Penny drought pinches banks

Short: Some businesses are rationing supplies as the Fed sends the coins to areas in worse shape.

July 23, 1999|By Liz Atwood | Liz Atwood,SUN STAFF

Federal officials want your 2 cents worth -- and more.

A nationwide penny shortage has hit local banks, forcing some businesses to appeal to customers for help and others to face rationing. And though the U.S. Mint is working almost around the clock to make more, officials say it will probably be several weeks before there are enough pennies to meet demand.

Giant Food Inc. has put signs in its stores asking customers to bring in their pennies.

Allfirst Financial Inc. has distributed coin wrappers to its customers asking them to bring them back filled.

And Dunbar Armored Inc. is rationing the pennies it distributes to gas stations and fast-food restaurants.

"It does play some havoc," said Paul Sobus, Dunbar's vice president of cash vault services.

Although coin demand typically increases in spring and summer, no one can explain why demand for pennies is running 33 percent higher this year than last.

More pennies are being made and distributed than ever.

Between January and April, the U.S. Mint shipped 3.6 billion pennies to the nation's Federal Reserve System banks -- up from 2.1 billion shipped during that period two years ago.

The mint estimates that more than 114 billion pennies are in circulation in the United States -- more than 426 pennies for every person in the nation.

The recent shortage has prompted the Federal Reserve office in Baltimore to cut its monthly shipments of pennies to area banks from 50 million to 30 million.

"There are plenty of pennies out there," said Bill Tignanelli, vice president of the Baltimore Federal Reserve office.

Saved in jars

But too many apparently are accumulating in dresser drawers and fountains.

"Coins are a nuisance to some people. They throw them in a jar or a drawer," Tignanelli said. "When they try to get rid of them, no one will take them."

Although some banks refuse to accept large amounts of change from customers, the Reserve and the mint are urging financial institutions to change that and help get more coins in circulation.

Paying for pennies

Some New York banks have heeded that advice and are paying customers and employees to bring in their stashes of pennies.

Chase Manhattan Corp. is giving customers 5 cents for every 50-cent roll of pennies.

The penny shortage in Baltimore appears spotty.

Spokeswomen at NationsBank and Provident Bank in Baltimore report business as usual.

An Allfirst spokeswoman said the bank has alerted its customers in Maryland and Pennsylvania about the shortage, but it has been able to meet the demand.

Supermarkets

Metro Food Market, anticipating the shortage a couple of months ago, doubled its penny order with the Reserve and says it has plenty.

"We didn't want our customers to be inconvenienced," said John Ryder, president and chief executive of the company.

Although Giant hasn't had trouble obtaining pennies, the supermarket chain is trying to avoid a shortage by appealing to its customers to bring in coins.

"For a company like Giant, we need a lot of change," said spokesman Barry F. Scher.

Other companies, however, are feeling the shortage.

Sobus said the armored car company is trying to limit its customers to $25 worth of pennies a delivery -- about half what they usually would receive.

Penny shortages also have cropped up in Pennsylvania, North Carolina, Florida, Missouri and Louisiana.

In some places, nickels and quarters are also in short supply.

Helping others

Tignanelli said penny supplies in the Baltimore region have been depleted in the past several weeks because the local Reserve office transferred some of its pennies to other districts that had more severe shortages.

The Philadelphia and Denver mints -- the largest mints in the world -- are manufacturing pennies at least six days a week on a 24-hour schedule, the U.S. Mint said.

No one can predict when the supply will catch up with demand. Tignanelli said it will be at least another week or two before the Reserve branch in Baltimore learns how many pennies it will receive in its next shipment from the mint.

Until then, banks, armored truck carriers and stores that get their money from the Reserve will find their pennies rationed, he said.

"You can't get water out of a rock," Tignanelli said.

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