Nickel Has Historic Appeal

By Tom LaMarre, Coins Magazine April 04, 2011

This article was originally printed in Coins Magazine.
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From an American Indian to Thomas Jefferson, and from an American bison to Monticello, the new nickel represented a dramatic change in themes and styles. But Americans took it in stride and started a run on Jefferson nickels that took years to subside.

The idea of placing Jefferson’s portrait on a coin may have originated with George W. Williams, president of the Baltimore Coin Club. Writing to the Mint director in April 1937, he suggested a series of presidential coins, starting with Thomas Jefferson. No one could have guessed what a big deal it would become.

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The Jefferson nickel—or “Jeffersonian” nickel, as the New York Times originally referred to it—created a sensation when the first examples went into circulation in 1938. Americans snapped up the coins as quickly as they could get them, and the hoarding continued throughout 1939.

Even a Hollywood star got into the act. The July 30, 1939, issue of The Morning Star, published in Wilmington, Del., reported that Cecil B. DeMille had rewarded Barbara Stanwyck with a newly minted Jefferson nickel for her outstanding performances in scenes of the 1939 movie “Union Pacific.”

One of today’s big-name actors probably would be insulted with the gift of a nickel. But Miss Stanwyck, as she insisted on being called, was thrilled with her presentation coin, presumably a 1938-S nickel. According to the Star, she was assembling a collection of Jefferson nickels.

Miss Stanwyck wasn’t alone. Banks began issuing Jefferson nickels on Nov. 16, 1938. But as late as January 1939, the new coins were seldom seen in circulation. In Reading, Pa., Loew’s Colonial Theater had counted only six Jefferson nickels.

The Reading Street Railway, which took in thousands of nickels a day, reported it had spotted only two examples.

A rumor was partly to blame. Word spread that Jefferson nickel production had been suspended because the coin’s designer, Felix Schlag, had forgotten to put a flagpole and flag on Monticello’s dome. Treasury officials denied the story, but they only managed to focus more attention on the so-called “omission.”

Attempting to end hoarding, Treasury Secretary Henry Morgenthau announced in January 1939 that the Jefferson nickel was still worth only five cents. In June 1939, however, some newspapers mistakenly reported the Jefferson nickel had been withdrawn from circulation.

There was no question about it. The Jefferson nickel was a hit. On Thanksgiving Day 1938, a government official said the Treasury gave thanks because the new Jefferson nickel was such a success.

Chicago sculptor Felix Schlag was thankful, too, but his gratitude was tinged with regret that changes had been made to his award-winning design.

The Treasury Department announced a Jefferson nickel design competition on Jan. 25, 1938. The winner would receive a $1,000 cash prize. As the Albuquerque Journal put it, at $1,000 the nickel cost many times what it would buy.

Three prominent sculptors—Sidney Waugh, Albert Stewart and Heinz Warneke—would judge the entries. The Numismatist called it a “free-for-all competition,” and many entrants disregarded the rules regarding the design requirements.

The rules made it clear the government was not required to preserve the entries, but there was nothing to prevent an artist from doing so. In 1994 Stack’s auctioned two uniface plaster models entered in the competition by Karl Hejda. They realized $4,180. Dies were later made from the models and used to strike specimens of “the nickel that never was.”

Schlag’s designs, completed and submitted by train at the last minute, were chosen from the 390 models submitted. He later recalled:

“I came to the United States in 1929, after winning a dozen European art contests, and worked as an auto stylist for General Motors in Detroit. While in Chicago in 1934, I won several commissions for sculptures on public buildings and first prize for a model of a fountain and first prize for the design of a Red Cross medal.”

The U.S. Mint website also says, “Schlag was an auto stylist for General Motors.” But Schlag himself didn’t mention it when he addressed American Numismatic Association members at their 1964 convention in Cleveland, saying in part:

“The life of most sculptors in the Depression years was rather hard. Not all lived in splendor. Sometimes I worked in ivory, window displays, silver, and for half a year with pick and shovel and, at the same time, as a busboy at night just to make a living. I was always on the move.”

