At least one wooden nickel is made of something (Photo by H. Armstrong Roberts/ClassicStock/Getty Images)
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Wait, they already did. Or rather, the very existence of nickel means that they have already eliminated something else, something better. In the civil war they got rid of the halfpenny, which was actually called “halved” (!). Silver was becoming very expensive because the United States was shutting down the private economy for the war effort. The halfpenny, or five-cent piece, was made of silver, one-twentieth of an ounce. An ounce of silver, like that of the old Spaniards, was a dollar. As silver doubled in price in or about 1862, one twentieth of an ounce became worth much more than five cents. So the government began minting five-cent pieces from a cheaper material, nickel. Buffalo girls are you not going out tonight or something. We never saw the halfpenny again.
Yes, in the Big One, World War II, they minted pennies out of zinc-coated steel. This was more of a lack of material, rather than an understatement issue. The war effort needed copper. After the Big One, we got copper pennies again. (Zinc was also depreciated after the Donora industrial disaster of 1948.) Comparable to the replacement of the half dime with nickel was the minting of silver quarters and dimes by Treasury Secretary Henry Fowler in 1965, and soon half dollars and dollars. The quarters we’ve lived with since 1965, the ones with Helen Keller sitting stiffly upright in a chair for Alabama and all the rest, are made of amalgam.
In 1792, when the American mint began that year to take care of the Coinage Act of 1792—and we certainly deal with this issue in new book Free Money—Amalgam was the next useless material necessary to amalgamate the coin, made chiefly of precious metal, as of course. The amalgam ensured that the coin would retain its shape and wear. “Smiling, he pocketed the coin,” as Strunk & White put it for many years in their pocketbook.
Is it any wonder that today, the government can’t make a penny out of amalgam? The G-man can’t make pennies for less than three cents each – even out of amalgam (they could be colored like copper). Amalgam is useless, or at least it always was. Is dirt-poverty meaningless anymore? Dirt fingernails can fetch three cents a pop now? What has happened to the flames?
The first thing that happened is that the government now makes all the coins, without the participation of the democratic people. This is in stark contrast to tradition and the Coinage Act of 1792, whose achievements (notwithstanding the fat half fiasco) include the monetary system of the industrial revolution. The way it’s always been done, anyone he could come to the Mint with precious metals, i.e. gold and silver, and stamp it into coin, free of charge. If you brought an ounce of silver, they would put it on a dollar with all the marks for you. The only charge was that you gave them an ounce and they gave you back the coin, which had a little less than an ounce of the metal because of the amalgam. The Mint collected the scraps of precious metals that remained for its profit.
Again, how has this system fared financially? Agrarian and industrial revolutions, that’s how it happened. Mass prosperity. A professional, Federal Reserve, Ph.D. monetary system is better? Absolute boss.
It’s not just that the government monopolized the monetary system and took over the banks with regulation, through the Federal Reserve. It is also that the government has monopolized it coinage system. The coinage system was supposed to be a give-and-take between the people and competing mints. We got rid of it for… a 34-fold increase in the price level since 1913?
The second general thing that has happened is the now virtually complete separation of money from the underlying value of the monetary instrument. The remaining coins we have are the final frontiers in this saga. Don’t you dare wipe out the nickel (don’t you dare wipe out the cent, I used to say)—for now that’s the leg we still keep in this truly outstanding tradition. I bet that nickel is worth even more than quarters are these days. We should expect the pressure on the federations (which they themselves feel) to intensify.
Yes, yes, Bitcoin is going to take over the monetary system and all this will soon pass. However, how disappointing it is that the government cannot face an honest competitive opponent when a challenge like Bitcoin arises. Bitcoin is obviously coming for the dollar, it is here to steal its lunch and pull down its shorts before packing it up for good. When a fierce competitor comes along, you’re supposed to be competitive with them, not try to outrun them in a flash.
Yet here we are as the United States begins to finish eliminating monetary instruments of value. All is not lost. As in everything, in government, every day is an opportunity to get it right again.
