The Indian Head Cent
With the discovery of gold in California, large quantities of this precious metal began flooding the marketplace. One would think, being gold is more desirable than silver, the price of silver as a commodity would drop. It did not happen. There wasn’t any significant finds of silver (that didn’t occur in the U.S. until the 1870s), so the price of silver rose significantly against gold. The rise in silver prices, made the U.S. silver coins worth more then the face value placed on the coin. In other words, one dollar by denomination(s) of U.S. silver coinage was worth $1.06 in gold. Speculators, worldwide, were hoarding, melting, and selling as many U.S. silver coins as they could. Finally, in 1853, the U.S. Mint realized that something had to be done to protect the massive loss of silver coins, and its effect on commerce. The U.S. Mint adjusted the weight of the silver coins (the dollar coin was excluded) to where melting would no longer be profitable. An arrow appearing on each side of the date, in 1853, can identify this adjustment in weight. Even though the mint took steps to protect the silver coins of the U.S., the damage was done. It would take over a decade for the mint to replace all the silver coinage lost. One would think this event would make the one-cent piece of even greater importance in commerce. It did not, and the campaign of Mint Director James R. Snowden, which led to the Coinage Act of 1857, compounded the problem.
By the time the California Gold Rush started, the large cent, which was in circulation at that time, had become very unpopular. Technically, it was not legal tender, and many merchants and banks refused to accept them. In addition, there was both Spanish and British silver (among other countries’ silver coinage) circulating as legal tender in the United States. The Mint Director Snowden, actively campaigned to revamp the one-cent piece (to The Flying Eagle Cent), and to eliminate foreign coinage from commercial transactions. This was accomplished through the Coinage Act of 1857. The Act authorized a new smaller cent (it still was not declared as legal tender), and eliminated foreign coinage as legal tender for transactions. Estimates approaching $3 million of foreign silver coinage being melted by the mint for U.S. coinage have been made by some numismatists. In addition to these two events, add to them the Panic of 1857.
In August of 1857, the New York branch of the Ohio Life Insurance and Trust Company failed, banks started to place restriction on all transactions. Bankers awaited monetary reserves to offset their losses in loans in the form of an estimated 30,000 pounds of California Gold to arrive on the ship, SS Central America. In September of the same year, the SS Central America was sunk, in a storm, off the coast of the Carolinas, resulting in a massive economic panic; banks closed their doors, manufacturing companies folded, foreign countries withdrew their investments, and thousands of Americans were left unemployed. It took an estimated three years for the United States to recover from the resulting depression. Add in one more event that will contribute to the relevance of the Indian Head Cent, The War Between the States (The Civil War).
In 1849, the balance of power in Congress was evenly split at 15 each between “Free States” and “Slave States.” With California wanting to enter the Union as a “Free State,” the balance of power would now favor the Northern or “Free States.” The division between the North and South seemed to be more about lifestyle, tariffs and taxes initially, then slavery. President Lincoln’s predecessor, President James Buchanan tried to win favor with the Southern States by vetoing every bill (1859 – 1861) passed by a Republican majority in Congress. These actions only served to create a huge base of enemies both from the North and South. Seven Southern States seceded from the union, which forced Buchanan not to seek a second term.
The United States was in turmoil. It suffered; losses in silver coinage, compounded economic strife, and the inevitable Civil War, which would place increased hardships upon its populace, both socially and economically.
THE INDIAN HEAD CENT
Manufacturing problems arising from the design characteristics of the Flying Eagle Cent is believed to have prompted Mint Director Snowden to have James B. Longacre redesign the one-cent piece. The Longacre design ultimately chosen by Snowden was the one with the lowest relief, an Indian obverse with a laurel wreath reverse. It seems Longacre just did not understand the mechanics of coin design, and had a tendency for designing coins with a relief that would not lend itself to striking properly. It is obvious, from looking at the coin; the portrait is not one of a Native American. Myth tells us it is Longacre’s daughter with a child’s Indian Headdress, but the reality is, the profile was taken from sketches he did some ten years earlier of a statue in a Philadelphia museum, called ‘Venus Accroupie.’ The new Indian Head Cent was placed into circulation in 1859 with a composition of 88% copper and 12% nickel.
Apparently, there were still problems with striking the coin due to the high relief of the reverse design. This design was again modified to an oak wreath with a shield in the 12 o’clock position, and in 1860 the new design made its appearance.
By the end of 1860, the U.S. economy was becoming more unstable. Mint Director Snowden had flooded the market with one-cent coins (still not legal tender), and silver and gold coins had all but vanished from circulation. Even the nickel alloy cents were starting to disappear from circulation because the price of nickel was climbing in the commodities’ market, and once again, it was costing the U.S. Mint more to manufacture the one-cent piece then what the coin was worth. With all this havoc occurring, Snowden was still buying up, and melting as much of the foreign coinage as he could withdraw from circulation. The new President, Lincoln, replaced Snowden with James Pollack.
Once the Civil War started, The Indian Head Cent took on even greater importance to the American citizen. Congress repealed the clause of the Coinage Act of 1857, which eliminated foreign coinage from legal tender status in the United States. This was too little too late because Snowden had been extremely effective in eliminating almost all of the foreign coinage. Most of the silver and gold being manufactured by the U.S. Mint was going to purchase munitions for the war effort from England and France. It was at this point in time private issue tokens (now called “Civil War Tokens” or “Hard Times Tokens”) made their appearance. The tokens had limited success only because there was nothing else to supplement the Indian Head Cents in circulation.
In 1864, Congress passed a new Coinage Act. This bill changed the composition of the Indian Head Cent to “French Bronze” (95% copper, 5% tin and zinc), and gave the coin limited legal tender status. Full legal tender status was granted to the one-cent piece in 1865. The Indian Head Cent continued to be issued into the year 1908.
In most cases, taking a microscopic view of the history helps us to understand the relevance of a coin, but in this case one needs to take a much wider view. The Indian Head Cent was practically the only coin the American people had to conduct business transactions. The public found the very fabric of their society and economy eroding from beneath them due to speculators, depression, a natural disaster, the government and war. Each had a compounding effect on the other, and each in its own way contributed to making the Indian Head Cent become more important.
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