Ban The Penny

Forbes.com ^ | 7/5/02 | Mark Lewis

[GeneD]

NEW YORK - Almost a year has passed now since U.S. Rep. Jim Kolbe made headlines by introducing his anti-penny bill, yet these pesky one-cent coins continue to jingle uselessly in people's pockets. Can nobody rid America of this copper-coated scourge?

Kolbe, an Arizona Republican, is doing his best, although his proposed Legal Tender Modernization Act is languishing in a subcommittee. The bill would not ban pennies, but merely discourage their use by establishing a system under which cash transactions would be rounded up or down. That would render the penny unnecessary.

"It's practically useless in everyday life," complains Neena Moorjani, Kolbe's press secretary. But the penny has its fans, especially in Tennessee, which is rich in zinc. Up until 1982, pennies were made mostly of copper; since then they have been 97.5% zinc, with a little copper mixed in for appearance's sake.

Just last week, two lawmakers from the Volunteer State introduced a resolution commemorating the 20th anniversary of the zinc-based penny. Fans of this coin note snidely that Kolbe's home state of Arizona is rich in copper--which makes up a bigger percentage of the larger-denomination coins that might be more heavily used if the penny were discontinued. Kolbe also favors replacing paper dollar bills with longer-lasting $1 coins--and as it happens, the Sacagawea "golden dollar" introduced two years ago is made mostly of copper.

Moorjani stoutly rejects the suggestion that her boss is shilling for his state's copper interests. "Our office has not spoken to the copper industry in Arizona about this issue at all," she says, referring to the Legal Tender Modernization bill.

Be that as it may, Kolbe's proposals are only logical. Several other nations have eliminated their small-denomination coins without going to wrack and ruin in the process, and Canada managed to replace its dollar bills with dollar coins. Yet many Americans recoil from the idea of losing the penny, and they have responded to the golden dollar more by admiring its image of Sacagawea than by using it to buy things.

Still, the U.S. Mint considers the new dollar coin a success. "America seems to really like the coin, despite what people might read to the contrary," asserts Doug Hecox, a Mint spokesman. If they tend to hoard it rather than spend it, that just means they value it, he says: "Their inaction speaks louder than words."

After producing more than a billion Sacagawea dollars, the Mint temporarily halted production earlier this year. But Hecox says that was due to the economic slowdown, which affected demand for all coins. Now that a recovery seems to be at hand, the Mint soon will consider putting Sacagawea back into production, he adds.

The Mint never stopped producing pennies, however, recession or no recession. Last year it stamped out 10.3 billion of them, and through the first five months of this year it put another 2.5 billion shiny new pennies into circulation. Meanwhile, Kolbe's bill molders in some congressional cubbyhole. The ban-the-penny movement lives on (it was featured on one of last season's episodes of The West Wing), but the pennies keep mounting up.

Perhaps the University of Pennsylvania's prestigious Wharton School could take the lead in studying this issue and determining which course makes the best economic sense. That would only be appropriate, because this school originally was endowed by Gilded Age industrialist Joseph Wharton, who got rich by cornering the market for nickel and then persuading Congress to create a new coin made exclusively of metal from his mines.

More than a century later, the nickel is still with us, but these days it contains more copper than nickel. Chalk up another win for Arizona. Now, if Kolbe and company could just get Congress to drop the penny, they would introduce some real sense into America's currency.

[vetvetdoug]

I think we need the penny. However, there is a serious problem with the penny being >90% zinc. If a child swallows the penny (which many of them do) and it stays in the stomach over two days there a some serious effects of the zinc. First, there is significant erosion of the gastric mucosa causing a major ulcer. The zinc also causes hemolysis of the red blood cells and liver failure primarily and multi system organ failure. The dangerousness of the penny is dependent upon a) if it was made post 1982 and b) if the copper coated penny post 1982 had damage to the copper coating exposing the zinc.

Tennesseans in the legislature need to have their butts reexamined for common sense for continuing to embrace the penny made primarily of zinc.

If Congress wants to do something for the children and little animals, they could go back to making the penny out of copper. I have personally treated many dogs that were dying from penny ingestion and zinc heavy metal poisoning.

[Timesink]

The US Treasury MAKES A PROFIT minting pennies. It costs less than one cent to make a penny; the difference is pure profit. Combine that with the fact that so many people hoard the pennies and take them out of circulation, forcing the Treasury to mint even more pennies, the profit only goes up. Ban the penny and that's more cash that the RATS will have to "find" by raising taxes.

Anyone who advocates banning the penny either doesn't understand the most basic details of how the Mint works, or else has an alterior motive.

Be that as it may, Kolbe's proposals are only logical. Several other nations have eliminated their small-denomination coins without going to wrack and ruin in the process, and Canada managed to replace its dollar bills with dollar coins.

Yes, and these other countries routinely ignore their citizens' wishes on every other issue under the sun as well. This isn't a good argument for anyone that believes in freedom.

