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Replies: 16 / Views: 3,216 |
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Bedrock of the Community
Australia
21788 Posts |
Copper nickel coins are a bit like banknotes, they have token value only. Even the Romans happily accepted orichalcum sesterces, and the sestertius was the basis of their currency system, just like the Dollar is to the U.S. currency system. The populace is forced to have confidence in the currency system they have to use.
In personal sense are YOU happy enough to use a base metal coin that has only a tiny intrinsic value that is relative to it's publicly accepted nominal value?
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Rest in Peace
United States
17900 Posts |
Wonderful question. I can't offer any real help, but ill certainly watch to see what might be added for this topic.
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Pillar of the Community
 United States
6130 Posts |
The main problem is Gresham's Law. Unless the few grams of nickel was "worth" as much as the few grams of silver it was replacing, the public will cling to the intrinsically more valuable money. If the Mint re-released the 40% silver half dollar, you can bet that people would be lined up for miles to swap their change jars for real silver coins. I don't struggle to imagine that people would have been happy to spend the new nickels, but if I went to the market, I would of course ask if the cashier had any Half Dimes before I accepted a nickel. Even a trime and a Two Cent Piece. Going back to Rome, yes the intrinsic value of the Sestertius was largely symbolic, but not totally. When the Praetorian guard sold the empire to Didius Julianus in 193, he paid them the promised face value in reduced weight sestertii, and they killed him for it.
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Bedrock of the Community
United States
17884 Posts |
Nickel was more valuable in the 19th century, but it was also beginning to be realized around the 1860's that minor coins were more of a convenience item and did not require close to their full face value in metal value in order to be accepted. The large cent had over one cents worth of copper in it. The copper in the small cents was well below the face value, but the addition of the nickel brought the value up close to the face value. But the popular acceptance of the bronze civil war tokens in the 1861 to 63 era showed the government that a full face value was not needed for the acceptance by the public. So in 1864 the "costly" nickel was removed and the cent became bronze. So the nickel in the Three Cent and five cent coins, while not costing as much as the face value, did provide coins of reasonable value and convenient size that were readily accepted by a population that was starved for coinage and would now be relieved of the nuisance of trying to do all their everyday commerce with nothing but cents that were only legal tender to ten cents. To a large extent nickel was not used in coinage other than in small denomination until around 1920 when WWI had caused silver to be too costly for most countries to use in their coins. By that time countries were already off the precious metal standards.
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Bedrock of the Community
United States
20753 Posts |
At one time Silver was going to be the common usage of all our coinage. However, Some guy with a White Horse and an Indian companion started using So much Silver for his bullets, this left very little for our coinage. Law enforcement people didn't want to make him mad so they all agreed to change some of our coinage to Nickel. 
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Moderator
 United States
189340 Posts |
An interesting topic. I always enjoy Conder's contributions. 
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Bedrock of the Community
United States
17884 Posts |
Back in March I Transcribed a document for Roger Burdette from 1854 that was discussing the use of nickel in the cent coin. The letter gave the price of Nickel at that time as $2 a pound. At that time copper was around 41 cents per pound. So the new coppernickel small cent contained 4.1 grams of copper worth .37 cents and .56 grams of nickel worth .27 cents for a total metal value of .64 cents apiece. Notice that while there is only 1/8th as much nickel in the coin as copper it is worth nearly half as much. Assuming the price of nickel stayed fairly constant, the would make the Three Cent piece 1.46 grams of copper or .13 cents and .49 grams of nickel or .21 cents for a total of .34 cents The five cent had .34 cents in copper and .55 cents in nickel for a total of .89 cents. But the three and five cent pieces were made after the mint realized that minor coins didn't have to have nearly their full intrinsic value in them. (The intrinsic value in the bronze cent was only .26 cents.)
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Pillar of the Community
 United States
6130 Posts |
Interesting info, Conder  Going back to Gresham's law, it still surprises me that especally in the wake of the Civil War, people weren't inherently distrustful of base metal coinage when silver could be had. Perhaps they were just glad to not have to resort to shinplasters and encapsulated postage?
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Moderator
 Australia
16849 Posts |
Most of the early introductions of nickel and cupronickel do seem to be efforts at reducing the size of base-metal coins while maintaining the "appearance of value".
Here in Australia, nickel was first contemplated for coinage in the early 1920s. The theory was that the large, bronze pennies and halfpennies would be replaced with smaller, square-shaped nickel coins (the square shape to help distinguish them from the higher-denomination silver coins). In the end, the plan was never implemented, as the costs of producing nickel coins on square planchets proved too high.
This is one factor that many countries issuing nickel coins, especially pure nickel ones, failed to take into account until it was too late. Nickel is a hard, tough metal, much more difficult to work with than the traditional coinage metals. This means production costs (labour, energy, die wear, etc) are a much higher component of the cost of making a nickel coin, and you can never get those production costs back when the coins are returned for melting. On the flip side, of course, is that nickel coins are much more long-lasting in circulation so there should be less need to return and remelt them.
