Is it Time to Retire the Penny?

The United States penny: another name for our country's smallest monetary denomination - one cent. The penny did not originate in America. In 680, a pence coin was created out of silver by the Anglo-Saxons. At one point, the penny was made of gold. In 1797, Great Britain started manufacturing copper pennies. Today, the copper colored one cent coin is made from zinc. Because it costs more to make a penny than it is worth, legislation has been presented in 2000, 2006 and 2008 to never mint another penny, or find cheaper materials to make them.

Those who want to stop making the penny see it as a nuisance. What can you buy with one cent today? When most people see a quarter on the ground, they pick it up. What about a lonely penny lying near the curve? People are more likely to walk over it than bend to pick it up. The poor penny is not even worth their time.

Economists argue that Americans lose $300 million annually in transactions that involve pennies. Pennies are not acceptable in vending machines or toll booths. When someone approaches the store clerk with a jar full of pennies, what is the first reaction by the clerk and all the customers who are unfortunate enough to get in line behind the penny jar customer? Penny savers throw one cent coins into receptacles and save them at home for years and years. This act does not encourage exchange, which is what the American monetary system thrives on. The penny costs about 1.7 cents to manufacture using zinc with copper plating. As of 2007, the nickel or five cent coin is worth what the penny was worth in 1972.

Advocates to keep the penny contend that consumers will pay more for merchandise if the penny is removed from circulation. For example, a purchase that originally costs $24.88 will cost $24.90. Two cents don't sound like much, until that same consumer has made 1,000 similar purchases in one year. Those two cents just morphed into $20.00 that would have been saved if the store hadn't gone penniless. For stores that round up to the nearest nickel when giving change back - is that good or bad for profits? Recently a Dunkin' Donuts advertised that they would be rounding purchases up to the nearest nickel in order to speed up service at the cash register. That lasted for one day.

There are other alternatives to getting rid of the penny. One proposal is that the penny be made worth five cents. I guess that makes sense, since you only get a penny's worth out of a nickel. Another idea is to make the penny from steel, a cheaper metal, and treat it with copper color.

Coin counter machines located inside grocery stores is a way for pennies and other coins to be quickly converted to dollars. Penny stashers can bring their bag or box of them and load them into the machine where they are counted electronically. The machine will print a ticket that consumers take to the store office to claim the exchange amount in dollars, minus the fee to use the coin counter. This fee can be between 9 and 15 percent.

Banks have been exchanging large amounts of pennies for dollars long before commercial coin counter machines became popular. Bank tellers are happier when pennies have already been sorted and rolled before the customer gets to his or her window. Fundraising organizations and missionaries who've been donated truckloads of pennies probably use this method to get the most value out of their pennies.

As the debate continues over the devaluing penny, whether it is worth keeping or more valuable if the mint got rid of it, folks will probably keep on using or not using the proverbial penny the way they always have.

Sources for this article:
http://en.wikipedia.org/wiki/Efforts_to_eliminate_the_penny_in_the_United_States

http://en.wikipedia.org/wiki/Penny

http://www.financialcrisis2009.org/forum1/Business-Finance/HOW-DO-I-CHANGE-JARS-OF-LOOSE-PENNIES-TO-DOLLARS-QUICKLY-19819.htm

"Are Pennies Really Necessary?"Time for Kids, Nov. 12, 2010, vol. 1 no. 9, edition 3-4.