The U.S. Mint’s 2019 Annual Report says pennies and nickels cost more to produce than they are worth. A one cent coin cost almost two cents to produce, and a five cent coin cost more than seven cents. Cash transactions are less common today and using pennies in those transactions is rare. Here are 10 truths about our penny.
The penny was the first coin to bear the face of an American president
Before 1909, all U.S. coins were designed with an image of an eagle or the mythical figure Liberty. Much of America's founding principles are strongly anti-monarchist, and founders believed it was inappropriate to put a living person's face on a coin. This was codified into law by Congress in 1866. In 1909, to commemorate the 100th birthday of President Lincoln, the Mint produced a commemorative penny featuring the face of Abraham Lincoln with the Lincoln Memorial on the reverse. The coins were so popular that they became the new look of the penny, changing an American tradition.
Every penny minted since 2006 was produced at a loss
The penny accounts for the largest amount of loss for the U.S. Mint. From 2009-2019 the U.S. Mint produced pennies at a total loss of $586,000,000. In 2019 the loss was $73,000,000.
There are about 130 billion pennies currently in circulation
That’s more than 716 million pounds in pennies. The Mint produces 5-16 billion pennies every year. Coins that are heavily damaged are typically removed from circulation. The U.S. Mint has a program (currently on hold) to destroy mutilated coins and reimburse you for the metal value. Pennies don't expire and they spend about 40 years in circulation. Banks will accept your old pennies, but collectors may pay more for certain coins.
The U.S. Mint has retired 13 American coins from production
There is precedent to retire the penny. During the U.S. Mint's 225-year history, several small denomination coins and all coins valued over $1 have been eliminated from production. One of those coins, the Half Cent, was retired in 1857 due to inflation. Our current penny is experiencing a similar effect, where it's production cost exceeds its face value. Coins with a face value above $1 were retired during the Great Depression. These coins lost their status as legal tender with the passing of the Gold Reserve Act of 1934, a law meant to protect federal gold (U.S. coins belong to the Department of Treasury) from being hoarded by private citizens. This act made gold coins illegal in the U.S.
Pennies were once HUGE
Before 1857, the U.S. Mint produced a coin called the Large Cent. This was a pure copper coin about the size of a Half Dollar. The melt value of the copper in this coin today is about 7¢. The collector value can range from $70-$900 based on quality and variety.
Melting pennies and nickels down for their metal value is illegal
The maximum penalty for melting pennies and nickels is 5 years in prison and a $10,000 fine.
Abraham Lincoln is on both sides of the penny.
If you have a good macro lens or a magnifying glass, you can see many of the details crafted by the U.S. Mint's engravers. Lincoln can be seen on the back of the penny with the naked eye if you get close enough. He’s seated inside the Lincoln Memorial, just like in real life.
Several countries has retired their low denomination coins
If we retired the penny, the U.S. would join other nations to stop minting their lowest denomination coins. At least 29 countries and Hong Kong have stopped making coins with low face values. Most of these coins are the equivalent of the cent in their respective monetary systems. Many other countries have stopped minting these coins, although they haven't been officially retired. Our neighbors in North America and Mexico are two of our closest neighbors to stop making their one cent coins.
“Remember that time is money”
This idea is as old as Ancient Greece, but was made popular by Benjamin Franklin. Professor Robert Whaples of Wake Forest University says the cost of using a penny in a transaction results in wasted time, and this wasted time adds up. “If you get the average wage for an American, and you divide it out, the average American earns about a penny every two seconds. So if it takes you two seconds to fish around for that penny, it’s a loss.” Many statistics put the average annual earnings of an American at around $40,000/year. This breaks down to $800/week, $20/hr or 1¢ every two seconds.
The price of copper continues to increase
In 1961, a pound of copper would cost you 27 cents a pound. In 2011, copper peaked at $4.49 a pound. Today, a pound of copper costs about $2.79 a pound. As inflation increases so does the cost of everything else, including the metals used to make our money. There is less copper in today's pennies than in previous versions and metal composition has changed drastically to make it affordable to produce. Despite new metallic recipes, the production cost is still more than the penny is worth. Inflation will also increase the price of zinc, so changing the metallic composition might not be enough to solve this problem long term.