#### News and Analysis regarding scarce coins, coin markets, and the coin collecting community, #281

** A Weekly CoinWeek Column by Greg Reynolds** ….

Three Cent Nickels were minted from 1865 to 1889. Except for the 1877, every date in the series can be obtained for less than $500 each. Indeed, Good-04 grade Three Cent Nickels of at least 10 different dates could be purchased for less than $25 each, maybe as little as $12 each for some. The focus here, though, is on collecting options for coin buyers who are willing to spend as much as $500 per coin. With such a limitation, it would be easy to collect Three Cent Nickels and multiple strategies should be considered.

### What Are Three Cent Nickels?

People who are not experienced coin collectors often think of ‘nickels’ as five-cent coins. After all, it’s been more than a century since Three Cent Nickels were produced. Curiously, though, there were Three Cent Nickels before there were five-cent nickels.

Three Cent Nickels were issued in 1865 and Shield Nickels, which are the first five-cent nickels, were not issued until 1866. From the 1790s until 1873, though not in every year along the way, the U.S. minted half dimes, which are five-cent *silver* coins.

Nickels are called “nickels” primarily because they consist of 25% nickel. Half dimes do not contain any nickel, and are generally 90% silver. (Before some point in 1837, half dimes were specified to be 89.24% silver.) Half dimes weigh half as much as corresponding dimes of the same respective era. The amount of silver in half dimes and dimes was of central importance. Nickels were intended to be “base coinage,” with less intrinsic value.

In the U.S., the composition of a nickel is 25% nickel and 75% copper. Current five-cent nickels are of this same alloy. For chemical reasons, nickel tends to dominate in terms of color and texture.

In the 1860s, notions of nickel coins were controversial, as a large number of U.S. citizens preferred that three-cent and five-cent coins contain silver. During much of the history of human civilization, most people thought of gold and/or silver as ‘money.’

Before the 20th century, paper money was usually accepted only if people thought such ‘paper’ represented holdings of gold or silver, or could eventually be traded for a predictable amount of gold or silver. Base coinage was considered acceptable for very low denominations or in situations where sufficient gold or silver coins were not available to meet the needs of commerce.

“Silver coins did not circulate east of the Rocky Mountains after the summer of 1862,” **R. W. Julian** notes, in a response to my inquiry. “They were hoarded or exported because the silver contained in such coins was worth more than the value in paper currency. Three Cent Nickels proved popular when introduced in 1865 because the only coins then circulating were the bronze [95% copper] one- and two-cent pieces; the public was happy to get more coins for their daily purchases in the marketplace,” Julian emphasizes. For decades, R. W. Julian has been the leading researcher of historical documents relating to coinage in the 19th century.

So, there were then persuasive political and practical reasons for the U.S. Mint to produce a three-cent coin that did not contain any silver. Three Cent Silvers had been produced since 1851, though were hoarded during the Civil War and afterwards.

**Joseph Wharton** had rapidly become the dominant business figure in the nickel industry. He influenced U.S. Congressmen and Treasury Department officials regarding the use of nickel in coinage. As R. W. Julian has pointed out, however, Wharton was not involved in the nickel industry until around 1863 and small cents each contained 12% nickel from 1857 until the middle of 1864.

Flying Eagle Cent patterns of 1856, which sometimes circulated, were the first widely known ‘cents’ to contain nickel. Flying Eagle cents were regularly issued in 1857 and 1858, and were often termed “nickels” by people who spent them. Copper-Nickel Indian cents were produced from 1859 to some point in 1864.

Interest in the use of nickel for coinage had been fading until Wharton became influential. In 1863, Mint Director James Pollock argued that the use of nickel, as it is a hard and intractable metal, was harmful to the machinery at the Philadelphia Mint and problematic for additional reasons.

“The nickel mines at Lancaster Gap, Pennsylvania, which had been counted upon as a source of nickel when [Flying Eagle cents] were adopted in 1857, had not been successful, and nickel for the coinage had been imported for a number of years. In 1863, Wharton acquired the Lancaster Gap mines as well as a refinery in Camden, New Jersey, which had been struggling with the problem of reducing nickel ores,” explains **Neil Carothers** in his epic work, *Fractional Money* (NY: Wiley, 1930, p. 197).

In 1864, the copper content of Indian Cents was increased from 88% to 95%, and the new denomination of Two Cent Pieces was specified to be 95% copper as well, with zero nickel. A short time later, however, Wharton convinced politically influential people that domestic supplies of nickel would be adequate for mass coinage and could be reliably provided. Three Cent Nickels and five-cent nickels became realities.

