Penny Foolish or Penny Wise?

The penny costs more to make than its face value, so why is it still around?

One quarter, two nickels, three dimes, zero pennies. This is what you may find in the average pocket. Most people do not carry or use pennies on a daily basis. If we see a penny on the ground, we are likely to pass right over it. So why do we need the penny? Many politicians and economists are proposing to eliminate the penny altogether. The penny currently costs more to make than it is worth, so that fact alone is reason to get rid of them. So why have we kept them around and what would happen if we got rid of them?

It may be surprising to find that pennies aren’t the only coins that cost more to make than their face value. In 2011, the nickel cost $0.1118 cents to make, while the penny cost $0.0241. From the infographic, we can see the true cost of nickels and pennies. Seigniorage is the difference between the total cost of production and the actual value. In 2011, this came out to be $60.2 million for pennies and $56.5 million for nickels.

Proponents of the penny argue that the formula for making them should change. Over the last 30 years the penny has been made with 97.5% zinc and 2.5% copper. The nickel is made of 75% zinc and 25% copper. It is surprising that the nickel contains even more copper than the penny. President Obama has proposed altering the materials in the penny and nickel to decrease their cost. People opposed to keeping the penny believe this will only increase the likelihood of counterfeiting the coin.

American’s For Common Cents says that if we moved from the penny to the nickel as the lowest denomination coin it may create public anxiety over higher prices. About 77% of Americans worry that prices would be raised if the penny was abolished. Professor Raymond Lombra of Penn State found that rounding to the nearest nickel would cost consumers more than $600 million annually. About 59% of Americans worry that getting rid of the penny would cause confusion when purchasing items.

Whether you are against or for the penny, it will be interesting to see how this controversy plays out over the coming years. Next time you see a penny on the ground, pick it up and consider your thoughts on whether it should be eliminated or kept around.

History of the Statue of Liberty

This statue is a symbol of America and is known throughout the world. Many visitors come to New York just to view her in person. She was a gift from the people of France in 1886. During immigration, the statue became an icon of freedom for those arriving from other countries. Here are some facts you may not know about Lady Liberty.

• 1984-1986: The statue was closed for restoration. The torch and much of the internal structure were replaced.
• After 9/11, it was closed for safety reasons and was reopened in 2009 for limited visitors.
• Liberty Island fully opened July 4, 2013
• Nobody has been able to access the balcony on the torch since 1916
• The French paid for the statue but the US paid for the pedestal on which it stands
• There are differing opinions in how much copper was needed for the statue. Some say 200,000 lbs while another says 128,000 lbs.
• The cost of the donated copper was $16,000 at that time (Around $354,000 in 2014).
• American fundraising for the statue included a young Theodore Roosevelt
• Designer of the Eiffel tower, Gustave Eiffel, also helped on the Statue of Liberty
• To protect the copper skin on the statue, Gustave Eiffel insulated it with asbestos
• Many Americans at the time preferred realistic artwork rather than allegorical like the Statue of Liberty
• The proposed height of the pedestal was 114 feet, it was reduced to 89 feet
• Some people donated as little as 5 cents towards the pedestal
• The tradition of the ticker-tape parade started during the parade for the Statue of Liberty when traders at the NYSE threw ticker tape from the windows
• A fireworks display was planned for the Statue of Liberty’s arrival, but it was postponed due to bad weather
• Replacement copper for some repairs came from a rooftop at Bell Labs

What Happened to the Half Dollar?

Numismatists (coin collectors) likely have a few half dollars stashed away in their collection. Since 2002, the half dollar has only been minted for collection purposes.  This was due to a large inventory and lack of demand. These coins are no accepted in vending machines, slot machines, or other coin operated machines. Once supply levels of the coin drop, more will be minted. If you were lucky enough to find one in circulation you probably held onto it. Many magicians prefer the half dollar due to the coins weight and size.

History

During their prime, half dollars were used quite often. Many casinos accepted them, especially for games requiring a 50 cent ante like blackjack. The rise of silver in the 1960s caused a problem for the US Mint. The price of silver would have exceeded the value of the coins (dimes and quarters). In 1965, the composition of the coin changed to copper and cupro-nickel. The Kennedy half dollar, though, still contained silver. The percentage of silver in this 50 cent piece dropped from 90% to 40%.

Rise of the Quarter

As silver continued to rise, many people hoarded half dollars containing 90% silver. A roll of these coins would net around 7 ounces of silver. Eventually there were so few in circulation that businesses became used to it. The quarter soon became the highest value coin. Soon enough, banks and cash drawers stopped stocking the half dollar. Coin operated machines like payphones and vending machines did not make slots big enough to accept half dollars.

Half Dollars Today

Today the half dollar is virtually out of circulation. You would be hard pressed to find a place that accepted them or that issued them. It is mainly for the collector that the coin has been minted. If you have an interest in coins, the U.S. mint allows you to purchase modern day half dollars.