Market Insights, The US Dollar

Why Do Some Gold and Silver Coins Have Ridges?

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Last updated: 2/16/2022

Some coins, such as the nickel and the penny, have no ridges along their edge, but other coins do. Why is that the case?

Why do coins have ridges?

Coins have ridges to prevent people from “coin shaving”, the illegal act of stealing raw material from coins by shaving off their edges. Throughout history, thieves have been cutting off tiny slivers of the edges of currency to keep for themselves. Tiny enough that no one would notice. This sneaky method could, over time, be quite profitable. In Britain, a cache of Roman silver coins was found. While the coins at the top looked shiny and new, the coins underneath them had had so much silver shaved off that the writing along their edges was rendered illegible. Coin shaving was a problem throughout the history of coinage until a solution was developed.

Who invented putting ridges on coins?

Issac Newton implemented the coin ridge system during his term in 1696 as part of his overhaul of the currency system. We all know about Isaac Newton treatise on gravity, but he did far more than observing apples falling of trees. For instance, he developed calculus and invented the reflective telescope. What you may not know is that Newton also served as the Warden of the Mint for England during a time marked by financial turmoil. The English silver penny was worth less than its weight in silver.

From the very beginning of his term in 1696, Newton took drastic measures to overhaul the currency system. To eliminate forgeries, he recalled every single coin in England and recast them. He was aware of the impact of coin shaving, so he implemented a system where ridges were added to all coins—a system that is being used globally today.

Why do US Coins have ridges?

If we go back in US history, we’ll remember that each state practically was sovereign. They could mint their own currency and apply their own trade tariffs. However, this resulted in currency imbalances between powerful and weak states, and with the creation of the Constitution in 1787, Congress was tasked with minting all coins and applying all currency regulations.

In the Coinage Act of 1792, Congress announced that all US dollar and dime coins must have their face value in gold or silver, respectively. And when the national mint started producing these coins, coin shavers were ready. This led to the implementation of Newton’s ridging system, which not only effectively stopped coin shaving but also made it extremely hard to counterfeit the currency.

Why don’t Pennies and Nickels have ridges?

To get back to our original question: Today’s pennies and nickels have no ridges because of their low value of their materials (cooper/zinc and copper/nickel, respectively). In other words, the US mint see no point in using ridges along the edges of these coins—coin shavers have no interest in the metals. In addition, it’s illegal to debase currency (and the Secret Service will prosecute currency debasers).

Like the English silver penny mentioned above, there would actually be a good reason to shave off smaller coins today: the cost of producing a US penny exceeds its worth—the copper it contains is worth more than the value of the actual coin. A couple of centuries ago, this would have attracted coin shavers, but it seems that this “profession” has been extinct for years.