Later, nickel and cupronickel alloys were introduced throughout the world to replace silver, once silver coinage became nonviable. We didn't have the same push towards removing silver from the coinage that most of the rest of the British Empire had, because Australia still had plenty of silver mines. Silver was cheap and plentiful here, and we'd have had no other use for the stuff if we'd stopped putting it in coins.
We didn't see nickel reintroduced to the coinage until decimalization in 1966, when the old predecimal silver coins were withdrawn and replaced with mostly cupronickel counterparts.
Don't say "infinitely" when you mean "very"; otherwise, you'll have no word left when you want to talk about something really infinite. - C. S. Lewis
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Moderator
 United States
189340 Posts |
I always enjoy Sap's contributions, too. 
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Bedrock of the Community
United States
17884 Posts |
Quote: Going back to Gresham's law, it still surprises me that especally in the wake of the Civil War, people weren't inherently distrustful of base metal coinage when silver could be had. Perhaps they were just glad to not have to resort to shinplasters and encapsulated postage? Well silver was never really available for the minor coinage other than the Half Dime, which due to its small size was very difficult to handle. And silver didn't come back into day to day commence after the war until about 1874 by which time the people had become accustomed to the more convenient sized minor coins provided by the subsidiary metal compositions. And Greshams law doesn't always hold true. Look at paper money. Under Gresham's law the idea of a preference for paper over silver (or even clad coins that have some intrinsic value) seems ridiculous. What made it work was the guaranteed conversion on demand of paper to silver. At first people didn't feel comfortable with it and that resulted in paper money passing at a discount to silver, but as time passed and the government continued to honor the guarantee the value of the paper rose until in 1874 it was passing at par with silver and the coins returned to circulation. After that the paper became the preferred form of handling large transactions because it was lighter and easier to carry and conceal. Although it had no intrinsic value in itself, the guarantee of convertibility meant that for all practical purposes paper WAS silver or gold.
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Pillar of the Community
Belgium
506 Posts |
We need considering that even a currency system based on precious metals only and with large copper coins approaching their face value, occasionally is under strain, as explained in Monetary Regimes in Transition see https://books.google.be/books?id=UT...tion&f=falseFrom 1850 onward, silver appreciated in price relative to gold and countries tended to issue smaller denominations in gold. The French 10 francs coin is but one example. As 90% silver coins disappeared from circulation towards 1860, additional measures needed to be taken. In the Latin Monetary Union, the silver content of all coins up to 2 Francs was reduced to 83.5%. Mintage numbers of the 90% silver 5 Francs coins were reduced. Belgium introduced copper-nickel coins from 5 Centimes to 20 Centimes, replacing both the small silver coins and the large coppers. During the early 1870's the situation reversed and gold became more valuable again. While initially this led to a flurry of newly minted silver 5 Francs coins and cranked up mintage numbers of smaller denominations, countries within the LMU soon decided to halt the production of regular silver 5 francs coins, abandon the idea of a bimetallic standard and revert to a gold standard. Thereafter, all silver coins in circulation now were token coins. Cheaper silver also facilitated the return of silver coins to circulation in the US few years after the civil war and over a decade before full gold convertibility of the dollar would be restored.
Edited by Gwyde 08/24/2017 10:52 am
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Pillar of the Community
United Kingdom
1323 Posts |
One point not mentioned so far is convenience, If you are going to have bronze coins and silver coins with intrinsic value, then you end up either with a very large bronze coin or a tiny silver one in the middle of the series - copper-nickel was useful compromise around this.
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Bedrock of the Community
Australia
21788 Posts |
In consideration of Sap's comments, it would seem that Australia may have been the LAST country in the World to introduce nickel into the circulating coinage system.
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Pillar of the Community
Australia
3831 Posts |
I think in general, with any new coinage regardless of whether the public likes it or not, if they are not given an alternative, they will use them, unless shown to be worthless. US dollar coin is a good example.
In the case of Asia, Japan first started off with the 1889 5 sen coin followed by Korea in 1892 (issued in 1894). China followed by in 1909, first issued by the German terrority Qingdao. While this was not too much of a problem in Japan, people's faith in the new coinage didn't last too long. Previously, mint officers were well known to be corrupt - coins were not based by weight value as the alloy could have been of a cheap alloy. It was only a matter of time when people's fear of "worthless" coins cause a havoc.
This proved to be true. In 1909 when nickel prices started to fall, Koreans immediately demanded their coins to be converted into "proper" money. These caused the coins to rapidly disappear from the public and by the following year, due to massive demand - nickel coins were no longer legal tender. Supposedly more than 200+ million coins were sent back to Japan to be melted down. You can only imagine the irony as Korea's nickel copper coins are perhaps some of the world's most expensive coins other than the illusive 1913 nickel.
Similar story happened in China. The public initially did not like them. Over time, the public got used to them.
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