The U.S. ended production of the penny Wednesday, abandoning the 1-cent coins that were embedded in American culture for more than 230 years but became nearly worthless.
When it was introduced in 1793, a penny could buy a biscuit, a candle or a piece of candy. Now most of them are cast aside to sit in jars or junk drawers, and each one costs nearly 4 cents to make.
“God bless America, and we’re going to save the taxpayers $56 million,” Treasurer Brandon Beach said at the U.S. Mint in Philadelphia before hitting a button to strike the final penny. The coins were then carefully placed on a tray for journalists to see. The last few pennies were to be auctioned off.
Billions of pennies are still in circulation and will remain legal tender, but new ones will no longer be made.
The last U.S. coin to be discontinued was the half-cent in 1857, Beach said.
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Still, many Americans have a nostalgia for them, seeing pennies as lucky or fun to collect. And some retailers voiced concerns in recent weeks as supplies ran low and the end of production drew near. They said the phaseout was abrupt and came with no government guidance on how to handle transactions.
Some businesses rounded prices down to avoid shortchanging shoppers. Others pleaded with customers to bring exact change. The more creative among them gave out prizes, such as a free drink, in exchange for a pile of pennies.
“We have been advocating abolition of the penny for 30 years. But this is not the way we wanted it to go,” Jeff Lenard of the National Association of Convenience Stores said last month.
Proponents of eliminating the coin cited cost savings, speedier checkouts at cash registers and the fact that some countries have already eliminated their 1-cent coins. Canada, for instance, stopped minting its penny in 2012.
Some banks began rationing supplies, a somewhat paradoxical result of the effort to address what many see as a glut of the coins. Over the last century, about half the coins made at mints in Philadelphia and Denver have been pennies.
See here and here for the background. I had a post drafted about the penny shortage but didn’t get around to publishing it in time, so I grafted this onto the beginning of it. Click on for more. I’m one of those sentimental idiots about the penny, but what’s done is done and I’m not going to try to justify its continued minting. So long, pal. Some of us will miss you.
The United States is running out of pennies.
President Donald Trump’s decision to stop producing the penny earlier this year is starting to have real implications for the nation’s commerce. Merchants in multiple regions of the country have run out of pennies and are unable to produce exact change. Meanwhile, banks are unable to order fresh pennies and are rationing pennies for their customers.
One convenience store chain, Sheetz, got so desperate for pennies that it briefly ran a promotion offering a free soda to customers who bring in 100 pennies. Another retailer says the lack of pennies will end up costing it millions this year, because of the need to round down to avoid lawsuits.
“It’s a chunk of change,” said Dylan Jeon, senior director of government relations with the National Retail Federation.
The penny problem started in late summer and is only getting worse as the country heads into the holiday shopping season.
To be sure, not one retailer or bank has called for the penny to stick around. Pennies, especially in bulk, are heavy and are more often than not used exclusively to give customers change. But the abrupt decision to get rid of the penny has come with no guidance from the federal government. Many stores have been left pleading for Americans to pay in exact change.
“We have been advocating abolition of the penny for 30 years. But this is not the way we wanted it to go,” said Jeff Lenard with the National Association of Convenience Stores.
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Besides American’s penny hoarding habit, a logistical issue is also preventing pennies from circulating.
The distribution of coins is handled by the Federal Reserve system. Several companies, mostly armored carrier companies, operate coin terminals where banks can withdraw and deposit coins. Roughly a third of these 170 coin terminals are now closed to both penny deposits as well as penny withdrawals.
Bank lobbyists say these terminals being closed to penny deposits is exacerbating the penny shortage, because parts of the country that may have some surplus pennies are unable to get those pennies to parts of country with shortages.
“As a result of the U.S. Department of the Treasury’s decision to end production of the penny, coin distribution locations accepting penny deposits and fulfilling orders will vary over time as (penny) inventory is depleted” a Federal Reserve spokeswoman said.
The lack of pennies has also become a legal minefield for stores and retailers. In some states and cities, it is illegal to round up a transaction to the nearest nickel or dime because doing so would run afoul of laws that are supposed to place cash customers and debit and credit card customers on an equal playing field when it comes to item costs.
So, to avoid lawsuits, retailers are rounding down. While two or three cents may not seem like much, that extra change can add up over tens of thousands of transactions. A spokesman for Kwik Trip, the Midwest convenience store chain, says it has been rounding down every cash transaction to the nearest nickel. That’s expected to cost the company roughly $3 million this year. Some retailers are asking customers to give their change to local or affiliated charities at the cash register, in an effort to avoid pennies as well.
See here and here for the background. “Yes, but not like that” ought to be the official motto for any Trump policy that has a rational basis but is being done in the dumbest way possible. As this story notes, every other country that has eliminated their penny or the equivalent has done so over a much longer time span, precisely to avoid these kinds of problems; Canada stopped minting theirs in 2012 but there are still some in circulation. At least consumers aren’t (yet) getting screwed on price round-ups (there’s a bill in Congress that would allow for such), though that’s less good for businesses. Count on Trump to screw up even the easy wins.
Breach is wrong about the last coin to be discontinued being the half cent. We had coins denominated at 2¢, 3¢, 20¢, $2.50, $5, $10, and $20, all of which ceased production after 1857.