U.S. Mint Opposes Steel Cent Bill
Friday May 9, 2008
The U.S. House of Representatives finally took some action yesterday (Thurs. May 8th) in an attempt to solve the penny crisis. The question doesn't seem to be "should we eliminate the penny?" but rather, "what should it be made of?" The bill, HR-5512, calls for a penny made out of copper-coated steel to be issued within 270 days (about 9 months) from the date of enactment. The bill also calls for a steel nickel (hmm, is this an oxymoron?) but doesn't set a timetable. U.S. Mint Director Ed Moy opposes this bill, primarily because it doesn't give the Treasury Department enough authority to prescribe the alloys U.S. coins are made from, plus Moy says that 270 days is too short to allow for proper testing and implementation. Furthermore, he hinted that the price of steel might even go too high in the near future to coin pennies cost-effectively.
Even though this bill passed the House unanimously on a voice vote, it is not expected to emerge unscathed from the Senate. A competing bill is expected to be introduced by Sen. Wayne Allard (R-Colorado) in the coming weeks, perhaps before the Memorial Day recess. Judging by Moy's comments about the use of steel, I tend to think that perhaps Moy favors aluminum or some other metal besides steel. The last time the U.S. made steel coins, it was a disaster! The 1943 steel cent, issued during World War II to conserve copper for the war effort, was widely reviled by the public. It was partially coated in zinc, and therefore silver-colored, which made it easily confused with the dime. The fact that only the faces were coated, but not the edges, meant that the low-grade steel used in these pennies degraded into a rusted, ugly mess very quickly. Although minting technology has advanced substantially since 1943, and many nations (including Canada) have issued steel coins for decades (usually plated in nickel or other metals,) the U.S. has avoided this metal until now, probably because the large and politically well-connected vending machine industry uses magnetic coin validation technology in its machines. Replacing this stuff would be a real hardship, the industry claims.
Of course, vending machines don't generally accept pennies, so making a steel cent shouldn't affect them. But once we open the "steel coin door," will we ever be able to close it? The way that existing beneficiaries of government contracts have a powerful influence over future policies and legislation via lobbying efforts, it is often very hard to change things once they are set in Washington. Once certain steel providers get those lucrative U.S. Mint contracts to supply the metal and/or coin blanks, they'll fight tooth and nail to increase the Mint's use of their products. I understand Moy's reluctance to be legislatively bound to any certain metal composition, and think it is well past time to hand over the authority to determine coin alloys to the Treasury Department (and by extension, the U.S. Mint.) After all, they are experts in this business.
What do you think? Should the Mint have the authority to decide the metals that coins are made of? Or should we leave that power to Congress, as the Constitution says it should be? Or maybe we should just do away with the penny entirely? Share your views via the "comments" link below.
See also: Current Costs to Mint U.S. Coins.
Even though this bill passed the House unanimously on a voice vote, it is not expected to emerge unscathed from the Senate. A competing bill is expected to be introduced by Sen. Wayne Allard (R-Colorado) in the coming weeks, perhaps before the Memorial Day recess. Judging by Moy's comments about the use of steel, I tend to think that perhaps Moy favors aluminum or some other metal besides steel. The last time the U.S. made steel coins, it was a disaster! The 1943 steel cent, issued during World War II to conserve copper for the war effort, was widely reviled by the public. It was partially coated in zinc, and therefore silver-colored, which made it easily confused with the dime. The fact that only the faces were coated, but not the edges, meant that the low-grade steel used in these pennies degraded into a rusted, ugly mess very quickly. Although minting technology has advanced substantially since 1943, and many nations (including Canada) have issued steel coins for decades (usually plated in nickel or other metals,) the U.S. has avoided this metal until now, probably because the large and politically well-connected vending machine industry uses magnetic coin validation technology in its machines. Replacing this stuff would be a real hardship, the industry claims.