All Three Cent Nickels were struck at the Philadelphia Mint. There are no mintmarks. Each Three Cent Nickel has the same diameter as a dime, seven-tenths (0.7) of an inch, though is thicker than a dime.

### Easy To Collect

A set of Three Cent Nickels ‘by date,’ missing only the 1877, could be assembled without spending more than $500 on any one coin. **Rich Uhrich** remarks that “it may be not be easy to get an 1878 for less than $500. But, there are some with problems that sell for less than $500.”

Uhrich continues:

“*A good thing about Three Cent Nickels is that the set is completable without spending a fortune. For a set of Liberty Seated silver dollars, a collector may have to spend hundreds of thousands of dollars for an 1870-S. An 1877 Three Cent Nickel could be bought for less than $2000. After completing the rest of the set, a collector could save up for an 1877* … It is fun to have a complete set of a whole type.”

For every date from 1865 to 1879, and also the 1881 and the 1888, a PCGS- or NGC-graded MS-64 Three Cent Nickel could be purchased for less than $500 each. A PCGS or NGC graded MS-63 1880 could surely be found for less than $500.

The 1889 is not especially expensive either. During July 2014, Stack’s-Bowers sold a PCGS graded and CAC approved MS-64 1889 for $458.25.

Non-Proof Three Cent Nickels that date from 1882 to 1887 fall into a separate category and are discussed herein. Proofs of these dates, though, may be obtained for less than $500 each.

### Collecting Proofs

Given a $500 per coin limit, the easiest way to collect Three Cent Nickels is to focus on Proofs. Except for the 1865, 1877, and 1878, PCGS or NGC certified Proof-64 or 63 representatives of all dates of Three Cent Nickels may be obtained for less than $500 each.

On a Proof, the contrast of white or off-white frosted raised elements with mirrored fields is referred to as being ‘Cameo.’ When struck, many Proof coins had deep cameo contrasts, though many others did not have much, if any, such contrast. A coin that never had a cameo contrast may be just as much of a Proof as a coin that has a deep cameo contrast.

The premiums paid for Proofs with “Cameo” or “Deep Cameo” designations by PCGS, or “Ultra Cameo” designations by NGC, seem steep, given that the extent of cameo contrasts are especially hard to gauge. Such contrasts are often enhanced by dipping coins in acidic solutions or by other means.

The desirability of cameo contrasts is very subjective as well. On average, coins with a less of a cameo contrast will be more original than coins of the same type and date that feature glittering cameo contrasts, which are often consequences of acid treatments by coin dealers. Of course, the evaluation and rating of coins will never be perfectly objective. Cameo contrasts are very popular features.

For Three Cent Nickels that are certified as grading 63 or 64, ‘Deep’ or “Ultra” cameo designations are unusual and need not be considered here. Three Cent Nickels certified by the same service as Proof-64 with ‘Cameo’ designations tend to bring modest premiums over Proof-64 Three Cent Nickels without ‘Cameo’ designations, generally from $15 to $100. Collectors may decide whether or not to pay such premiums on a ‘coin by coin’ basis. As Proofs without ‘Cameo’ designations often have noticeable cameo contrast and some of those with the designations have only faint cameo contrasts, it is best not to generalize about such certifications.

It is also best to not be rigid in forming a collecting plan for 19th century Proof coins. There are many beautiful Proofs that have no cameo contrast whatsoever.

Rich Uhrich emphasizes respecting the “personal preferences of the collector” over the rules laid down by grading services or price guides. “Make a collecting plan before starting a set of Three Cent Nickels,” Rich advises. An 1878 for less than $500 may be part of the plan.

On December 2, 2014, **Heritage (HA)** sold an 1878 in an NGC holder that indicates ‘environmental damage,’ for $423. In September 2013, HA sold one with more severe damage, which also exhibited considerable wear, for $250.28.

More recently, on May 19, 2015, HA sold an 1878 that does not have any wear–though it was mistreated in the past. The coin brought $374.83. Images suggest that it is not terrible. In March, HA sold an 1878 in an NGC holder that is said to have the details of a Very Fine grade coin, though has been ‘damaged.’ This coin went for $111.63, which is a good deal from a logical perspective. People who collect Three Cent Nickels ‘by date’ demand an 1878.

