The power of the penny is a strange alchemy of history, habit, and economics.
Find a penny, pick it up? Maybe not. Under the proposed COIN Act, the iconic United States penny may be no more. Many lawmakers and citizens contend minting the coin costs more than it’s worth. And yet, the value of the United States’ penny isn’t easily pinned to a manufacturing cost. Today, 55 percent of consumers support keeping the coin, while 43 percent are in favor of abolishing it. The power of the penny is a strange alchemy of history, habit, and economics.
The first currency of the United States, the penny, then known as the Fugio cent, was struck in 1787 and was 100 percent copper. Designed by Benjamin Franklin, the coin featured a sundial and the caption “Fugio”, meaning “I flee / I fly,” as well as the words “Mind your business.” On the reverse, the coin depicted 13 interlocking rings representing the colonies. Franklin intended to remind the holder of the coin that time is fleeting, and one should attend to one’s work. But “Fugio” could also describe the activity of the coin itself. The penny is a currency that rarely stays in one hand, but rather is always on the exchange, moving from one transaction to the next.
Over the years, the one cent piece saw new designs and compositions. In 1856, the Flying Eagle penny was 12 percent nickel and only 88 percent copper; after the Civil War, the penny became a fusion of copper and zinc. It was then that the penny became legal tender under the Coinage Act of 1864. Shortly thereafter, the penny design featuring President Lincoln that we still use today was born; it was also the first coin to feature the words “In God We Trust.”
But as currency exchange ascends to the cloud with apps like Venmo and Zelle, it seems like fewer people even bother to carry cash anymore, making the case for the humble penny ever weaker. In March, Senators John McCain and Mike Enzi reintroduced the Currency, Optimization, Innovation, and National Savings Act, which would suspend minting of the penny, reduce the nickel’s manufacturing costs, and turn the one dollar bill into a new coin. It’s estimated that suspending the penny could save taxpayers $16 billion. The penny, however, has been historically hard to kill. Representative Jim Kolbe of Arizona first tried to suspend the penny in 1991, and then again in 2001 and a third time in 2006. The penny lives on.
In 2012, Mark Weller, the Executive Director of Americans for Common Cents, made the case that eliminating the penny would cause price-rounding and inflation:
“Over three-quarters of Americans (77 percent) are concerned merchants would raise prices without the penny. And they’re probably right. Economists agree on one principal: businesses are guided by a desire to maximize profits. There is no obvious incentive for businesses to set prices in a way that will lead to rounding down.”
While this may not impact consumers using credit cards, as their purchases will still be calculated to the cent, it would impact lower income Americans using only cash. Some calculations show that rounding to the nearest nickel could cost Americans up to $600,000 a year. But, in Canada, where penny manufacturing ceased in 2013, the economy has not been embattled by inflation. This is a good sign, but it bears noting that though the production of the penny has stopped, the coin still remains in circulation.
Many anti-penny groups describe the coin as “worthless,” but for charities, donations in pennies can amount to hundreds of millions of dollars each year. The Leukemia and Lymphoma Society, Salvation Army and Ronald McDonald House raise funds through penny drives. Because people perceive pennies as having so little value, they’re happy to give them away. As charities seek more efficient fundraising means electronically, however, coin drives are likely to play a diminishing role.
In President Obama’s 2014 YouTube chat, he got to the crux of the issue: “It’s one of those things that people get attached to emotionally.” The penny brings back happy childhood memories of saving pennies. The penny has also become a symbol of the United States–it’s as familiar as fireworks on the Fourth of July. President Obama concedes that getting rid of the penny could be a way to eliminate inefficiency, but also notes that the cost of the penny is a drop in the bucket of the governmental budget–and the legislation that it would take to make such a move seems far less pressing than other matters.
Thus, the value of the penny remains paradoxical. It is both worthless and expensive. On its own, it has scarce purchasing power, but in great numbers, pennies can mean a great deal. It may be economically inefficient, but the cost of removing it from the system is worth more in legislative time than the inefficiency it presents. President Obama cites nostalgia as the reason the penny still holds sway, but its power goes deeper than the wells of childhood piggy banks.
Since its inception, the penny has been an object of luck in its finding, an object of fate in its flipping, or an object of destiny in its saving or spending. Sporting the image of Abraham Lincoln, it symbolizes a time when the United States was at its most fractured and yet persevered, choosing to rise above one of the ugliest stains on our national history, the legacy of slavery. The United States didn’t emerge from the Civil War shiny and new, but we persisted, putting faith in the currency of our nation to propel us forward.
Now, as the fate of the penny hangs in balance, we have an opportunity to evaluate its worth in the present economic and political climate. Again, the states face a deep political divide and the demise of the penny, while saving taxpayers some money, will also cost consumers — and it’s likely to disproportionately affect lower income consumers. Those who need the savings most are unlikely to benefit from the penny disappearing from our currency. While the practical arguments against the penny may hold weight, in glossing over its inherent symbolism in our country puts us at risk of losing sight of something more valuable: our heritage as a democratic, imperfect nation that, despite all odds, aspires to provide for the pursuit of happiness for all.