Words of wisdom, right.
I mean, c’mon, wood and metal don’t feel the same, weigh the same, look the same, etc. Two of my co-workers claim that around the Civil War, wood was used to make nickels, but that metal ones were later introduced, and the wood ones were no longer good currency; hence the phrase.
To put it mildly, I have my doubts. Any thoughts?
Sua
Brewer’s Dictionary of Phrase and Fable gives to variants – “Don’t take any wooden nickels” and “Don’t take any wooden nutmegs.” He’s unclear about the dates, but does seem to imply “nutmegs” came first.
It’s not hard to carve a whole nutmeg out of wood, rub it in some nutmeg powder to give it a scent, and sell it to someone as the real thing. The warning thus makes real sense.
How “nickels” comes into the picture is unclear. Brewer said that the nickel of 1857 was only worth a cent and it was referring to that, though I don’t see what that means exactly. (Sounds like Groucho’s eight-cent nickel. 
) It’s possible that people heard “nutmegs” and “nickels” or they deliberately changed the word to be funny (since the warning wasn’t really all that necessary).
I’ve heard two stories.
One was that some banks stamped nickles on bits of wood when coins ran short, just to keep trade going.
At coin shows of course, there are lots of gimmic wooden nickles, but they would have been imitating the saying alone, not necessarily true to the origin of it.
The other was that red nickels (copper) were around and wood just refered to the color.
Possibly related to the specie crisis of the post-Revolutionary era?
I’m pretty sure that’s why Bugs Bunny always bites a coin when he gets one.
Another theory is that the saying is about “scrip” – the money-like stuff that was issued by banks, stores and whatnot. Many mining companies, for example, paid their employees in scrip that could only be used at the company store – keeping it all in the family, as it were.
Scrip, if you think about it, is only as good as the company that backed it, so if the local store went out of business, the customers holding scrip were up the creek.
“Don’t take any wooden nickles,” means that you should insist on real legal tender.
From what I’m getting so far, except from Wooster, is the “don’t take any wooden nickels” thing was always metaphorical, and our nation’s economy was never threatened by a scourge of herbaceous counterfeits. I’ll accept that.
And kids, remember, bedbugs are not your friends.
Sua
I would point to two factors. One, in the old days coins like nickels were worth alot more than they are now, and alot more effort might have gone into trying to make a wood nickel seem like a real one than you would think. Two, back in the good old days many people lived pretty self-sufficiently in the backwoods, and did not frequently handle money. On rare trips into town such people were candidates to be ripped off with counterfeit coins. A person who dealt with money on a regular basis would be alot harder to fool.
Still, some of you seem to think the wooden nickel thing is a metaphor for fake money or money only backed by a certian group or whatever.
I always presumed that nickels of old must have been somewhat simpler looking and also worth more such that a child might spend their day making counterfeit ones with his whittlin’ knife and have it actually be worth his or her while. In fact, I recall a part in the Mark Twain classic The Adventures of Huck Finn where he bites down on a nickel to make sure it is real. Presumably, old nickels must have been sufficiently lighter metal and/or wood colored to make fooling someone fairly easy.
I thought they said wooden nipples. 
The story I heard was that the saying was originally “Don’t take any wooden nutmegs” . . . actual nutmegs and wooden nutmegs look pretty similar, the principle difference being the wooden ones don’t grind up nice, whereas the actual ones do.
Before this gets all screwed up numismatically, here are a few facts:
Prior to 1866, there were no “nickels”. There were “half-dimes”, made out of silver, which we continued to strike through 1873.
We did strike a five cent coin, made out of nickel and copper(just like today) starting in 1866.