The Civil War emptied American pockets of coins. Silver and gold were hoarded, and even the copper-nickel cent disappeared, so small change came from private tokens and from paper fractional currency in amounts as low as three cents. Congress began restoring coins in 1864 with the bronze cent and the two-cent piece, then added a copper-nickel three-cent piece in 1865. The industrialist Joseph Wharton, who controlled most American nickel mining, pressed for more nickel in the coinage.
A five-cent coin in the same alloy followed. Mint Director James Pollock proposed a coin of no more than 60 grains, but the House raised the weight to 5 grams. That was presented as a metric round number, but the historian Don Taxay thought the real aim was to let Wharton sell more nickel. The bill passed on May 16, 1866. NGC dates the first coining to June 11, 1866, and more than 14 million were made in the second half of the year.
Chief Engraver James B. Longacre adapted the shield from his two-cent piece. Other patterns showed George Washington and the newly assassinated Abraham Lincoln, but Pollock never showed the Lincoln design to Treasury Secretary Hugh McCulloch, expecting it to offend the South, and McCulloch chose the shield. The new coins were the first five-cent pieces called nickels, since the silver coin of that value was the half dime.
The hard alloy made trouble from the start. Dies cracked and broke quickly, and most coins were weakly struck. Critics disliked the look as well: Wharton compared the shield to a tombstone, and the stars and rays of the reverse reminded many people of the Confederate stars and bars. Early in 1867 the rays were removed in the hope of easing production, with February 1 the planned date of the change. NGC notes that this cut down the die breaks without curing the weak strikes.
By late 1869 there were enough nickels in circulation, and output fell. The Mint Act of 1873 ended the half dime, and the same law let the Mint stop striking a denomination that was not needed. Late in 1876 nickel production stopped. In 1877 and 1878 only proofs were made for collectors, and from 1879 to 1881 the Mint struck business strikes only in small numbers, until full production resumed on December 12, 1881.
Charles E. Barber's Liberty Head nickel replaced the design in 1883 and was first struck on January 30. Shield proofs were kept in production until June 26, 1883, to discourage speculation in them.
