Is the (US) penny doomed?

[dianeduane]

The question comes up once again, as the one-cent piece now costs more to produce than it's worth.

...The U.S. Mint could lose a mint, or $43.5 million, producing the coin this year, according to at least one expert.

...The Mint is also losing a pretty penny on the nickel. The agency, which plans to produce 1.7 billion of them this year, shells out 6.4 cents for each five-cent piece. Yet, there has been far less hoo-ha over the nickel.

"There is more sentimentality associated with the penny," said Anthony Zito, 53, former president of the Massapequa Coin Club and avid penny collector. "It has a beloved president on it and has inspired a host of sayings, such as 'penny-wise and pound-foolish,' 'a penny saved is a penny earned' and 'a penny for your thoughts.' It is more ingrained in our culture than any other currency."

Well, the "pound-foolish" saying would have come from the British side of things, or at least the pre-dollar side. 

Another take on the situation from further on in the article:

Another penny advocate, Mark Weller, executive director of Americans for Common Cents, an advocacy group, argues that the elimination of the penny would hurt consumers and many charities, which rely on penny drives as part of their donation collections.

Most convenience stores would round up instead of round down, costing consumers $600 million, said Weller, citing a study by Raymond Lombra, a Penn State University economist.

Weller added that Kolbe is pushing the legislation because Arizona is a copper-producing state. The elimination of the penny would force the Mint to make more nickels, which are mostly composed of copper, he said.

"This is special interest legislation at it worst," Weller said.

...There was a lot of noise, I seem to remember, when the euro was first being structured, as to whether or not there should be a one-cent coin. I can't now recall all the justifications for the "yea" or "nay" positions. Whatever: we've got it now.

Meanwhile, it'll be interesting to see if our cent outlasts the US one...

 

 

Comments

[commodorified.livejournal.com]

There seems to be a pronounced lack of a 'make the damned thing smaller and thinner' option on that survey...

[bellinghman.livejournal.com]

I'm not entirely sure you could ...

Oh, OK, you could. But it's flimsy enough as it is.

[naraht.livejournal.com]

we have a smaller coin.

it's called the dime

[kengr]

That's a non-starter because of all the coin handling equipment that'd have to be replaced. Coin counters at banks and other places, all the vending machines, and on and on.

The choices are keep it or get rid of it.

[kradical.livejournal.com]

It would cause all sorts of entertaining problems because sales tax would, of necessity, have to be rounded off to a percentage that would only allow amounts in increments of five cents -- which, in real terms, means that all sales taxes have to be in percentages ending in a five or a zero. Either that, or all pricing will have to be done in such a way that the sales tax will make it come out in a number ending in a five or zero, but I don't see that as being practical.

[trdsf.livejournal.com]

Non-cash transactions (credit/debit, wire transfer, and presumably checks) would still be done to the cent. Cash transactions are the ones that would be rounded to the nickel, and these are precisely the ones that would hurt the poor--people who can't get a bank account and the attendant debit card--the most, so not only is there a potential $600 million windfall for retailers, but it would come mainly on the backs of people who even collectively don't have $600 million to lose.

In any case, rounding would (theoretically, anyway) be applied only after tax was calculated on the to-the-cent amount.

[ckd]

Rounding the total off, while letting individual prices (and sales tax) float around, would work. In theory the rounding will average out (round down 2/5 of the time, round up 2/5 of the time, no rounding needed 1/5 of the time).

[antonstrout.livejournal.com]

I'm not sure, but I think this all ties into the pennies and half cent scheme that the villainous Richard Pryor tried in Superman III.

[phoebesmum.livejournal.com]

All I know is, this was a plot point in third season West Wing. All I know of the world I learned from the telly (well, some of it was from Arthur Mee's Children's Encyclopaedia; it's hard to tell which is the more inaccurate).

[zanda-myrande.livejournal.com]

That would explain why I now have Leo in my head going on and on about Andrew Jackson and a big block of cheese...

[fleetfootmike.livejournal.com]

"...has inspired a host of sayings, such as 'penny-wise and pound-foolish,' 'a penny saved is a penny earned' and 'a penny for your thoughts.' It is more ingrained in our culture than any other currency."

I'd lay good odds all those predate the 1c piece :)

[nelka35.livejournal.com]

we will see, we will see...

DD - what's happening with "The Big Meow"?

I am a full subscriber, and the last I got was chapter 4.
And the projected dates on the website are behind the times, evidently. What are the projected dates now?

[rosefox]

Let's not forget the Illinois lobby to keep Lincoln one of the few people featured on a coin and a bill. They're very serious about it.

[trdsf.livejournal.com]

Pardon me while I slip on my coin-collector's hat...

This is something that's been floated every now and then since at least the mid-70s. I don't think it will happen any time soon--at the very least, plans are already made for four commemorative general issue cents in 2009, the bicentennial of Lincoln's birth and the centennial of the Lincoln cent and it would be boorish at the very least to cancel the coin before then, so I think we're safe at least through 2010.

Second, the points made by the pro-cent factions are probably correct: there's just something about the penny, and I agree that most Americans would hate to see it go, partly for sentimental (or cent-imental... oh, like I could resist that) reasons, partly because most people expect that businesses would make it an excuse to raise their prices to the nearest nickel and grab the windfall profit.

