Should the penny be removed from circulation?
Although the United States has not had a problem removing small denominations in the past, controversy exists over whether the penny should be eliminated
Rise of the Issue
Whether the penny should still remain in circulation has been a debate for long, with congressmen unsuccessfully trying to pass bills to remove it, because it costs much more to produce them than what they are actually worth. Many, however, feel sentimentally attached to the coin and do not want to see it removed. As a YouGov poll found, in the U.S., 51% of people oppose eliminating the penny, while only 34% are in favor. What is more, 43% of people said they would be angry or disappointed if the government stopped minting pennies.
Proponents of eliminating the penny point out that it is no longer feasible to mint pennies, as their strike costs twice their worth. Moreover, the size and weight of the penny, coupled with its ever decreasing value, makes it an inconvenience for most people to hold onto. On the other hand, opponents to eliminating the penny argue that the poor would be the hardest hit, both because of their reliance on the penny as currency and the fact that prices would be rounded up.
George Washington Signs the Mint Act
The penny became the first currency created by the United States after the Mint Act was signed by President Washington.
The Half-Cent Coin is Ended
Due to the cost of making it being more than it is worth, the half-cent coin is removed from circulation.
The Lincoln Penny Begins to Circulate
To commemorate the 100th birthday of Abraham Lincoln, President Roosevelt added the sixteenth president’s image to the front of the penny.
The Steel Cent Circulates
Because copper was needed to make ammunition for the Second World War, the copper penny was replaced with one made of steel coated in zinc.
The Price Rounding Act
The House Representative James Hayes was the first to try to pass a bill in order to start removing the penny from circulation by automatically rounding prices to the nearest 5 cents required.
Lincoln Bicentennial Pennies are Struck
For the 200th birthday of President Lincoln, and the 100th anniversary of the Lincoln penny, four designs are made for the reverse side of the penny to symbolize different eras of Lincoln’s life.
Cost of its Removal
Proponents of eliminating the penny argue that it costs almost double its worth to create, while opponents say it would cost more to replace it by minting more five-cent pieces.
Proponents of eliminating the penny argue it would help people and businesses save time during purchases, while opponents say it would potentially harm charities and the poor.
Opponents argue that the penny has sentimental value for many Americans, while proponents say that people’s sentimental attachments should not influence fiscal policy.
Pennies cost more to make than they are worth.
According to the United States Mint, it costs 2.1 cents to make a penny, a one-cent coin.
The utility of pennies is limited.
Pennies are not accepted everywhere. Small businesses, vending machines, or toll booths are all places where the penny can usually not be used.
Pennies can be inconvenient in everyday life.
Pennies being both large and heavy, and not worth much, are inconvenient for people to carry.
Pennies are made of toxic material.
Zinc, one of the elements in the penny, can cause anemia or gastric ulceration and is particularly dangerous for babies and toddlers that accidentally consume them.
Mining zinc and copper is harmful to the environment.
To be obtained in nature, zinc and copper require mining and smelting, which can have adverse effects on the environment; also, zinc can seep into nearby soil, water, and air causing damage to local ecosystems.
People are sentimentally attached to the penny.
The penny, as the first coin ever authorized by the U.S. as well as the first to ever adorn a U.S. president, Abraham Lincoln, has acquired sentimental value for many Americans who oppose its elimination.
Consumers could spend more because prices will be rounded up.
Eliminating the penny would require rounding prices to the nearest five, and as businesses will be the ones making that call, it will most likely be rounded up and increase prices.
Removing it from circulation would make for unpopular public policy.
Rather than removing the penny completely and facing backlash from all its opponents, a more gradual strategy which incentivizes businesses to round down their prices would probably make the elimination of the penny easier to achieve and fairer to everyone.
Eliminating the penny could harm low-income families.
Because prices would be rounded up and because the people who use cash the most are the poorest fringes of American society, the poor would be most affected economically by the penny’s removal.
Charities might lose an important part of the donations they receive.
Most fast food restaurants and grocery stores have donation jars for people to drop their change in, which is mostly made up of pennies, meaning, if pennies leave circulation, those charitable donations would be hit.