Congressman Offers Bill to Abolish the Penny

Congressman Jim Kolbe (R-AZ) unveiled a bill yesterday to get rid of the US one-cent piece, often but inaccurately called the “penny.” The ideal bribe for 3-year-olds and the value of most people’s thoughts, the one-cent bit is now merely inconvenient thanks to inflation. Penny candy now costs 25 cents, and even making a penny costs more than a hundredth part of a dollar. Congressman Kolbe believes its time to admit the penny’s day has come and gone, and so it has.

According to the US Treasury, more than half of the US Mint’s coin production is in one-cent coins. The copper penny really isn’t copper; it’s 97.5% zinc, the price of which has soared recently. Just last year, it cost 0.97 cents to make a cent, giving Uncle Sam a 0.03 cent profit (known as seigniorage or seigneurage, and it’s hefty on a $100 bill). Now, a Lincoln head cent costs 1.4 cents to make. Every time the US stamps a penny, it loses money. It has come to pass that the government can’t even make money when it makes money.

Mr. Kolbe proposes that prices merely get rounded off to the nearest 5 cents for specie and currency transactions, but the one cent increment would remain on credit card transactions. Why to the nearest 5 cents rather than 10? Mr. Kolbe represents Arizona, a state rich in copper, and the 5-cent piece is misnamed the “nickel;” it’s 75% and 25% nickel. Abolishing the penny will increase demand for copper to produce nickels. Dimes are also made from the same cupronickel alloy as nickels, but for historically bizarre reasons, the American 10 cent piece is actually smaller than the 5-cent bit. Rounding to the nearest 10 cents wouldn’t do the same for copper producers.

Still, the one-cent coin has its fans in America. Americans for Common Cents are certain to fight his proposal. It describes itself as “a broad-based advocacy group of business, charitable, and numismatic organizations. The group formed in 1990 in response to Congressional threats to eliminate the penny.” ACC maintains, “National polling over the past decade has consistently shown that between two-thirds and three-fourths of Americans support keeping the cent in circulation” Given the high levels of debt in America, this is too serious a matter to be left to the consumer. After all, when was the last time anybody bent down to pick one up?

Coins have been abolished before. America used to have half-penny, two-cent and three-cent coins as well as eighth of a dollar coins (actually produced by the Spanish, but used in the US; thus, a quarter is still sometimes called “two bits.”). The Eisenhower dollar is long gone, but the middle-aged might have actually spent one when it was new. It was replaced by the Susan B. Anthony and the Sacajawea coins, and so unsuccessfully that many Americans have never seen or used either one (indeed, Mr. Kolbe's bill also proposes getting rid of the $1 bill in favor of a $1 coin). Losing the penny won’t be the end of the world, but it might be a new beginning for all those mason jars currently holding them.

© Copyright 2006 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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