[afraidfortherepublic]

This is the pretty one.

[afraidfortherepublic]

If a child swallows the penny (which many of them do) and it stays in the stomach over two days there a some serious effects of the zinc.

That's quite alarming information. In the past parents were advised to just let the penny pass. Now there is a whole population of grandparents out there that will be mis-advising their children as to treeatment when the grandchildren swallow their allowance! I think we need a nationwide alert on this situation. :-)

[AdA$tra]

I think we should mint the 99-cent coin.

Especialy useful when you pump $20.01 into your tank and you only have a 21 dollar bill. Keeps you from having a pocket full of change.

[AdA$tra]

Looks like a fake!

[Frohickey]

I think that we ought to ban all pennies, dimes, quarters, dollars, $5, $10... round everything to the nearest $10 million.

[ThinkDifferent]

Why do I think this is nothing more than a scam to increase sales tax revenue by forcing all prices to end in a 5 or 0. As we know, prices would always be rounded UP and not down

I'm not sure about that. Most prices today end in .98 or .99 to make the dollar amount appear smaller. I'd expect an item that costs $9.99 to be rounded down to $9.95 rather than up to $10.

[Phantom Lord]

And when the after tax price is $10.33 which way do you think it will be rounded? Up or down?

[Billthedrill]

I was living in Japan in the late 80s, when they actually had done this de facto - all prices were rounded up to the nearest 5 yen to avoid having to carry around the silly little aluminum 1Y coin (it floats in a glass of water, BTW). Despite what you may have heard from campus feminists in the U.S., Japanese women control even more of the economy than American women do theirs, and they were sick of having their purses bulging with the worthless little buggers.

So what changed? Well, the government in its infinite appetite for somebody else's money - there is no other kind - decided to pass a 3% value-added tax to all retail purchases, and voila! the little aluminum monsters became necessary again overnight. The resulting furor very nearly brought down the government. But the furor died down and, naturally, the tax remains.

This is why I tend to doubt we'll ever rid ourselves of the penny, at least until the government succeeds in convincing us that it needs our money in larger bites.

[R. Scott]

But what would retailers do without the Magic Number Nine?
I seldom have more than four or five pennies in my pocket at any one time – I spend them. Eliminate the penny and everything gets rounded up.
On the topic of coins – I’d like to see the elimination of the one and five dollar bill, replacing them with coins. It’s a hassle to pull my wallet for a dollar. I’d take coins in my pocket any time, and it wouldn’t weight me down any – I seldom have more than a few ones or fives in my wallet.

[R. Scott]

”And let's not forget how useful they are, when thrown out your car window by the handful into the street, as you are passing a long line of homeless guys...”

That’s a good way to discourage tailgaters on the freeway too.

[MissBaby]

Wait a minute. If they ban the penny, what am I going to do with the jars of them I have collected?

[ThinkDifferent]

Up of course. But the after-tax rounding would cost you at most 2 cents, while the pre-tax price of most items would probably drop by 3 or 4 cents.

Already today after applying sales tax you rarely end up with an exact number of cents, so you have to round. Eliminating pennies would just increase the quantum from 1 to 5 cents. Since 5 cents today is worth less than 1 cent many years ago, I don't see that as a major issue.

[discostu]

Actually while part of that pricing is to make the price look $1 cheaper another part is to take advantage of sales tax break points. When a business pays it's sales tax it pays based on gross sales, not based on the rounded math they charge customers. So while 100 $.99 sales = $99.00 on which the company has to pay sales tax they garnered sales tax from the customer as if it were $100 in sales (thanks to rounding error). It's only an extra penny here or there but it adds up when your store is doing hundreds of transactions a day (and it always adds, they never lose a penny on this gig).

[Non-Sequitur]

Meanwhile, Kolbe's bill molders in some congressional cubbyhole.

1. Whose face is on a penny?
2. What state is he from?
3. What state is the Speaker of the House from?

And you wonder why this idea 'molders in some congressional cubbyhole'?

[Billthedrill]

If they ban the penny, what am I going to do with the jars of them I have collected?

You will become a criminal immediately and be sent to prison camps set up specifically for your evil kind...

I can save you from this fate. Send 'em to me...NO, NOT C.O.D.!! NOT C.O.D.!!!!

[RightWhale]

If you have zinc, some carbon [charcoal will do,] and a lemon for acid, you can combine them to make a battery. Since you will have to shave the copper off the penny, better wait until the government has collapsed or it's the federal pen for defacing currency. Zinc is highly underrated as a Y2K survival supply.

[Tourist Guy]

Retail hint: People will buy for 99 cents, and think twice about the next dollar up (9.99 looks like a better deal than 10.00)

FWIW History fact: In the late 1800's - early 1900's, newspapers often sold for a penny. Grocers started charging .09 [etc] so the customer would have the penny left over for the newspaper.

[TheBattman]

Best use of the coin $1 - tips...

Used them for tips while on our cruise last summer. Work great, and are really convenient.