A Penny Saved

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One of the hottest coin topics today is a civic concern about the future of the U.S. cent. There is a general misconception about its usefulness, the cost of producing it, and how eliminating it may increase prices, so some editorialists have turned to numismatists for their advice and guidance. 

The “Penny” that Never Was

Nearly everyone is surprised to learn that these coins are not actually pennies­—in fact, no U.S. coins by that name have ever been minted. 

All of this flies in the face of tradition, where many, even the U.S. Mint, refer to our cents as pennies. Nevertheless, the penny was and still is an English coin that has no relation to American coinage, other than that some of them were used in the colonies as small change before the establishment of our own monetary system. Yet, the mint still refers to their coins as pennies right up to today.

Even President Donald Trump used the term “penny” when he stated his opinion about their continued production, stating, “For far too long, the United States has minted pennies which literally cost us more than two cents. This is so wasteful, I have instructed my Secretary of the U.S. Treasury to stop producing new pennies.”    

The penny was and still is an English coin that has no relation to American coinage.

The Cost of Keeping Cents

Yes, “pennies” are a waste of taxpayer dollars. It doesn’t make sense to spend millions each year minting coins that so few people actually use. But there is a problem with President Trump’s common-sense plan. Phasing out the penny could result in needing to make more nickels (which also contain copper), and the U.S. Treasury Department loses far more money producing nickels than it does making pennies. 

In reality, consumers have access to enough U.S. cents to facilitate commercial needs for countless years. Even so, some have concerns that without the cent, prices of almost everything might have to be increased. That scenario, of course, is nothing more than irrational thinking and fear-mongering. 

Similar psychological effects occur in everyday pricing. Retailers often set prices just below a round number—such as $3.99 instead of $4—or create multi-item deals like “two for $5” to influence buying behavior. This practice can give the impression of savings.

Plus, the “penny problem” would only affect cash payments, which would need to be rounded up or down to the nearest 5 cents, depending on the company’s policy. This is unlikely to cause massive price increases, as charges are exact for electronic payments, which comprise the bulk of all payments for products and services. Finally, if there is, or could be, a future need for coins valued below 10 cents, plastic, fiber, or resin coins would suffice.

The “penny problem” would only affect cash payments.

Copper Riches and a Cent’s Last Stand

Unknown to the general public is the fact that the old “Wheat Ears Reverse” copper cents minted before 1958 are worth at least double their face value because of the price of copper. The U.S. government is quietly recalling and melting these pieces to cash in on the bonanza. In fact, Congress recently passed a law (Title 31 U.S. Code 5120) to prevent anyone else from doing the same. The legislation explicitly prohibits the melting of 1-cent and 5-cent coins for profit. This regulation was implemented to prevent the exploitation of the metal content in these coins, which can sometimes exceed their face value. Other coins, such as dimes and quarters, are not subject to this specific prohibition.

This situation is not unlike the circumstances Americans faced in 1934 when the government recalled gold coins that it valued at $20 per ounce, knowing that it would, and did, immediately raise the value to $35 per ounce.

Yes, traditional American cents and nickels will likely someday disappear from our nation’s monetary system, but the longtime favorite “pennies” will live forever in our hearts.