Good question Jay,

I started playing in card rooms in the 50's. I would say the answer to your question would be that it depended on the income level of the clientele. Some card rooms in poorer areas had very low buy ins and low rebuy levels. They had a much greater use for lower denomination chips. Dealers were instructed to always put some of the lowest denomination chips into each pot. They did this to stimulate tipping. Players used them to tip dealers and waitresses, and also for antes.
I lot of changes happened within the industry in the 70's and early 80's. Texas Holdem by passed 7 card stud to become the most popular game in played. California begin allowing cardrooms to spread any of the "approved" games.
This brought about Blinds instead of antes. Basically the big blind was anteing for everyone. The smaller denomination chips were still used for tokes, ability to split pots closer to even and most importantly for the house rake. If a quarter was the minimum bet and the house rake was 5 % with a maximum of $2, every time one player bet a quarter and three players called, the dealer could pull a 5 cent chip and ad to the drop.
I smallest game I ever saw had a 10 cent minimum bet.
The Town Tavern Cardroom in McFarland CA. was open from 1961-1963 and the only chips known from there are a 1 cent and a 25 cent. So, maybe in a small town like that they may have still used a 1 cent chip in the 60's