### Business Strikes

For every date from 1865 to 1876, Very Fine grade Three Cent Nickels tend to retail from $20 to $40 each, depending upon the date and the characteristics of the individual coin. For example, in March 2015, HA sold an NGC graded VF-25 1865 for $34.

Over the last three years, HA has auctioned multiple NGC graded MS-65 1865 coins for amounts between $400 and $460. In November 2014, a PCGS graded and CAC approved MS-65 1865 brought $499.38.

In MS-65 grade, Three Cent Nickels of the other dates in the 1860s are each a little more expensive than the 1865. It is not unusual for disproportionately large quantities to be saved of the first issue of a new design type, in this case of a whole new denomination. With a $500 per coin limit, it might not be practical to collect PCGS or NGC certified, MS-65 grade Three Cent Nickels.

It is easy to buy PCGS or NGC graded MS-64, Three Cent Nickels that date from 1866 to 1874 for less than $325 each. In February 2015, HA sold a PCGS graded MS-64 1867 for $238.53.

During June 2013, the Goldbergs auctioned a PCGS-graded and CAC approved, MS-64 1872 realized $242. It was from the “**George Follis Collection**”, an impressive set of Three Cent Nickels that featured a mix of business strikes and Proofs. Many other examples could be provided of certified MS-64 Three Cent Nickels, of various dates, that have sold at auction for less than $325 each.

### 1873: Open 3 and Close 3

There are two major varieties of the 1873; those with a numeral ‘3’ that is relatively open and those with a numeral ‘3’ that is not as open, “Close”! The term “closed” is frequently used in this context, though is misleading as there is space, on the left side, between the upper part and the lower part of the numeral ‘3,’ which is close, not “closed.”

Fortunately for collectors with a limit of $500 per coin, representatives of both may be easily acquired. In choice uncirculated grades, MS-63 and higher, the ‘Open 3’ 1873 is much more expensive than the ‘Close 3.’ In circulated grades, they are worth about the same.

Within the last few days, HA sold a PCGS-graded and CAC approved MS-64 coin of the ‘Close 3’ variety for $423. Although I have not seen the coin, images suggest that it has natural toning and scores highly in the technical category. This could have been a good deal.

Others have sold for substantially more. For example, in October 2014, the same auction firm sold a PCGS graded MS-64 1873, which did not have a CAC sticker, for $505.25.

Also over the last week, HA auctioned five 1873 Three Cent Nickels of the ‘Open 3’ variety. A PCGS graded MS-65 coin, with a CAC sticker, brought the exact same price that a NGC graded MS-65 coin, with a sticker, brought in May, $2820. On June 4, a NGC graded MS-65 coin, without a CAC sticker, sold for $1999.85.

On June 7, two different PCGS graded MS-64 1873 ‘Open 3’ coins sold for divergent prices, $1762.50 and $587.50, respectively. Neither had a CAC sticker. It is possibly true that bidding wholesalers thought about ‘cracking out’ the more expensive one and re-submitting it to PCGS with the idea of this coin receiving a MS-65 grade. On this same day, a PCGS-graded MS-63 1873 ‘Open 3’ went for $199.75. This result seems reasonable.

As already indicated, PCGS or NGC certified, MS-64 grade, Three Cent Nickels, dating from 1874 to 1876 and 1879, 1881 and 1888, may be obtained for less than $500 each.

Mint records give the impression that the 1877 and the 1878 are Proof-only dates. The 1886 is often held to be a “Proof-only” date as well.

If all Proofs of the year 1887 are 1887/6 overdates, then all 1887 ‘normal date’ Three Cent Nickels are business strikes. A Proof 1887 with a so called ‘weak overdate’ is sufficient, in my opinion, as an 1887 for a set that is collected ‘by date.’

If an 1887 that is PCGS or NGC certified as a business strike is to be purchased for less than $500, it would probably have to be graded below AU-50, maybe below EF-40. A non-gradable, ‘mint state’ 1887, however, could probably be found for less than $500, for inclusion in a set where most all coins grade above 60.

### The Strange Six: 1882-87

Generally, for Three Cent Nickels in the 1882 to 1887 date range, Proofs are less expensive than business strikes that have been certified with the same respective numerical grades.

I suggest that, for each date where a business strike Three Cent Nickels is priced higher than a Proof with the same certified grade, collectors should tend towards buying the corresponding Proof Three Cent Nickel. This advice applies to Shield Nickels as well.

