Do Pennies Still Make Sense?
Friday, July 7, 2006
A penny used to buy a loaf of bread, but in an age of inflation and affluence, the coin is slowly sliding into monetary obsolescence.
For the first time, the U.S. Mint has said this year that pennies are costing more than 1 cent to make, thanks to higher metal prices.
That idea of spending 1.2 cents to put 1 cent into play strikes many people as "faintly ridiculous," said Jeff Gore, of Elkton, Md., founder of a group called Citizens for Retiring the Penny.
"The penny is going to disappear soon unless something changes in the economics of commodities," said Robert Hoge, an expert on North American coins at the American Numismatic Society.
Still, Gallup polling has shown that two-thirds of Americans want to keep the penny. There's even a pro-penny lobby called Americans for Common Cents.
"It's part of their past, so they want to keep it in their future," said Dave Harper, editor of Numismatic News.
The Mint's announcement is a milestone, because coins have historically cost less to produce than the face value paid by receiving banks and have usually been moneymakers for the government. Rep. Jim Kolbe (R-Ariz.) wants to keep it that way. When he asked Congress to phase out the penny five years ago, he failed; he plans to try again this year.
The idea of a penniless society began to gain currency in 1989 with a bill in Congress to round off purchases to the nearest nickel. It was dropped, but the General Accounting Office in a 1996 report acknowledged that some people consider the penny a "nuisance coin."
Copper, bronze and zinc have been used to make the penny, and steel was used in 1943 when copper was desperately needed for World War II. In 1982, zinc replaced most of the penny's copper to save money, but rising zinc prices are bedeviling the penny again.
In 2002, Gallup polling found that 58 percent of Americans stash pennies in piggy banks, jars or drawers instead of spending them like other coins. Some people eventually redeem them at banks or coin-counting machines, but 2 percent admit to throwing pennies out.
"It's outlived its usefulness," said Tony Terranova, a New York City coin dealer who paid $437,000 for a 1792 penny prototype in what is believed to be the denomination's highest auction price. "Most people find them annoying when they get them in change."
Not Edmond Knowles, of Flomaton, Ala. He hoarded pennies for nearly four decades as a hobby. He ended up with more than 1.3 million of them -- 4.5 tons -- in several drums in his garage. His bank refused to take them all at once; he finally found a coin-counting company, Coinstar Inc., that wanted the publicity.