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I. R. Bama's Blog

14 Dec 2020

Three Cent Coins Part Two: Economics: Why a Three Cent coin?

Coins-United States | I. R. Bama

Several weeks ago, I identified Metallurgy in my blog as being the third pillar of Numismatics, along with Art and History. But in researching the two three cent coin denominations, I realized that there is a fourth pillar of our discipline and that is economics. Art and History were pretty easy for me to recognize, but as I study numismatics more deeply I recognized that it is also underpinned by metallurgy and economics as well. This may not be news to many of you but for me it was a discovery. Quite humbling too, as I really didn't enjoy taking the subject in college. Over the years, I have developed an appreciation for the subject and wish I had studied it a lot harder than I did.

So If Art, History and Metallurgy are the who, what, when and where, Economics is the why. In this article, I will present and summarize a paper written by Michael F, Bryan of the Cleveland, Ohio Federal Reserve Bank (2004). Each Federal Reserve has an archive of articles that are of interest and use to the Numismatist on their website. Please enjoy the images of the Cleveland Reserve Bank and the safe they they have in the bank. Wouldn't you love to have that level of security for your collection in your home? That'll work!

So why a three cent coin, let alone two kinds and two kinds that also circulated at the same time for eight years? Really, that was unprecedented. Mr. Bryan tells us that it was the economics of the mid 1800's that was the inspiration of these two coins.

In 1851, the United States Postal Service. at the time, a monopoly at the time, was facing intense pressure from its competition which resulted in a loss of revenue that threatened its continued existence. In those days it cost five cents to mail a one page letter up to 300 miles, but with the development of railroads and steam ships, they could carry more letters in a less expensive manner than the Post Office. In fact they would carry letters for far more distant places than the Post Office for only two cents. Because of this economic pressure, the Post Office was forced to drop the cost of mailing such a letter to three cents and this created another problem, the problem of monetary indivisibility. In order to pay for postage, people were forced to carry around a large number of bulky large copper cents. Because of the size of these coins, they were growing increasingly unpopular with the public, eventually leading to the creation of the smaller Flying Eagle cent in 1857.

As a response to monetary indivisibility, Congress responded by creating the three cent silver coin, This coin only had enough silver to make it worth 2.5 cents and this was the first coin ever issued in the U.S. whose intrinsic value was less than the face value of the coin. Coins that have less intrinsic value are known as subsidiary coins.

Eventually, all metals of intrinsic value (gold and silver) were removed from circulation and currency was no longer backed by gold or silver leading to a term called fiat money. Fiat money has value only because the government states it does. It has no worth intrinsically

For a more detailed discussion of the economics of the Trime and gold and silver coins I would strongly encourage you to read the full article by Mr. Bryan at The Cleveland Federal Reserve Bank. It is listed under Economic Discussion. Look in the archives for the year 2004 to find it. I was unable to copy the exact link.

Coming soon: Part Three: the Three Cent Nickel. Don't miss it!






Comments

Mal_ANA_YN

Level 5

Nice blog with lots of great information. Three cent silver coins are just so small and thin it is hard to believe how they survived through time. Thanks.

Kepi

Level 6

Great blog! Really enjoyed it. Thanks for all your research ; )

It's Mokie

Level 6

Excellent research and presentation. This is worthy of a Numismatist series.

Antek

Level 3

Good job :)

slybluenote

Level 5

GREAT blog Bama! Very informative and I greatly enjoyed reading it. It's odd that I just ordered a 3 cent nickel and a CC dime a couple of days ago! Can't wait to read your next installment! Talk to ya soon buddy!

Longstrider

Level 6

Great job on this chapter. I believe I am going to go back and read it again. A lot of cool facts here. Thanks.

coinsbygary

Level 5

I can't wait for the next installment since it will be based on politics and the nickel miners' desire to find an outlet for their mined nickel. Coins like the trime came about because of the people's desire to carry smaller and lighter coins. Other coins came about because of the political pressure from miners' interests. This is a great series of blogs. Keep them coming!

Long Beard

Level 5

Although tiny, the three cent is my favorite of the obsolete coinage. In recent years I have found myself hoping that these are once again struck if and when they ditch the inefficient cent.

I. R. Bama

Level 5

@====> Longbeard.... I kind of doubt they would because of the invisibility problem.

Kevin Leab

Level 4

I love the old "odd" denominations...I have been working on sets of 2 Cent Pieces and Three Cent Nickels...very challenging to say the least. Very informative blog...thank you!!

What a vault! No one is breaking into that. I can see why someone wouldn't like carrying around a couple of large cents, but I would love to do that now. Thanks, I.R. Bama.

CentSearcher

Level 5

Very interesting. It seems like most of those odd denominations (ie 2 cent, half cent, 3 cent, and 20 cent) were created because of something's cost or value being that price. Thanks for sharing! To think that the 3 cent is weird, when we considered a one trillion dollar coin a few years back

TheNumisMaster

Level 5

Thank you for this! These coins have been on my mind a lot lately. I enjoyed this very much. Cheers, NM

Golfer

Level 5

Very interesting about the post office and competition. The large cent just hasn't got my attention as a collector. Just don't have any. No 3 cent coins either. Seems the post office and the mint today are struggling to find the right economic answers. Maybe that us just how it works?

"SUN"

Level 6

A simple design for a small coin

Stumpy

Level 5

Well done, very informative and enjoyable. Thanks Pally, Later!

CoinHunter

Level 5

Nice blog!

Mike

Level 7

It all Leeds to economics. . Even to tokens. The foreign coins that influenced our coinage. Tokens known as coppers. Helped our country move forward. The first coin as you know.authorized by the U.S. Was a.copper. They all led to civics how long have you not here that word. My point is all different metals led us to our state of living. One coin at a time. One Spanish coin a.token brought us were we are today. Great blog. You could write 8 parts on this. Thanks for a great blog. Keep them coming!!

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