January 7th, 2013
Could the penny become a thing of the past?
If a recent trend makes its way south, coin collectors could be faced with the reality that the penny may become a relic.
The one-cent piece has been a standby of American mintage and a staple for collectors longer than any other coin still in production. After making its introduction with the Flowing Hair cent back in 1793, the penny has undergone its share of alterations over the years, surviving through design changes that featured likenesses such as flying eagles, Indian heads and our nation’s 16th president throughout the decades. But changes of another kind may spell its eventual demise.
In recent years, the penny has been stricken by a pair of economic forces that have diminished its usefulness. For starters, inflation has made one cent worth next to nothing. Further pressure has been applied by the way Americans shop – particularly related to electronic transactions – making the penny mainly a nuisance for consumers. When you consider that it costs more to produce a penny than its face value – it now costs about 2-1/2 cents to make each piece – one must wonder how long it will remain relevant. And with our neighbors to the north doing away with the one-cent piece next month, just how long will it be until the U.S. government calls it quits for penny production?
In case you haven’t heard, the Canadian government will cease production of that country’s one-cent piece as of February. Officials came to that conclusion based on the same reasons Americans loathe the penny, determining that the cent is more of a pain in the you-know-what than it is practical. It didn’t help that a government study showed that, from a fiscal standpoint, Canada would have been prudent killing off the one-cent piece as early as 1982.
While the Canadian government opted out of the one-cent game, the U.S. Mint continues to churn out pennies in record numbers. In 2012, the Mint released some 6 billion pennies into circulation. By contrast, they produced just shy of 5 billion one-cent pieces in 2011 and little more than 4 billion in 2010. But how much longer can they justify those types of numbers? With the federal government facing record deficits, politicians already scratching for every spare penny it can find in the budget. Considering the dollar bill has come under scrutiny and may be replaced in by dollar coins, don’t be surprised if the penny is the next piece to face extinction.