In the past, one collector publicly accused me of encouraging the violation of rules so that collectors could “save money” by substituting Proofs for business strikes. I am challenging such rules. Proof nickels of the 1870s and 1880s constitute an odd topic and are defined differently from other Proof U.S. coins of the 19th century. In a sense, many of these are exceptions to rules.

Dozens of nickels from this time period that are called Proofs, some of which may have been intended to be Proofs, do not fulfill the minimum criteria to be Proofs. Researchers have emphasized that such nickels have been generally treated as exceptions by coin collectors. It is relevant that U.S. Mint personnel were then having trouble working with nickel and dies often cracked while striking nickel coins.

From the late 1870s and 1880s, there are many Three Cent Nickels and some Shield Nickels that are accepted as Proofs, yet have business strike luster, faint mirrors (if any), mushy details, very noticeable Mint-caused imperfections, and/or somewhat rough surfaces. There are also nickels from these two decades that are powerful Proofs and clearly more than fulfill minimum criteria.

I am concerned about the classifying of those that seem ‘to fail the Proof test,’ though many of the coins in this odd category do seem to be markedly different from typical business strikes of Three Cent Nickels or Shield Nickels. They are often hyper-reflective and may actually glitter.

“It is interesting to debate whether [1878 Shield nickels] should be called Proofs because they were called that by the Mint,” **Q. David Bowers** wonders, “or whether they should be called Uncirculated for they appear to be [business strikes].” (See his *Guide Book of Shield and Liberty Head Nickels*, Atlanta: Whitman, 2006, p. 116.)

Additionally, Bowers stated that 1880 business strike, “Mint State” Shield Nickels “closely parallel Proofs in appearance.” QDB then referred to extensive criteria that relate to determining whether specific 1880 Shield Nickels are Proofs or business strikes. QDB makes clear that there is much disagreement among experts.

It is not practical to discuss the criteria for identifying Proofs or business strikes here, although I am very tempted to do so, as this is one of my favorite topics. It is a fact that, for 1883, 1884 and 1885 Three Cent Nickels, and for 1880 Shield Nickels, those certified with ‘Mint State’ designations are worth dramatically more than those certified as Proofs. As many such nickels that are certified as Proofs are, in my opinion, clearly not Proofs, it doesn’t make sense to pay vastly greater amounts for those with ‘Mint State’ designations.

In quite a few instances, graders at PCGS and NGC have changed their minds about the Proof or business strike status of such nickels. It is plausible that a credible grading service that emerges in the future may not certify as Proofs some of the nickels that are currently certified as Proofs. My impression is that most or all pertinent experts are in agreement that many of the nickels that are certified as Proofs are not very convincing as Proofs; some experts are applying different criteria to nickels from the 1870s and 1880s than for nickels from other eras.

In the context of collecting with a $500 per coin limit, Proof Three Cent Nickels, dating from 1882 to 1887, should be included in sets that contain some business strikes. After all, for coins that grade 63 or higher, a PCGS certified ‘Mint State’ 1882 or 1883 costs, on average, at least twice as much as a PCGS certified Proof 1882 or 1883 with the same numerical grade assignment.

A PCGS-graded MS-64 1884 is estimated by PCGS to be worth “$10,000.” A PCGS certified Proof-64 1884 probably has a retail value of $400. So, a coin that is certified as a business strike is worth 25 times as much as a coin that is certified as a Proof that might not be a Proof. Very apparently, there are many 1884 Three Cent Nickels that are certified as Proofs that appear not to fulfill much of the traditional criteria for a Proof.

Paying $400 for a certified “Proof-64” 1884 really makes more sense than paying $10,000 for a certified “MS-64” 1884 Three Cent Nickel. It is fascinating that some researchers figure that they have identified the nickels that U.S. Mint officials intended to be Proofs and/or sold as Proofs during the 1870s and 1880s.

I have respect for these researchers. In my view, however, if a coin clearly does not have the requisite physical characteristics of a Proof, it is not a Proof, even if it was listed as a Proof in U.S. Mint records. The people who keep records or report their activities to bookkeepers may not always be competent, thorough, careful, diligent and completely honest.

*©2015 Greg Reynolds*

A well written article. While Mr. Reynolds is well known for his research on six and seven

figure coins, he also takes time to write about coins that many of us can afford to collect.

His articles on Mercury dimes, Buffalo nickels and Walking Liberty halves are some

of my favorites.