potential value in alloys for coins.

To say that Wharton had been an enthusiastic advocate for the use of nickel in the copper-nickel cent would be putting it mildly. Wharton had something of a vested interest in the use of nickel as he was the owner of the nation’s only nickel mine in Lancaster Gap, Pa. Over the years he had been something of a one-man lobby for the benefits of nickel proposing that virtually all denominations be changed to copper-nickel.

In this crisis Wharton found more receptive ears than usual and one in particular, Rep. Kasson who chaired the House coinage committee was especially helpful as he pushed through legislation calling for copper-nickel three- and five -cent coins.

The efforts of Wharton might almost seem comical except for the fact that he was ahead of his time in a couple respects. The first is that years later mining interests from the West learned that Wharton had at least a possible solution to their problems in that his efforts to create more use for the metal from his mine in many ways were something of a blueprint for the strategy of the silver interests.

In addition, as it turned out, Wharton was advocating an alloy that would prove to be very useful as realistically the nickel today is the same alloy as the nickel he was promoting and no other denomination has been unchanged in terms of composition for the period since the Civil War except for Wharton’s nickel.

The copper-nickel three-cent piece was rushed into production in 1865 not as competition for the silver three-cent piece but rather as a coin that could potentially not be hoarded by the public and circulate. The high hopes for the new coin were seen in its initial 11,382,000 mintage in 1865.

The situation in 1865 was interesting as you had the silver three-cent piece, the new copper-version of the same denomination and a Fractional Currency note also of the same denomination. When you realize that just 15 years earlier there were no three-coins of any type it was an amazing wealth of ways to make three cents in change.

However, the three-cent silver was hoarded, so it really wasn’t available. And the three-cent note was roundly detested by the public and the Treasury alike since it was introduced in 1864.

Some would have seen the arrival of the copper-nickel three-cent piece as the beginning of the end for the silver three-cent piece as it certainly turned out to be, but in that first year it was simply a matter of trying anything that would rid the country of the detested Fractional note.

Collectors looking at the 8,500-piece mintage of silver three-cent pieces in 1865 have the benefit of hindsight. Many also point to the first copper-nickel five- cent coin in 1866 as the beginning of the end for the copper-nickel three-cent piece as well. That also proved true eventually, but the nickel was an attempt to find a durable substitute for the five-cent note.

The Treasury succeeded on  both counts as by 1869, the lowest Fractional Currency note in use had a denomination of 10 cents. Step by step, the Treasury was working to get rid of Fractional Currency and put gold backing behind the larger denominations, a goal that was ultimately successful.

Certainly predicting the end of a coin like a copper-nickel three-cent piece just introduced might have been a bit premature, but there is also no doubt that after the initial large mintage, the coinages of the copper-nickel three-cent piece began to drop. The 1866 mintage was just 4,801,000 and the 1867 total was one million lower than 1866. By 1871 mintages fell below 1 million pieces, yet there would be a couple larger totals topping the one million mark in 1873, the year the silver three-cent piece was eliminated, and also in 1881. That said, the glory days for copper-nickel three-cent piece production do seem to have passed very quickly and the general pattern after the first year with a few exceptions was one of slowly decreasing totals.

The mintage patterns make for a collection that seems to have sections. The first are the available dates from 1865-1876 and they have no date at more than $20 in G-4 even though there are some lower mintage dates in the group like the 1875, which had a mintage of 228,000, and the 1876, which was at just 162,000 pieces. For the price, it is hard to find a better deal than such low mintage dates.

Looking to the MS-63 grade, all of the issues are priced below $300. The 1865 is $150, quite an attractive price for something that dates to Lee’s surrender at Appomattox.

The years following 1876 are where the tough dates are found as with the exception of the surprise 1881 with its mintage of just over 1 million pieces, it is this era where the lack of use of the three-cent piece was reflected in the mintages. Two dates stand out as the 1877 and 1878 were proof-only dates with mintages estimated at 900 for the 877 and 2,350 for the 1878. As might be expected, they are costly, with the 1877 currently at $3,750 in Proof-65 while the 1878 is at $1,200 in the same grade. Actually, when you consider the mintages they could be much higher, but the prices are modest with the current lack of demand.

Most of the other dates of the period while very low mintage are still quite reasonable in circulated grades. The 1883 is a good example with a mintage of just 10,609. It is still just $200 in G-4. The final year of the copper-nickel three-cent piece, the 1889 is another good example, as with a mintage of just 21,561 it still lists for just $90 in G-4.

