There has been a lot of talk over the years about the American cent. Much of this talk has orbited around the possibility of the U.S. Mint discontinuing the production of the iconic U.S cent, for several different reasons. Like talk of bringing back certain coins or possibly releasing certain commemorative sets, this is one of those things in the coin field that certainly does get talked about a lot, but never seems to happen.
The principal argument to discontinue the U.S. penny is simply that the penny costs more to produce than it’s worth. “The actual amount has fluctuated from year to year, but [the cost is] in the range of 1.6 to 1.7 cents per penny made,” said Jeff Gore, Associate Professor at MIT and co-founder of the group Citizens to Retire the US Penny. The manufacturing cost reached a peak of 2.41 cents in 2012, while in 2017 it cost 1.82 cents per penny, according to the US Mint’s latest annual report. It is also important to note that because so many pennies fall out of circulation, more are required than any other coin: 8.4 billion were delivered in the US last year, greater than the sum of all other coins combined. (See the article “World Finance: Are we witnessing the death of pennies?” in the reference section below.)
Also pointed out by those who would discontinue the U.S. penny, is that the production of the coin causes damage to the environment. And, it is not a coin that is not used as much as it once was. It has been years since one could purchase anything at a store for a single penny.
The Other Side of the Coin
The argument to keep the U.S. penny is simply that it still has use and is important to keep prices down. “Proponents of keeping the penny in circulation say that its use avoids increased prices that will hurt low-income households the most, that pennies have a long lifespan and are more cost-efficient to manufacture than nickels, and that pennies are vital to several charities’ fundraising efforts.” (See the article “ProCon.org: Should the Penny Stay in Circulation? – Top 3 Pros and Cons” in the references section below.)
Also, lack of cents will force us to raise or lower prices because the lowest denomination would be a nickel. A person faced with this may question, “Well what on earth am I going to get when I put down $1.50 for something that cost’s $1.47?” Opponents answer that the U.S. Mint will encourage stores to round up or down, and that society is almost cashless now anyway.
Another issue is sales tax. In Michigan, for example, the sales tax is 6%. So, would the sales tax go up, or down? Or would one be forced to pay electronically?
Looking to the Future
There is no evidence that the U.S. Mint will discontinue the penny. Quite to the contrary, the Mint has produced many fine pennies, even in just the last few years.
The devaluation of the U.S. penny comes from inflation. Inflation has occurred consistently for many years. But, who is to say that it will always continue to do so? At some future time, maybe we will write a different article on the fact that you can buy a lot more with the penny than you used to be able to. Perhaps we error to assume that the penny will never increase in value.
Canada DID cease production of their penny in 2012. The Royal Canadian Mint quit distributing them February 4, 2013. Discontinued currency in the Canadian monetary system remains usable currency. Once distribution of the coin ceased, though, vendors were no longer expected to return pennies as change for cash purchases and were encouraged to round purchases to the nearest nickel. Non-cash transactions are still denominated to the cent.
If the U.S. quit producing the penny, the U.S. Mint would make a pretty big announcement about it. It would be historic. Can you imagine? The discontinuation of a piece of American currency that’s been around for over two hundred years? It would be big news to say the least. We feel that, if the day does come when the cent is discontinued, we will all hear about it long before it goes into effect.
World Finance – Are we witnessing the death of pennies?
ProCon.org – Should the Penny Stay in Circulation? – Top 3 Pros and Cons
Entrepreneur – Why Does the US Keep Minting Pennies? For All the Same Reasons Every Organization Resists Change.
Wikipedia – Penny (Canadian Coin)