COMMON CENTS

Geezers among us will recall the ubiquitous use of the United States penny in vending machines for candy and gum as well as in parking meters and other devices. Today, however, that has all changed. A nickel today is worth less than a penny was in 1972. It costs 2.1 cents to mint each penny--even when considering the fact that they have been made primarily out of zinc since 1982 (specifically, they now consist of a zinc core with a thin outer shell of copper for a total composition of 97.5% zinc and 2.5% copper). Gumball machines and the like are now fueled by higher-denomination coins.

According to the infamous 2001 "penny episode" of the West Wing TV series (a brief excerpt can be found here), the only vending machines which still accept pennies are toll booths in Illinois. The episode further claimed that Illinois politicians were successfully blocking any and all attempts to eliminate the penny from circulation out of respect for the individual pictured thereon (who, incidentally, was born and raised in Kentucky and Indiana--not Illinois).

Any truth to the West Wing assertions? Actually, yes, at least to the one about the toll booths. Toll booths in Illinois at the time were still accepting pennies. In fact, in 2001, they were taking in 800,000 of them a DAY. However, in 2020, the Illinois Tollway eliminated all cash payments--pennies or otherwise.

Whether or not Illinois representatives were the ones opposed to eliminating the penny is not nearly as well-documented. In fact, the highest-ranking politician alive hailing from Illinois, Barack Obama, indicated in 2013 that he would be fine with getting rid of the coin.

When the small-sized penny was first issued in 1856, it had the buying power of about 37 cents today when adjusted for inflation. Nowadays, virtually nothing can be purchased for a cent, while using a bunch of pennies to buy groceries is cumbersome, impractical, and irritating to both the cashier and the people behind in the line. Most banks will not count loose change, and anyone desiring to redeem their coins for cash without a major hassle is doomed to take them to one of those ubiquitous coin-counting machines in grocery stores and the like which will convert them to paper money while charging a substantial premium for that privilege. Americans normally instead take the pennies home and stuff them in a jar to deal with later, effectively removing them from circulation and creating a shortage which results in the mint making billions (literally) more cents each year to fill the gap--cents which will also end up in the same vicious cycle.

Canada had a similar coinage system as the USA (distinguished, however, with quaint designs including royalty, leaves, boats, woodland creatures, etc.) which featured the minting of huge quantities of pennies. In 2012, the Canadian government stopped making pennies and started withdrawing them from circulation for melting in 2013, leaving the 5-cent nickel as the lowest-denomination coin. Transactions are still initially conducted, however, to the nearest cent. Then, if cash is used, the total bill, including tax, is rounded up or down to the nearest multiple of 5 cents--for example, a total ending in $0.62 would be rounded down to $0.60, a total ending in $0.23 or $0.27 would be rounded to $0.25, and a total ending in $0.08 would be rounded up to $0.10. Credit card or check transactions are billed and paid to the exact cent and are not rounded.

If the USA were to adopt the Canadian system, the mint itself would probably save in excess of $80 million a year. The costs to businesses and individuals in having to deal with the pesky pennies would be harder to calculate but would nonetheless be substantial. In addition, especially after the COVID-19 pandemic, Americans have gradually been shifting to a cashless economy with even less reason to use the coins. On the other hand, there would be the resentment engendered in many citizens for paying ten cents in an eight-cent transaction as well the public outrage against removing a denomination which has been around prior to the establishment of the Republic and a coin which has featured the beloved Abe Lincoln ever since 1909. It thus seems unlikely that Congress will be eager to drop the penny in the near future to save $80 million annually, especially since it spends almost $7 million every MINUTE on other stuff.

Finally, however, remember, even though a penny today is virtually worthless, you can still get in deep trouble if you transport more than 500 of them out of the USA.