American coins tend to be larger in proportion to their worth–except for the dime. Why were they designed to be smaller than pennies? Also, is there still talk of rounding all prices off to the nearest nickel and dispensing with the penny once and for all? (I’m sure we could find some other way of commemorating Lincoln, like maybe with a functional dollar coin.)
Yeah, it’s too bad nobody has any $5 bills around that have a picture of some guy with a beard on it.
And there is talk of rounding off prices to the nickel, but it remains talk and likely will for a long time. Especially since after years, the major stock exchanges finally agreed to start trading in pennies after rounding off all their prices to various fractions.
As for the size of the dime, I’m sure someone else will have a good explanation. I would think it has something to do with the size of the dime historically and the metal used to make it.
Use to be, dimes were made of silver. Well, with some copper in them for hardness, but still mainly silver. Now if you figured out how much silver was in a dime and how much in the other silver coins, you would find that a dime had exactly one tenth as much silver as the dollar, one fifth as much as a half dollar, and two fifths as much as in a quarter.
Coincidence or not? You decide.
Coin Silver is 90% silver, 10% copper including traces of other metals.
Sterling Silver on the other hand is 92.5% silver, 7.5% copper.
More at: <http://southwestaffinity.com/made.htm>
So then the question becomes, “Why are nickels so big?”
Because nickels were not made of silver. The five-cent piece was made of (get this) nickel, a much less valuable but more durable metal.
You notice that the edges of the penny and the nickel are not milled, as are the edges of the silver (and back when we had them, the gold) coins. It is unlikely that anyone would bother shaving off a shred of nickel or copper to short-change a customer.
Back in the day, coins were not just money tokens but were a guarrantee by the government that this particular lump of metal is exactly the weight and purity it should be.
Because they were not silver. The one and five cent pieces were base-metal, the dime, quarter, half-dollar and dollar were silver.
I’d guess that rather few stock transactions are settled with actual pennies changing hands. Just as in the old days, even though a stock sold for 17 1/8, brokers weren’t chopping many quarters in half.
Whatever coin is the least valuable is also going to be the most common. Get rid of pennies and nickels become the nuisance coin. Besides, money these days largely works because everyone believes it works, not because of inherent value in the materials used to make money. If you start rounding to the nearest nickel, some people will start to wonder what happened to the 3.5 cents they were owed that one time and begin to lose faith in their money. Multiply that by millions of transactions and millions of people and you may be facing the devaluation of the dollar on foreign markets.
Ha ha ha. I agree that most arguments for the penny are silly, but give them some credit; they’re not as far-fetched as that. 
Cecil has a column: Does it make sense to keep minting pennies? Short answer: no.
Actually (American) nickels are made of 75% copper, 25% nickel. Really, despite the color, nickels are pretty close in composition to the one-cent piece.
But five-cent coins were once made of silver, before 1860’s. Then they were called “half dimes,” and were very small. Even smaller were the three-cent silver pieces, which were introduced in 1851 to coincide with the advent of the three-cent stamp.
Oz got rid of their penny years ago, and no one, as far as I could tell, was bothered by the missing 2 cents, because they would get an additional 2 later on. (0-2 cents => 0, 3-5 cents => 5) I could be wrong though, I was only there for a month. Any Ozzies wanna chime in?
Too late.
I, personally, have stopped accepting pennies as change, I’ve been shorted maybe a dollar in the last couple of months, cumitively.
Nowdays pennys are 97.5 percent zinc and 2.5 percent copper (copper-plated zinc).
When I was passing through a few of the U.S. Army and Air Force bases in Germany about ten years ago, they had gotten rid of the penny at all of the military stores (Post/Base Exchanges). All cash transactions were rounded up or down to the nearest nickel. It seemed to work just fine. (Apparently it wasn’t worth the cost for the military to continue to ship bags of pennies overseas.)
Anyway, if you think about it, rounding exactly balances out, and this is even more true for large numbers of transactions. For example, $1.61 and $1.62 both round to $1.60, and $1.63 and $1.64 both round to $1.65. Nobody would ever be owed “3.5 cents.” The most you would ever be down for any one transaction would be two cents.
So long as the government can produce pennies for less than one cent each, though, there is no real incentive for the mint to get rid of the penny.
Lastly, so far as the nickel becoming the “nuisance coin,” you have still improved the situation by at least five times. In fact, it is better than that. While a cashier today might be forced to give you 4 pennies in change, you would never receive 4 nickels in change (unless they were out of dimes).
Even today, I think you’d find that five dimes are exactly equal in weight to two quarters; they should still be proportionate even though they are made of base metals.
Which is already happening. By this time, in most contexts, most U.S. coins are nuisance coins except in a few specialized contexts like when you need to feed a parking meter or do the laundry. And even then, you’re likely to need a pocketful to make any useful purchase. If you ask why the nickel is so big, the next logical question is, why do we have such a big coin that is worth so little. The answer, of course, is inflation, the reality of which becomes more stark when you stop to think that there was once a whole range of products and services you could buy with each coined denomination. A penny could get you candy. A nickel would get you on the bus or train, pay for a newspaper, or get you any of a number of small food items. As for dimes, there was a whole class of stores named after them, chock full of things you could buy for – you guessed it, a dime. Moving on, a quarter was enough for a burger and a drink, and buy the time you reached the one dollar mark, you’d have enough money for a round of drinks. Now you can’t any of those things without a handful – or perhaps a sackful–of quarters and dimes. 
I think they should get rid of the penny, nickel, dime, and paper one-dollar bill. Round everything to the nearest quarter. The only coins you’d have are the quarter and the dollar coin. And, get rid of the $10 bill also.
Back in 1792, when the Mint first began operations, it issued coins containing almost precisely $10, $5, and $2.50 in gold, 1, .50, .25, .10, and .05 in silver, and .01 and .005 in copper, a minimal percentage being retained as "seigneurage" to cover the cost of minting. Some other values of coins were later added to that. In 1857, we discontinued the half cent and switched to a much smaller cent coin, and introduced a new five-cent coin composed of .05 worth of nickel. In 1871, we discontinued the silver half-dime.
In 1933, we stopped issuing gold coins altogether. And in the 1970s we stopped issuing silver “specie” coins whose face value was supposedly equivalent to their intrinsic value in silver (due to the price of silver escalating). The new base-metal coins were issued in equivalent dimensions and weight to the silver coins of the same denominations which they replaced, owing to citizen familiarity with what a dime and a quarter were like and to the vending machine industry.
Why get rid of the ten? Otherwise I agree with you, except that I’d keep the dime; in the money of, say, 40 years ago it would be worth about a penny, which back then seemed a reasonable coin to have around. I wouldn’t want the smallest coin I coiuld put into a meter to be a quarter.
Because it’s not really needed. The $5 and $20 can easily cover any transaction up until a $100 bill can be used (yeah, I’d eliminate the $50 too). It is really THAT much of a hassle to pay $15 with three bills instead of two? Or a $10 tab with two bills instead of one?
Under my system ($0.25, $1, $5, $20, $100 only), each denomination is 4 or 5 times the previous level. That’s a fine spread to cover any amount of payment with a minimum overall number of types of money.
The problem there is that you’d also have to keep the nickel if you kept the dime. If I bought an item for $0.60, and all I had were three quarters, we couldn’t complete the transaction.
Quick Quiz: Using only US coins and bills less than $100 (minted in the last 50 years), what is the maximum amount of money you can have in your pocket without being able to make exact change for any US coin or bill (minted in the last 50 years), including a $100 bill? Exchanging a SBA dollar for a paper dollar, for example, doesn’t count as making change.