Schlag fought in the German army during World War I. But he became an American citizen in 1938, the same year the Jefferson nickel made its debut. Concerning the coin’s design, Schlag wrote:

“One day in the mail arrived an official-looking letter announcing a design competition for a new five-cent coin. That would change my life forever, bringing me undreamed achievement and to the brink of grief.

“As I looked at the explicit and exacting rules of the competition, I learned there was little room for the creative mind of the artist. Two plaster models had to be submitted to the government, representing obverse and reverse of the nickel. The subject matter must contain an authentic portrait of Thomas Jefferson and a perfect representation of Monticello. There were endless restrictions.

“Coinage law required the word ‘Liberty,’ the date and the bust on the obverse. On the reverse, in addition to Monticello, the inscriptions ‘E Pluribus Unum’ and ‘United States of America,’ as well as the denomination ‘Five Cents.’ The coin would have to contain the motto ‘In God We Trust.’

“Plaster models could not be signed or initialed and could not exceed 8.5 inches in diameter. The depth of the relief from the border to the deepest part of the design must be 5/32nds of an inch. If the designs were not satisfactory, no contract would be awarded and all that work would have been for nothing. However, the winning designer would have to sign a formal contract with the Department of the Treasury.

“I stiffened at all of these rules and regulations, but because of the Depression and lean times, the $1,000 prize would be a considerable windfall.

“Ideas come in a sudden gush or a flurry of deep recognition. But sometimes ideas do not come at all. One night at about 10:00 p.m., after a hard day’s work, I entered an old bookstore in my neighborhood to browse. To my great surprise and excitement, in the first magazine I opened I found a portrait of Jefferson that I intuitively knew depicted the noble qualities of the true American statesman. My search was over. My decision to compete was now certain.”

The magazine photo pictured Jean-Antoine Houdon’s bust of Thomas Jefferson. Schlag made a perfect likeness of a side view of the sculpture.

Schlag’s original model for the reverse was entirely different from the design that went into production.

“For the reverse design,” Schlag wrote, “I chose a three-quarter view of Monticello, Jefferson’s private home at Charlottesville, Va. In front of the structure was a small tree. With deft strokes, Monticello was built again in a design considered by many artists and collectors to be superior to the design that was finally chosen by the committee. I heard later that it was President Roosevelt who wanted a front view of the house.”

The modern lettering also had to be changed. The design went back to Schlag in May 1938 for the revisions the Treasury Department described as “minor” but which actually required an all-new design. Work continued throughout June, with no additional compensation paid to Schlag, as stipulated by the rules for the competition. The Treasury Department gave its final approval to the design on July 21, 1938.

“Mrs. Nellie Tayloe Ross, then Director of the Mint, advised me that the Acting Secretary of the Treasury had approved the models and Philadelphia was being instructed to surrender the prize money,” Schlag later said. “Considering the actual time involved to create the models, the reward itself was nominal. When the check arrived, every cent was used to pay debts accumulated due to the sickness, death and funeral expenses of someone close to me.”

Schlag was referring to his first wife, who died while he was working on the Jefferson nickel design.

Jefferson nickel production started Oct. 2, 1938, at the Philadelphia Mint and the Denver Mint. The front page of the Oct. 8, 1938, issue of the Spartansburg, S.C., Herald-Journal pictured the first bags of Jefferson nickels. On them were giant facsimile plaques “struck off in honor of the occasion,” showing both sides of the coin.

According to another newspaper article, the San Francisco Mint began striking Jefferson nickels Oct. 12, 1938, with a goal of 3 million—$150,000 worth—to be finished by Nov. 1.

The Dec. 1, 1938, issue of the Lodi News-Sentinel said the “vanishing redskin” and “doughty buffalo” were making their last stand on the nickel. Buffalo nickel production ended with the striking of coins at the Denver Mint.

