The story of the penny starts in the first US Mint founded in 1792 which produced these one-cent pieces along with other coins including the Quarter, Dime, Half Dime and a mystery coin that we’ll get back to later.
These pennies of the new republic were born of 100% pure copper.
But, two forces conspired to ensure this wouldn’t remain the case for long. The value of copper went up and, because of inflation, the buying power of the penny went down.
This caused The Mint to reduce the amount of copper in pennies, first from 100% to 95%, and then to only 5% copper and 95% zinc.
Despite this debasement, in 2006 the value of the metal in older pennies rose over 1 cent and suddenly they were worth more dead than alive so people melted them to sell the raw copper for profit.
In a rational, efficient world, the story of the penny would have ended here with the Government realizing that they weren’t worth Minting and happy that its citizens were removing them from circulation.
But, instead the Government made melting U. S. coins illegal and continues to manufacture 4 million pennies each year.
Which is idiotic as it costs the US Mint about 1.8 cents to make a each 1 cent penny.
But, even if pennies were minted from something more representative of their true value – like plastic or lint – it wouldn’t fix the fundamental problem that pennies are bad for people and the economy.
The purpose of physical, cash money is to make it easy to transact the everyday business of buying stuff.
A shopkeeper has stuff and you want that stuff. Rather than bartering like savages for it, you use cash as a medium of exchange.
To get the price just right the cash must be divisible into pieces so that you don’t overpay.
But it isn’t divided forever, because at some point the value it represents is too small to buy anything or bother with. Which brings us back to the penny.
In the olden days, pennies could actually buy stuff, no more. Now, if you want to spend pennies, you’re going to have to put in some effort.
For example, try to pay for 20 bucks worth of groceries with 2,000 pennies weighing 11 pounds and see how that works out.
So you have to get rid of them by using exact change.
But, because the United States doesn’t include sales tax in prices – unlike more civilized countries – and you can’t multiply by 8.875% in your head, you can’t get your change ready before you reach the register like a good Samaritan would.
The pennies you inevitably fiddle with after discovering the true cost of your goods add two seconds to each cash transaction on average which is less than the value of your time, and the time of everyone behind you, which is why most normal people don’t bother messing with change and the usual penny-counting culprits are those with nothing better to occupy their day.
If you want to spend pennies without being an inconsiderate jerk who wastes other peoples’ time perhaps you can find a machine that will accept them.
Good luck with that. Vending machines won’t take pennies, neither laundry machines or toll booths or parking meters or anything else – because pennies aren’t worth the time and effort to count, store and transport them.
In fact there is only one machine that takes pennies: Coinstar – a leach on the economy that eats 10% of your money while providing nothing in return except the ability to spend cash that was already yours.
The difficulty of spending pennies is why they end up in jars, dead to the economy after a short, useless life where they failed at their only job, to facilitate exchange and instead did the exact opposite by being a literal dead weight on every cash transaction.
They must be eliminated.
But, you might think, won’t prices rise and charities lose money without the penny?
New Zealand got rid of their 1 cent coin, as did Oz. Finland and the Netherlands ditched the 1 euro cent coin as well. Though that might have been because of how absurdly small and frustrating 1 euro cent is.
These countries round to the nearest 5 cents for cash transactions and none of them saw prices rise or charitable donations drop.
And anyway, the United States has already gone through this process before without trouble.
Remember the mystery coin from the beginning? That was the half-cent. Seen one lately? Of course you haven’t. It was discontinued in 1857 for being worth too little.
But when the half-cent met its fate, it had more buying power than today’s dime so perhaps the list of modern coins to kill could even be larger.
There is one last, irrational problem with getting rid of the penny.
Everybody loves Lincoln – well almost everyone. After booting off Lady Liberty and the Chief, the US sure has Lincoln-ified the penny within an inch of its life.
But ditching the penny won’t erase him from history.
Lincoln, and his monument, are still on the 5 dollar bill which isn’t going away.
And, even if you think it’s unpatriotic or disrespectful to retire Presidential coinage, allow me to direct you to a little organization known as the United States Military.
Where, in overseas bases, they’ve already abolished the penny by automatically rounding to the nearest five cents.
Sooner or later even the most ardent Lincoln lovers will have to give up the penny: they cost more to make than they’re worth, they waste peoples’ time, they don’t work as money, and because of inflation they’re less valuable every year making all the other problems worse.
Sorry Abe, but it’s time to kill the penny.
- The number of pennies produced should be 4 billion, not for million. I was off by three orders of magnitude. Whoops.
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