During the Civil War, gold and silver coins disappeared into hoards, and even cents sold at a premium. Congress filled the gap with paper fractional currency, including a three-cent note first issued in 1864. The public disliked the small notes, which quickly became dirty and ragged. The bronze cent and two-cent piece of 1864 showed that base-metal coins would circulate, and the industrialist Joseph Wharton, who controlled the American supply of nickel, pressed for coins of 75% copper and 25% nickel.
Legislation for a three-cent coin of that alloy passed both houses without debate in the last hours of the session and was signed by President Abraham Lincoln; it is known as the Act of March 3, 1865. The coin was legal tender up to 60 cents, and it was issued in exchange for the three-cent notes, which were no longer printed. Between 1865 and 1876 about 17 million of the coins went to redeem those notes.
The three-cent nickel was welcomed at first, but the five-cent nickel of 1866, larger and easier to reckon with, soon took most of its work. Mintages passed eleven million in 1865 and fell below a million by 1871. The Mint Act of 1873 left the coin in place, but by 1876 only 162,000 were struck for circulation, and none at all in 1877 and 1878, when only proofs were made.
Its original purpose ended in 1883, when the postage on a letter dropped from three cents to two. No business strikes were made in 1886, and production ended with the coins dated 1889. Congress abolished the denomination in a law of September 26, 1890 that also ended the gold dollar and the $3 gold piece, and many of the coins held by the Treasury were melted and recoined as nickels.
