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The United States cent will not be the first coin discontinued by the United States. That honor would go to the United States half cent. In fact more than 10 coins have been discontinued for circulation use. However, some of these were for other reasons than seigniorage costs and errored value.
The first discontinuation was in 1857, with both the United States half cent and large cent coins. When the half cent was first issued in 1793, it had the buying power of a single egg or lemon. By 1857, nothing could be purchased for just one half-cent. Even the post office refused the half cent coins in the purchase of three-cent postage stamps. Then in 1856, what is termed the “copper bubble” occurred where the price of copper surged from $0.42 per pound to $0.62 per pound in just six weeks.
The half cent, which had always been unprofitable to marginal (with the last profitable year being 1811, when each half cent cost 0.48 cents to produce), had risen to 0.93 cents in 1856 at a loss of 0.43 cents per coin. With the rise of copper in 1857, it rose to 0.97 cents per coin to produce a loss of 0.47 cents per coin. This was a loss to taxpayers of $179,000 (in 1857 dollars). The large cents also hadn’t been profitable with the price per coin averaging 1.38 cents in 1850. The price inflated to 2.41 cents per coin in 1856 and jumped to 2.59 cents in 1857.
The Act of Congress signed by President Franklin Pierce, Public Law 34-162 of the 34th Congress, 3rd Session, would end the half cent with one line: “No half cents shall hereafter be coined at the Mint.” The last half cent was struck on February 20, 1857, before the dies were defaced. This same act would end the large cent in two sentences in Section 2: “The cent shall be of the weight of seventy-two grains […] From and after the passage of this act, the coinage of the copper cent […] heretofore authorized, shall cease.”
The new small-size Flying Eagle Cents were a game changer for the United States Mint. Not only were they cheaper to produce, costing the mint 0.70 cents per coin, they could also produce 100 coins per minute with the steam press, as opposed to the 20 coins per minute it took to strike the large cents. This would be the first time the Mint would be profitable in the production of cents since 1837. The projected profit for 1857 alone was estimated at $33,155. The Act also demonized foreign coinage in the United States, but that is a story for another time.
To promote the new cents, the United States Mint offered a redemption program. While the half cents and large cents were still legal tender, the Philadelphia Mint opened the courtyard for a redemption event on May 25, 1857, allowing people to exchange their half and large cents for the new Flying Eagle Cents. A program also allowed people to exchange their Spanish reales for the new small cents with a bonus. Over 1,200 people showed up for this cent-for-cent exchange, when the gates opened at noon folklore says that the first kid was able to change his 37 half cents for 37 new cents and some candy as a prize. Other kids were able to trade three large cents for three small cents, plus a pretzel. Within three hours the Mint had run out of the 50,000 Flying Eagle Cents and had to tell people to come back the next day. May 26 saw another 60,000 cents exchanged. For the United States Mint, this was a great deal with each large cent melting at 2.18 cents in copper. Between May 25 and June 30, some 2,840,000 large cents and 180,000 half cents were redeemed.
The success of the small cent and end of the half cent are a chapter in American history that shows even with arbitrage involving copper, the public was happier to exchange it for convenience in a new, flashy (and smaller) coin.