Why are nickels bigger than dimes?

When the first US Coins were struck at the end of the 18th century, each one contained its face value in metal, minus a small amount for what's called "seigniorage". Only three metals were used: copper, silver, and gold. A cent had 1 cent's worth of copper, a dime 10 cents' worth of silver, a $5 coin had $5 worth of gold, and so on. Because the same weight of each metal was worth a different amount, the coins' sizes had to be different in order to match weights and values. For example, silver was (and still is) worth a lot more per ounce than copper, so a dime could have a lot less metal in it but be worth far more than a copper cent.

However nickel metal wasn't used for coins at that time because it's very hard and would have broken the presses then in use. Instead, the Mint made coins called half-dimes that contained 5 cents' worth of silver. Half-dimes were unpopular because they were so tiny that people could easily lose them. When minting technology improved enough to allow the use of nickel in coins, the Mint decided to replace the half-dime with a new 5-cent coin made from an alloy of 25% nickel and 75% copper.

The new coin's size followed the same pattern as other denominations: because copper and nickel are worth much less per ounce than silver, cupronickel 5-cent pieces are much larger than the half-dimes they replaced. In fact, they're also larger than dimes and almost the size of quarters.

The coins were initially just called "5 cent pieces" but soon became known as "nickels" in common slang usage.

More answers

Even though the monetary value of coins no longer represents the value of their metal content, the traditional sizes are maintained.

A nickel is bigger than a dime because dimes prior to 1965 had silver. Since 1866, nickels have been 75% copper and 25% nickel. Until 1964, it made sense for the dime to be smaller than the dime because the intrinsic value (the value of the metal) of the nickel had to be worth less than the intrinsic value of the dime. To help understand this even better, you need to know that silver is worth a lot more than cupronickel, so you had to have a tiny amount so that the intrinsic value does not exceed the face value.

Consult the "Official Blackbook Price Guide to United States Coins"

By Marc Hudgeons, Thomas E. Hudgeons, Jr., Tom Hudgeons, Sr.

If you read pages 315, 325-26, and 334-35 of "The Official Blackbook...", you will understand why it once made sense to have nickels bigger than dimes (or more precisely dimes smaller than nickels).

Now that our present-day coinage is made from base metals, a nickel should technically be smaller than a dime, but changing its size would require retrofitting every device (e.g. vending machines, coin sorters, etc.) that recognizes coins by their size in addition to their electrical properties.