James Z. Writes: I to be a university professor that at California State University, Hayward. I work-related with students that will end up being elementary college teachers. I was visiting a institution today, and also a 4th grader inquiry me the following question, “Why is the dime for this reason small?” The penny and also nickel room both larger than the dime, yet the dime is precious more. Why is the dime smaller sized than the nickel?

The unified States offered to have actually an intrinsic monetary system that relied on turn around precious steel coins because that commerce. Coins to be “the money”. The United claims really didn’t have actually a national document money system until 1861 and also that to be controversial since they were “Legal Tender” notes, not redeemable for coins. This fiat money to be one method the unified States raised funds to lug on the polite War. Record money redeemable because that gold and silver coins were revitalized after the war but the paper was only a receipt for coins.

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For money to be intrinsic, a dime had actually to have virtually 10 cent worth that silver, a quarter had to have actually virtually 25 cents worth the silver, etc. In the beforehand days that the nation the precious steel content the U.S. Gold and also silver coins was too high in connection to precious steel prices in Europe and massive quantities of coins were melted, offered in Europe and resold earlier to the joined States. The U.S. Reduced the precious steel content in 1834 and then in silver coins in 1853 and then to be able to save coins in circulation. Half dimes, dimes, quarters, half dollars and dollars were struck in .900 fine silver and also their value, size and weight were proportional (less a tiny amount of seigniorige to assist defray the Mint’s price of producing the coin).

Practical considerations demanded a low value token coinage in bespeak to do change. The very first copper cent were as practically as large as present day half dollars. This was an effort to make the coin intrinsic (one cent precious of copper). It eventually became impractical to usage such a coin in day-to-day transactions and that coin was tokenized and also reduced by 1857 come the dimension we watch the cent today. Token coinage was not directly redeemable because that precious steel coins and therefore no legal tender. For example, a 19th century financial institution might refuse to change 25 one cent coins into a silver quarter)

The copper-nickel 5 cent was presented as a token coinage in 1866 together was made larger for valuable reasons. Though tiny, silver half dimes ongoing to be produced until 1873 the bigger copper-nickel coin was less complicated to handle and also less likely to be lost. (Note that just precious steel coins had reeded edges. Base steel coins had plain edges)

Though base metal coinage was no legal tender, that was an important to assist complete transactions. The two significant 19th century coin shortages, in the 1830’s and also in the 1860’s, virtually brought commerce to its knee due the dearth of tiny change. A head industry developed during this duration making small change in the type of tens of hundreds of “good fors” and “advertising tokens” For more info, see: Tokens – The individuals Money.

After 1964 virtually all precious metals were gotten rid of from the U.S. Coinage device (a reduced content, 40% silver fifty percent dollars ongoing to be created until 1970) and also the whole coinage system came to be tokenized. Coins were created that mimicked the watch of the old precious metal coins by the clever use of a copper-nickel sandwich v a pure copper core and a reeded edge. This composition is well-known as copper-nickel “Clad” coinage. The cent and also nickel continued to be the same composition as before. The cent was further debased in 1982 by replacing copper planchets v zinc and also then plating them through copper.

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Today the dimension relationship between United states coins still exists yet for reasons of tradition only. Also, no one of our existing coins space legal tender and no one is causing obligation to expropriate them as money. Money’s meaning has adjusted radically end the years and now only file money in the kind of federal Reserve notes are considered legal tender.