Making cents

July 09, 2006

Here's a thought worth a penny: It's time to rethink the penny. Thanks to rising metal prices, a penny now costs more than a penny to make. According to government estimates, the U.S. Mint produces 3 1/2 pennies for the price of a nickel. And since the penny remains America's most widely circulated coin (more than 7.7 billion were produced last year), that's $100 million worth of nickels.

Rep. Jim Kolbe of Arizona has introduced legislation to abolish the penny. And while previous attempts by Congress to phase out the 1-cent coin have failed, rising prices make such a move appear to be inevitable. At some point, it will make more sense for people to melt their pennies for scrap zinc (copper is a much smaller component) than to use them as currency.

But polls show Americans are attached to pennies, and not just because of their fondness for Abraham Lincoln and the Lincoln Memorial or nostalgia for the days when a penny could actually buy something. Without a penny, many people suspect, prices would be rounded up. Paying $1 for something that used to cost 99 cents isn't a big deal - until you multiply it by a few hundred million transactions.

This may not be the year for the nation to go penniless, but that day is certainly coming. Decades of inflation have beaten the humble coin into little more than a nuisance. There's also precedent for eliminating it. In 1857, the government stopped producing the half-penny. And that's when a half-penny was still worth something. Factoring for inflation, a half-penny of the 19th century had the buying power of a modern dime.

To coin a phrase, the nation's dresser drawers, clothes dryers, purses, ashtrays and coin sorters cry out for change. We don't need all the clutter. And if it saves the U.S. Mint a pretty penny to stop making pretty pennies, so much the better.

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