Realistically, the Mint needs to review the composition of the penny again. If zinc is too expensive, perhaps aluminum is a good choice now--a few test coins were struck in that metal in 1974 (http://lakdiva.org/coins/pattern/1974_US_01c_al_oms.html), and I certainly hope the Mint is considering them again--or, to just decrease the amount of metal used, the ring design (http://uspatterns.com/j1721.html) has been tried before, too.

[kengr]

Can't use aluminum. Too many coin mechanisms depend on not just the size, but the *weight* (and some magnetic properties as well) to tell the difference between a real coin and a counterfeit.

Basically, the coins roll down a ramp past a magnet. Steel slugs get slowed by the magntic field, and when the ramp ends, they fall into the reject bin. So do coins that are too light.

Coins with the right combo of weight and magnetic properties (yes, all metals will be slowed some by the magnet, it's just that steel gets slowed a *lot*) will be moving fast enough to overshoot the reject bin and into the accept bin.

Aluminum is just too light.

[ckd]

Finland, which is in the eurozone, rounds to the nearest € 0.05 on totals; some Finnish 1c and 2c coins were minted, but they aren't circulated.

[ckd]

Here's a scenario to think about:

Dump the penny. This frees up a coin space in cash registers. Then phase out the $1 bill in favor of a $1 coin....

[a-muse-d.livejournal.com]

the US has dollar coins. the Susan B. Anthony and Sacajawea, which have never quite caught on, except at Post Offices where the golden dollar is given back as change, at least from the machines..

[occams_pyramid]

They could change the formulation. British 'copper' coins can be picked up with a magnet.

With continued inflation the problem will get worse and worse. At what point will the pro-penny crowd agree that enough is enough? There must be a breaking point somewhere. Presumably when it becomes profitable to melt down pennies and sell the metal (back to the mint?).

[atimson.livejournal.com]

At what point will the pro-penny crowd agree that enough is enough?

At the point it becomes legally mandated to round down. I'm fine with dumping the penny... so long as I never have to pay more because of it.

[kengr]

Alas, being that magnetic means that (like Canadian nickels) such coins wouldn't work in most vending machines and the like. They use a magnet as part of the process of trying to reject counterfeit coins (usually steel "slugs")

[a-muse-d.livejournal.com]

Australia no longer uses the penny. when i was on a southern beach during a visit in 2002 i found one on the shore that, if i recall correctly, was dated 1968. you bet i kept that :)

if they went through garbage heaps and gutters they could just reuse the pennies they find there and it'd be free!

[starcat-jewel.livejournal.com]

It would make more sense (cents? No, I couldn't resist that one either!) to dump the nickel and retain the penny. Nickels are only a convenience anyhow -- there's no compelling reason to have a denomination between 1 cent and 10 cents. And then you'd actually have a slot in the change drawer for the dollar coins, and could phase out the $1 paper bill at the same time.

[captainlucy.livejournal.com]

OK, the 1c coin may be small, but is it as small as (for example) the British 5 pence coin?

A couple of radical ideas. If the materials cost more than the actual coin is worth, try making the coin smaller. Reducing the radius of the coin by 10% and thickness by 20 will save over 35% in the amount of material required to make each coin. (of course, this saving is then slightly off-set by the large number of new coin dies that will be needed).

Alternatively (or indeed additionally) try making the coin out of a cheaper alloy. I would imagine the market prices of tin and aluminium are a good bit less than those for zinc and copper, so increasing the proportions of these metals in the coin would almost certainly save money. Plus, if the coin was made predominantly out of aluminium it would be noticeably lighter, thus giving a small saving transportation costs as well.

[kengr]

Can't change the size. that'd break every coin sorter, and automated cash register out there.

Can't change the weight either for related reasons.

[megabitch.livejournal.com]

Yup, Australia phased out the one cent coin a while ago. Shops still price in cents - but the total is rounded up or down at the till as required. IME supermarkets round down as a matter of course, smaller shops can vary. There was a news story not long after it came into effect of an unemployed bloke spending hours going through the supermarket buying a single item at a time to save as much as possible - one carrot at a time, for example, as anything under 5c was rounded to zero! Eventually the management got fed up and banned him.

When I had a shop in my local town (Somerset, UK) I set my till to round to the nearest 5p so that I didn't have to muck about with copper coins for the most part - the manual for the till described this as "Australian Settings" :)

[mistwolf.livejournal.com]

Not quite! Australia did the smart thing and mandated how to round things when they phased out the penny. $.01 and $.02 round down, $.03 and $.04 round up. Fair, equitable, and fine. I've yet to hear anyone complaining they should bring back the $.01 and $.02 pieces.

They also have $1 and $2 coins instead of bills, which is a fabulous idea. They colored them gold instead of silver and did the stippling on the edge differently so you can easily tell them from the silver change.

And they have true plastic bills that take a /lot/ of effort to damage or destroy. You don't see the old, nasty bills you do in the US at all, really.

All in all, this country did it, and did it /right/. I wish the US would do the same on all points.