What was the importance of nickels prior to 1964?

Answer 1

Nickels have had exactly the same use ever since the coin was introduced in 1866: making change for amounts less than a dime. In fact, the nickel replaced a tiny coin called a half-dime that served the same purpose but was very unpopular due to its small size.

You may be thinking that because dimes, quarters, and half-dollars minted up till 1964 contained silver, nickels were silver as well. However, except during WWII* the US nickel has always been made of the same metal, an alloy of 25% nickel and 75% copper.

The fact that nickels don't contain silver is the only reason 1964 is a special year for the denomination. When the silver market was deregulated demand for the metal, along with overt speculation, pushed its price well above the point where silver coins were worth more than their face value. Within months huge numbers of silver coins were being melted or hoarded. So many disappeared from circulation that businesses didn't have enough coins to make change. The problem was bad enough that people started referring to it as the Great Coin Shortage.

Because nickels and cents were the only coins that were not worth melting, the Mint churned out enormous numbers of them as a stopgap measure while the other denominations were being changed over to cupronickel. Over one billion 1964 nickels and 6.5billion cents were struck, many times more than in prior years. Those production levels made it possible for merchants to continue providing change, even though it might be in the form of 10 or 15 nickels at a time. It was inconvenient but arguably the lowly five-cent piece prevented the Great Coin Shortage from bringing commerce to a halt.

(*) During WWII, the Mint made nickels from an alloy of copper, silver, and manganese due to wartime metal shortages. These special "war nickels" are the only US nickels that ever contained any precious metals.