Wait, they already did. Or rather, the very existence of the nickel means they already eliminated something else, something better. In the civil war, they got rid of the half-dime, which was actually called the “half-disme” (!). Silver was getting too expensive, because the United States was shutting down the private economy for the war effort. The half-dime, which is to say the five-cent piece, was made of silver, a twentieth of an ounce of it. An ounce of silver, as of the Spanish of old, was a dollar. As silver doubled in price on or about 1862, a twentieth of an ounce became worth wayyy more than five cents. So the government started striking five-cent pieces out of a cheaper material, nickel. Buffalo girls won’t you come out tonight, or something. We never saw the half-dime again.
Yes, in the Big One, World War II, they stamped pennies out of zinc coating steel. This was more of a materiel shortage, instead of a devaluation matter. War effort needed copper. After Big One, we got copper pennies again. (Zinc also became discredited after the Donora industrial disaster of 1948.) The comparable to the replacement of the half-dime with the nickel was treasury secretary Henry Fowler’s ditching of silver quarters and dimes, in 1965, and soon half-dollars and dollars. The quarters we have lived with since 1965, the ones with Helen Keller sitting stark stiff upright in a chair for Alabama and all the rest, are made out of amalgam.
In 1792, when American coinage started that year care of the Coinage Act of 1792—and we sure do treat this subject in our new book Free Money—amalgam was the next-to-worthless material that was necessary for the coin, made mostly of precious metal, to cohere, as in physically. Amalgam ensured that the coin would keep its shape and hold up with wear-and-tear. “Grinning, he pocketed the coin,” as Strunk & White put it for the ages in their pocketbook.
Is it not quaint that today, government cannot even make pennies out of amalgam? G-man cannot make pennies for less than three cents apiece—even out of amalgam (they could be colored copper-like). Amalgam is worthless, or it least it always was. Does dirt-poor have no meaning anymore? Thimblefuls of dirt can fetch three cents a pop now? What in blazes has happened?
The first thing that has happened is that government now makes all the coins, without participation of the democratic populace. This is completely at variance with tradition and the Coinage Act of 1792, whose accomplishments (whatever the half-disme fiasco) include being the monetary system of the industrial revolution. In the way it was always done, anybody could come to the Mint with precious metal, namely gold and silver, and get it stamped into coin, for free. If you brought an ounce of silver, they would stamp it into a dollar with all the markings for you. The only charge was 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 pooled the scraps of precious metal that remained for its profit.
Again, how did it do, this system, economically? Agricultural and industrial revolutions, that’s how it did. Mass prosperity. A professional, Federal Reserve, Ph.D. monetary system is better? Utter bosh.
It is not merely that government has monopolized the monetary system, and captured banks with regulation, via the Federal Reserve. It is also that the government has monopolized the coinage system. The coinage system was supposed to be a give-and-take between the populace and competitive mints. We got rid of that for…a 34-fold increase in the price level since 1913?
The second general thing that has happened is the now essentially complete dissociation of money with the underlying value of the monetary medium. The remaining coins we have are the last frontier in this saga. Don’t you dare eliminate the nickel (don’t you dare eliminate the penny, I used to say)—because this is now the toehold we still retain in this truly eminent tradition. I bet nickel is worth more even than whatever they are making quarters out of these days. We should expect the pressure on the feds (that they make themselves feel) to intensify.
Yes, yes, Bitcoin is going to take over the monetary system and all this will soon be bygones. Yet how disappointing it is that government cannot field an honest competitive opponent when a challenge like Bitcoin comes along. Bitcoin is obviously coming for the dollar, is here to steal its lunch and yank down its shorts before packing it off for good. When a fierce competitor shows up, you are supposed to get competitive with it, not try to pseudo-outflank it in a patten of squeamishness.
Yet here we are as the United States starts to finish off its elimination of monetary media that have value. All is not lost. As in everything, government, each day is an opportunity to get right again.
