On November 13, 1861, with the nation embroiled in civil war, a small-town Pennsylvania preacher sat down to write a letter.  It was addressed to Salmon P. Chase, Secretary of the Treasury under President Lincoln. 

Rev. Watkinson was concerned that "recognition of the Almighty God" had been overlooked on the nation's coinage.  He believed that proudly declaring such recognition "would relieve us from the ignominy of heathenism" and "place us openly under the Divine protection that we have personally claimed." 

It is interesting to note that the "allseeing eye" device Rev. Watkinson suggested is exactly the device used on the Nova Constellatio silver pattern coinage of 1783 (and subsequently used on the Nova Constellatio copper coinage of 1785).

You are probably a Christian. What if our Republic were now shattered beyond reconstruction. Would not the antiquaries of succeeding centuries rightly reason from our past that we were a heathen nation. What I propose is that instead of the goddess of liberty we shall have next inside the 13 stars a ring inscribed with the words "perpetual union"; within this ring the allseeing eye, crowned with a halo; beneath this eye the American flag, bearing in its field stars equal to the number of the States united; in the folds of the bars the words "God, liberty, law."
 

This would make a beautiful coin, to which no possible citizen could object. This would relieve us from the ignominy of 
heathenism. This would place us openly under the Divine protection that we have personally claimed. From my heart I have 
felt our national shame in disowning God as not the least of our present national disasters. 

To you first I address a subject that must be agitated. 

Exactly one week later, on November 20, 1861, Secretary Chase wrote to Mint Director James Pollack, declaring "the trust of our people in God should be declared on our national coins" and directing him to prepare "a motto expressing in the fewest and tersest words possible this national recognition." 

Chase declined to forward Rev. Watkinson's more specific suggestions, but instead gave Pollack general instructions to devise a new motto without making any particular recommendations. 

In a lengthy letter dated December 26, 1861, Director Pollack responded to Chase, suggesting that the most appropriate place for the new motto would be on the reverse of the coins, above the eagle.

No nation can be strong except in the strength of God, or safe except in His defense. The trust of our people in God should be declared on our national coins. 

You will cause a device to be prepared without unnecessary delay with a motto expressing in the fewest and tersest words 
possible this national recognition.

At first the motto "OUR TRUST IS IN GOD" was suggested, but it contained too many letters to comfortably place on smaller coins.  "We therefore, selected for greater brevity the words 'GOD OUR TRUST' which carries the same idea." 

Pollack had his staff prepare four pattern dies containing the proposed motto: reverses of the silver half dollar and ten dollar "eagle" gold coins, with and without a scroll.  The new dies were paired with the regular obverse dies and struck in both copper and the regulation metal (silver and gold, respectively).   Thus a total of eight different GOD OUR TRUST pattern coins dated 1861 were struck.
 

1862 "GOD OUR TRUST" Pattern Coinage

With more pressing matters such as the financing of the war effort occupying his time, Secretary Chase had not responded to Director Pollack as of June 16, 1862.   On that date Pollack wrote to Chase noting that it was now time to prepare dies for the 1863 coins.  Chase's delay apparently accounts for the fact that no new dies were cut with the proposed motto in 1862 -  instead, a total of six patterns were struck using the same four motto reverse dies and new 1862 obverse dies.   None were struck this year in gold.
 

1863 Motto Pattern Coinage

The year 1863 was one of great experimentation at the U.S. Mint.   Patterns were produced for the proposed copper one cent, two cent, and three cent pieces, plus the ten cent "postage currency" pattern, as well as other coins.  A total of twenty-nine pattern coins bearing some form of the new motto were produced.  In addition to the initial "GOD OUR TRUST" motto, "GOD AND OUR COUNTRY" was used on a Two Cent pattern, and the ultimately adopted motto "IN GOD WE TRUST" appeared on two cent, quarter, half dollar, and dollar patterns.
 
 

As part of a long letter to Secretary Chase dated December 8, 1863, Director Pollack recommended the coinage of the bronze one and two-cent pieces.  Chase consented and Pollack drafted proposed legislation which was later passed as part of the Mint Act of April 22, 1864.   Chase approved the pattern two-cent piece with the shield design and motto "IN GOD WE TRUST".  Thus the 1864 two-cent piece became the first circulating U.S. coin to bear the new motto.
 
 
 
 

Sources: 

Judd, J. Hewitt, M.D., United States Pattern, Experimental, and Trial Pieces, Western Publishing Company, Racine, WI, Seventh Edition, 1982 

Lindheim, Leon, Facts and Fictions About Coins, The World Publishing Company, Cleveland, OH, First Edition, 1967 

Pollack, Andrew W. III, United States Patterns and Related Issues, Bowers and Merena Galleries, Inc., 1994

FOR MORE INFORMATION ON PATTERN COINAGE, SEE   http://www.uspatterns.com/