The most expensive date of the period other than the two proof-only years from the 1870s is the 1885, which had a mintage of just 4,790. That extremely low mintage results in a price of just $470, making it one of the very few cases where you can find a U.S. coin with a mintage under 5,000 in G-4 for less than $500.

The following year there was another proof-only date, but the 1886 is believed to have had sales of perhaps as high as 4,290, making it a much higher mintage date than the earlier 1877 and 1878. That results in a Proof-65 price of just $715 while one of the few 1887/6 proofs is $940.

These prices are not affordable to everyone, but certainly anyone who wants to commit five or 10 years to building a set should be able to put a very nice one together with a little planning and budgeting.

With current limited demand, it is possible to assemble a set in top grades as well. That is helped slightly by the fact that someone at least did a little saving back at the time of issue as a 1991 Christie’s auction called the “Baltimore Hoard” featured 1879, 1880 and 1881 copper-nickel three-cent pieces in Mint State with six examples of the 1879, 12 of the 1880 and 10 of the 1881 being sold at the time. Such totals cannot make a significant difference in a large market, but they do help when there is limited demand. If you use the $540 MS-60 price of the 1887, only the 1885 is higher in that grade and the 1877 and 1878 are proof-only issues.

In some cases, especially in the early higher mintage pieces prices run much less with the most available dates being under $200.

The situation in MS-65 is more complicated as a complete set in MS-65 can be quite a challenge. Some dates simply do not appear on the market with any regularity and even with unlimited funds assembling a complete set in MS-65 would probably take years.

Dates such as the 1883, 1884 and to a lesser degree the 1885 are going to be tough and there are a number of other dates also over $1,000, with even the most available dates currently priced at $650. In addition there are still the proof-only dates, making a complete set a good deal more difficult than many might realize.

Rather than attempt a set in MS-65, some might well be advised to consider a set in Proof-65 as it would probably be easier and more available. The reason is that it must be remembered that back at the time many collectors in the Philadelphia area were assembling sets by acquiring a proof example each year.

The Mint would charge roughly twice the face value and with copper-nickel three-cent pieces being only made in Philadelphia, it was a simple and easy way to assemble a top quality collection. While the mintages might have been in the hundreds or thousands, the proofs were only likely to end up in the hands of collectors, so they received better care generally than business strikes and stood a much better chance of survival. That makes them in many cases more available and less costly than business strikes today.

The 1883 is one example with an MS-65 at $4,850 but a Proof-65 is just $690. The 1884 is another with an MS-65 at $6,250 while a Proof-65 is at just $700. The differences for other dates may not be as large and there may be a couple exceptions to the pattern, but generally speaking the proof of a date is likely to be an easier coin to find and afford than an MS-65 of that same date.

The one tough proof is the 1865, which is currently listed at $6,500 in Proof-65. Certainly the price is higher but the 1865 can still be found and that is one thing that sets the copper-nickel three-cent piece apart as a potential collection in proof as there are other denominations from the period where most of the set can be assembled in proof but where there are one or two almost impossible dates like the 1867 nickel with rays, which makes the Shield nickel set extremely difficult and expensive to complete. There is no similar copper-nickel three-cent piece date making the set possible and one where the long-term values are hard to ignore.

In attempting a complete set in proof one-half the dates would be less than $1,000 in Proof-65., The remaining dates with the exception of the proof-only 1877 and the tough 1865 tend to be in a range from $1,000 to $2,000, making the entire set one many could potentially afford.

Moreover, there are the values as some of the dates are truly impressive like the 1885, which is $720 in Proof-65. The 1885 has a mintage of 4,790 and the best estimate is that only 1,000 of that total were business strikes. To obtain a Proof-65 date with a mintage under 5,000 for just $720 has to be on the short list of great buys in the current market. There is no good way to explain the low business strike mintage of the 1885 or some other dates as well, although there is speculation that token business strike mintages were made simply to avoid the appearance of creating rarities for special friends of Mint employees and officials. That was certainly an interesting possibility especially in 1885 the year when five 1885 Trade dollars were created clearly in violation of a directive to stop producing Trade dollars.

For the collector today, the reasons for the low mintages are not as significant as the fact that for relatively little money you can assemble a significant copper-nickel three-cent piece collection today. While perhaps not in the numismatic spotlight, it is hard to overlook the fact that the copper-nickel three-cent piece is an historic coin and a great value today.
       

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