2009 is the new 1943: Welcome Back, Steel Penny

There have a been a couple of numesmatic debates that have seemed endless over the past few decades.  One, of couse, has been around the eventual death of the paper dollar.  The second, almost as persistent, has been about the death of the US one cent piece, aka, “the penny”.

A friend of mine at work pointed me to this site, Retire the Penny.

For the most part, the call to retire the penny has been made on the back of two basic arguments:

  1. Nuisance.  People don’t value them anyway, and tend to just stuff them in dishes, jars, piggy banks, or literally on the ground.
  2. Cost.  With the rising cost of metals like copper and zinc, the cost of the penny has actually exceeded one cent, meaning that we lose money every year.  In fact, people are melting them down, illegally, spurring law enforcement action.

On Friday, May 9th, the US House of Representatives passed H.R. 5512, which gives the US Mint 270 days to change the base metal of the US one cent and five cent pieces to more affordable metals.  The current bill actually calls for “copper-colored steel”, although there are arguments for even more cost effective metals.  From CoinNews.net:

The House debated on the legislation and finally voted yesterday to change the metallic composition of the penny and 5-cent nickel to a less expensive copper-colored steel.

Although the prices of copper, zinc and nickel metals in coins have declined in recent months, the penny and 5-cent nickel still cost more to make than what they’re worth—resulting in a reported loss of about $100 million every year, or $1 billion over a decade.

It now costs about 1.26 cents to make the penny and about 7.7 cents to make the nickel.

House bill “H.R. 5512, the Coin Modernization and Taxpayer Savings Act of 2008” would seek to change those manufacturing costs by using copper-colored steal, which could cut the cost of making pennies down to about 0.7 cents each. But its recent passage in the House is no guarantee it’ll make its way to the White House for signing.

H.R. 5512 must still go through the Senate and then the President, and not everyone is happy with the current legislation.

Personally, I’ve always loved the steel pennies from 1943, the one year that they were switched due to wartime rationing of copper.  I even bought a few hundred on eBay just for fun.

Little known fact – Canada switched to a copper-colored steel penny a few years ago.  Who knew?

This type of change will remove the second argument against keeping the penny.  Personally, I think the penny is largely retiring itself. As more and more retail institutions display “give a penny, take a penny” dishes, they are effectively making the cent unnecessary for transactions.

This is all very interesting given that 2009 is designed to be a celebratory year for the penny, marking 100 years of the Lincoln cent, with collectible versions made out of pure copper.