This is a bit of lighthearted folk advice — particularly meant for country folks heading into the big, bad city. It means, “be careful and don’t get scammed.”
It’s an American adage, in existence since the mid-1800s, thus preceding the actual use of wooden nickels as currency. Back then, some peddlers were known to mix wooden nutmeg and wooden cucumber seeds in with the real nutmeg and cucumber seeds. So it’s easy to see why honest folk needed to heed the warning about accepting wooden fakes.
According to the Wooden Nickel Museum, the first wooden nickels didn’t come around until the 1930s. On December 5, 1931, the Citizen’s Bank of Tenino, Washington failed and created a shortage of money. This left the merchants of the area unable to get change without traveling about 30 miles over mountainous roads in automobiles ill suited to that purpose, on roads that were built for horses and mules to traverse. The average round trip was about four hours. Much too long for merchants to be gone from their stores. A meeting of the Chamber of Commerce resulted in the local newspaper printing up the first issue of wooden money in the United States.
Several other places, mostly in the Pacific North-West, issued wooden money after that. In 1934 a new use for wooden nickels was found — advertising for civic celebrations and providing souvenirs of the celebration. Binghamton NY was one of first places to embrace this concept.
The production of commemorative wooden nickels certainly contributed to the use of the phrase — the wooden nickels were easily broken and typically specified an “expiration date.” If you didn’t redeem them before the event closed, or if you broke your nickels, you were out of luck.
According to the International Organization of Wooden Money Collectors, America is not the only country to have struck wooden currency and use it as legal currency from time to time. Canada and other countries have done the same. Similar tokens and scrip have often been issued locally in times of severe economic distress such as financial crises and the Civil War.
It is doubtful that any wooden nickels existed prior to the turn of the 20th Century and for one simple reason. Prior to 1866, there was no such currency as a nickel in either Canada or the United States. There were half-dimes in America up until 1873 and these were made of silver.
However, the term nickel was used for other coins before it came to mean a five-cent piece. The original Indian Head cent was referred to as a nickel or “nick.” This is because when it was first produced, it was made from a copper nickel alloy. A three-cent nickel was produced in 1865, and it, too, was composed of a copper nickel alloy. The three-cent nickel wasn’t particularly popular and it was discontinued 1889.
There must be something odd about the number “three.” We’ve never had a three-dollar bill, nor a thirty-dollar bill, as far as I know. Or maybe it’s just as simple as the authorities deciding that all denominations must be based on ten.