Some critics wanted to keep the Indian portrait on the nickel. But according to The Evening Independent, published in St. Petersburg, Fla., no one had complained about the disappearing buffalo.

The Pittsburgh Press opposed the design change because the five-cent nickel did not even exist when Jefferson was president. The newspaper said a Jefferson dime would have been more appropriate.

Complaints about the Jefferson nickel also appeared in the April 21, 1938, issue of the Washington Post and the Sept. 8, 1938, issue of the Cleveland Plain Dealer.

There were other problems with the new nickel. Rumor had it they didn’t fit in slot machines. Monticello was often mistaken for the White House, despite the inscription “Monticello” on the nickel’s reverse. There was also talk of the “pinkishness” of the new nickel, and complaints of Jefferson turning red. Others said the critics were seeing “pink elephants.”

Despite the negative comments, people snapped up Jefferson nickels as quickly as they could get them. The Reno Evening Gazette said the public was accepting the new nickels without protest, although coin collectors believed it was not a work of art like the Buffalo nickel.

The Numismatist said the Jefferson portrait was the coin’s best feature. The magazine also praised the depiction of a building on the reverse of a U.S. coin as a welcome innovation, saying it was time something other than a wreath or eagle appeared on the reverse of U.S. coins.

Schlag would have preferred his even more innovative three-quarter view of Monticello. He obtained some proof 1938 nickels and mounted them on autographed cards bearing photographs of his original models. The cards were numbered and autographed by Schlag, and notarized by Paul Wagner on Sept. 29, 1939.

The designer wasn’t the only one to capitalize on the new nickel. In January 1939, the Chesapeake & Ohio Railroad handed out cards containing Jefferson nickels when making change for passengers. Despite their scarcity in circulation, Jefferson nickels were undoubtedly included in a massive stash of stolen nickel. In January 1939, New York District Attorney Thomas Dewey, arch foe of gangsters, charged that at least 26 million nickels had been stolen from subway turnstiles. Eight men were arrested.

The Jefferson nickel supply increased by nearly 6 million in June 1939, bringing the total number struck to more than 66 million. But hoarding was still widespread, and so was the rumor of a Jefferson nickel recall.

Among the 120 million Jefferson nickel struck at the Philadelphia Mint were an undisclosed number with doubling of the inscriptions “Monticello” and “Five Cents.” New York City collectors discovered the 1939 Doubled Monticello variety in the early 1940s. Numismatic Scrapbook Magazine published the first photos of the variety in 1947.

World War II brought a resurgence of interest in the Jefferson nickel when its composition was changed. Because nickel was needed for military uses, the government turned to other metals for the five-cent piece. The February 1943 issue of Popular Science explained the situation best, saying the metal had more important work to do than feeding juke boxes.

At first the Mint considered using an alloy of 50 percent silver and 50 percent copper. But testing revealed that five-cent coins struck in the alloy would not work in vending machines. So Congress instead authorized five-cent pieces struck in an alloy of 56 percent copper, 35 percent silver and nine percent manganese.

The new alloy went into production during the 1942 production run. To distinguish the “war nickels,” engravers added a large mint mark above Monticello’s dome, including for the first time a “P” for Philadelphia.

The Mint had toyed with the idea of a reeded edge to distinguish wartime alloy five-cent pieces. They dropped the scheme, but reeded-edge nickels were sold at bourse tables at the 1941 American Numismatic Association Convention in Philadelphia. The Numismatist said it had been stated “on excellent authority” that the coins were struck at the U.S. Mint.

Also displayed at the convention was a nickel with a flag engraved above Monticello, prepared for those who objected to its omission on nickels struck by the Mint.

The nickel returned to its original alloy and mint mark style in 1946, but nickels still made the news in the 1950s. In 1950, the Denver Mint struck fewer than 3 million nickels, making the 1950-D the lowest mintage Jefferson nickel intended for circulation. The entire production run of 1950-D nickels was completed in a single month, June. Speculators went wild for the coins, but the only place they were released in large quantities was Texas.