Of course, vending machines don't generally accept pennies, so making a steel cent shouldn't affect them. But once we open the "steel coin door," will we ever be able to close it? The way that existing beneficiaries of government contracts have a powerful influence over future policies and legislation via lobbying efforts, it is often very hard to change things once they are set in Washington. Once certain steel providers get those lucrative U.S. Mint contracts to supply the metal and/or coin blanks, they'll fight tooth and nail to increase the Mint's use of their products. I understand Moy's reluctance to be legislatively bound to any certain metal composition, and think it is well past time to hand over the authority to determine coin alloys to the Treasury Department (and by extension, the U.S. Mint.) After all, they are experts in this business.
What do you think? Should the Mint have the authority to decide the metals that coins are made of? Or should we leave that power to Congress, as the Constitution says it should be? Or maybe we should just do away with the penny entirely? Share your views via the "comments" link below.
See also: Current Costs to Mint U.S. Coins.
Comments
Just do away with the penny and the nickel entirely. Then we won’t need laws to tell us not to melt down our coins, at least not until the dime drops below the value of its metal content.
If we were then to replace the quarter with a 20¢ piece, then we could round off each transaction to the nearest 10¢. Then we would need the half dollar back.
And as long as we’re redoing our coins, we might as well replace words like “one dime” and “half dollar” with “10¢” and “50¢” to make our coins easier to use.
We could save the country even more money by eliminating the dollar bill entirely. And, we might as well replace the $2 bill with a coin. Pretty soon canned beverages from the machine will be $2, and I won’t want to have to dig out a pocketful of quarters or deal with the bill acceptor.
Our currency has been criticized for not being easy for the blind to use. So, we should make each bill a different size like in other countries.
If we could do this all at once, it would save the vending machine industry a lot of money by not having to retool their machines each time one of these individual changes is made.
I favor an copper-plated aluminum penny but the nickel - stainless steel could be best.
Read your constitution people! The constitution ONLY empowers the Congress with coinage. Geeee! Therefore, Moy can wish all he wants, and collectors too, but it isn’t going to happen where the Mint has any authority about pressing coinage. End of story.
I say make the nickle and cent out of aluminum. You can’t buy anything for a nickle or penny anymore, but as long as we have an 8% sales tax on purchases there will be a need for small coins. If they do away with the small coins, it will give local governments an excuse to raise the sales tax to 10 or 20 percent because there will be no cent or nickle.
First, the Penny should continue although I would see Copper electroplated Aluminum as the best potential alloy over steel for longevity of the coins in circulation not to rot out like zinc cents and especially turn into a rusted slug like so many 1943 steel cents. This would also fulfill the requirement to conform to a copper colored coin and bauxite is so abundant and has a very small magnetic signature.
Also the coins would weigh less so shipping them would save gas. And since they are not used for any vending purposes they would not need to conform to a standard weight of 3.1 like pre-1982 cents or 2.5 grams like modern post 1983 cents.
I also believe that the mint should have the say in alloys used since they will have to strike this alloy for billions of coins. I cant see steel being used since it is such a hard metal and rough on the life of dies. Aluminum is soft and would yield a longer striking life.
What would be even better is if they saved money not having to add copper to the coin or electroplate the aluminum, and go with the same aluminum alloy (experimented) in 1974. They would save money not having to put the extra effort into the coins alloy composition which would be hundreds of thousands of dollars saved, and they could recycle the worn or damaged aluminum cents like they currently do for US Currency, and it is a more environmentally friendly way of creating pennies that can be recycled vs mated with other alloys that make recycling them cost more than it is worth.
A good example of recycled coins would be the Morgan Dollars, which were melted by the hundreds of millions, then most of the silver that was not exported in bar form was used to strike the Peace Dollars from 1921 to 1935.
I would like to see the copper plated zinc alloy retired as for it is a horrible composition when exposed to weather or humid locations. Just the other day I saw a 2006 penny that was rotted badly. Likely a penny that was on the ground for a while and then was picked up by a kid and spent. Aluminum would still be a nice aluminum color without rot.