In 1953, the FBI cracked what it labeled the “Hollow Nickel Case.” The mystery began when a newsboy dropped a nickel and it broke into two pieces. This was not a typical magician’s hollowed-out coin. Inside was a microphotograph of a series of numbers, apparently in code, typed on a foreign typewriter.

The obverse of a 1948 Jefferson nickel had been used to make the coin. The “R” in “TRUST” had a tiny hole so a fine needle could be inserted to open the nickel.

The reverse was taken from another nickel, struck in the wartime alloy used from 1942 through 1945.

FBI experts tracked the altered coin to a Russian spy ring. Rudolph Ivanovich Abel was convicted of passing U.S. defense secrets, but the story did not end there. Abel was exchanged for American U-2 pilot Gary Powers in 1962.

In 1953, Francis L. Henning made counterfeit nickels in a machine shop in Arial, N.J., using two 1953 nickels as models. He struck 80,000 fake nickels, put them in rolls, loaded his car and drove from bank to bank to cash them in. Henning told the tellers he was a vending machine operator.

The counterfeit nickels were gone in just a week. Henning then struck another batch, using 1939, 1946, 1947 and 1944 nickels as models. The lack of a “P” mintmark on the 1944 counterfeits was Henning’s downfall. Coin collector Walter Williams noticed the omission.

With the Secret Service hot on his trail, Henning dumped thousands of counterfeit nickels into the Cooper River. He was arrested in October 1955. On Nov. 13, Philadelphia police found $10,000 in counterfeit nickels and two dies a the bottom of the Cooper River.

At the Philadelphia Mint in 1959, a batch of nickel planchets was left in the furnace too long after the annealing process, resulting in a black appearance. Collectors call it the “Black Beauty” variety and Mint State-64 examples have been offered for $250.

When the Mint was striking “Black Beauty” nickels, Baltimore was known as the city where nickel was king. It used more nickels than any other city. Baltimore city received seven 15-ton shipments of nickels a year. There were 670 bags of nickels in each tractor-trailer load that backed up to the rear of the Federal Reserve Bank in Baltimore.

Belated recognition for the Jefferson nickel’s designer came in the 1960s. A Flint, Michigan coin club launched a campaign to add Schlag’s initials to the Jefferson nickel. The momentum grew, and in 1966 the Treasury secretary issued an order making it possible to place Schlag’s initials on 1966 nickels.

“Our engraver at Philadelphia is now busy, getting ready to turn back a bit of the coat of Mr. Thomas Jefferson, so that Mr. Schlag’s initials can be placed on the 1966 and all future issues of this coin,” Director of the Mint Eva Adams said at the Metropolitan Washington Numismatic Convention.

Adams presented Schlag with the first strike of the revised Jefferson nickel during the 75th anniversary ANA Convention in Chicago. Schlag died in Owosso, Mich. in 1974 at the age of 82. He had moved there in 1943 and opened a photographic studio.

In 2004 and 2005 the Westward Journey nickel series had designs commemorating the Louisiana Purchase and Lewis and Clark Exposition. There were two designs in 2004. The first had a reverse depicting and Indian Peace Medal and was designed by Norman E. Nemeth. The second used Al Maletsky’s rendition of Lewis and Clark in their keelboat by Jamie N. Franki and engraved by Norman Nemeth. The other version depicted the Pacific Ocean and words from William Clark’s diary upon reaching it. Donna Weaver engraved Joe Fitzgerald’s design.

The old depiction of Monticello returned to the reverse in 2006, with a new forward-facing image of Jefferson on the obverse. Jamie Franki designed the portrait, using an 1800 Rembrandt Peale painting of Jefferson as a model.

Taken for granted for decades, the original but obsolete Jefferson nickel design by Felix Schlag has taken on a certain historical appeal. It’s long production run brought many collectible dates and varieties and some interesting stories. Schlag himself probably said it best: “America got its nickel’s worth out of me, wouldn’t you agree?”