I would like to see the penny continue with the same obverse design. I am in favor of a copper-plated aluminum composition for circulated coins. However, for collectors I would like to see the Mint/proof sets go back to the original composition that the 1909 had - 95% copper and 5% tin/zinc.
I guess the nickel could be done in either stainless steel or aluminum for circulated coins. For collectors, I would like to see the nickel stay at 75% copper and 25% nickel.
Granted (#3) that the constitution empowered congress with coinage, however since that document was written a whole new world of metallurgy has come into play. Yes? Well then who better to decide “what” a coin is made from than the folks that have been producing them for many, many years? Congress can decide design, quantity, etc., but leave the mechanics of actually producing the coinage up to the mint. It was in fact the mint that decided to use explosive welding, back in the 60’s, to produce our coins.
Thanks…
I must admit, I hate zinc pennies. They don’t look or feel right, and they don’t have the nice “ring” that the copper cents do when tapped with another coin.
If the cent is to be kept I would vote for making it as cheap and environmentally friendly as possible, since most will probably end up discarded. Replacing the cent with unplated aluminum or plastic would best demonstrate its near-worthlessness. Maybe cardboard: cheaper and more environmentally friendly.
Imagine a black carbon fiber penny.
Hmmmm!
Leave nothing to the congress. They are worst than Chinese Cluster-flocks. How about recycled materials to make pennies and nickels. Lots of plastic bottles and aluminum cans out there on land fills, USA. I’d say wood, but that would lead to deforestation. Rubber…now there’s a concept.
Recycling sounds good. Cept i have a problem with the rubber part. Just thinkning about where some of that rubber comes from, i don’t think i’d want to touch those coins!
The cost of producing the penny is secondary to the amount that need to be produced, and why.
How many pennies do we need? well, you only need 5 to make change for a nickel. 25 per person should be plenty to supply the needs of commerce.
Coincidentally, the mint produced 7.4 billion pennies last year, about 25 for every man, woman, and child in the US. Which should be plenty, considering that a penny should last decades in circulation before it wears out.
So where are all these pennies going? Mostly, they are being dropped and not picked up or stuck in drawers or jars because they are so worthless that they rapidly disappear from circulation. Not because people are hoarding something of great value, but because it is not worth the trouble to collect enough of them to trade them in for real cash.
Good afternoon ladys and gentalman. I suppose it depends on what part of the country a person lives. i don’t live in the big city, i live in a fairly decent size town. Here our banks have signs posted, asking people to bring in their wrapped pennys. In stores, mostly convienent type, they have penny trays, so you can freely help your self, if your short on change. Left by other customers. So here in the north east, why the difference? The banks won’t part with their pennys. So theres no chance of getting bank wrapped fresh pennys to cherrypick through. Kinda makes ya wonder don’t it. This messege is just one of those Hmmmm kind of gee, wonder why that is. Like i do.
coiny
Coiny, banks won’t give you pennies because they don’t have them. As fast as the mint produces them people lose them, because they are not worth keeping track of. I don’t think people save jars of pennies because they are of precious value. I think most people save them because the time and effort to trade them in isn’t worth the trouble.
Of course, that may change if metal prices rise any further. Then they will disappear even faster, not because their purchasing power is any greater, but because people will start melting them for scrap.
I don’t see how eliminating the penny causes some loss to our heritage. Half cents, Large cents, and Indian cents are part of our heritage even though they are no longer minted. We have probably added more major coin designs to our heritage in the last 10 years through the state quarter, jefferson nickel, and presidential dollar series than in all the all the other designs in the last 2 centuries combined.
The lincoln cent has had a 100 year run. It’s time to let go, IMHO.
gdnp — That’s very true. Alot of what you speak of sparked alooot of interest to collecting in any other time in history. The coins that disapeared from history were not as significant (my opinion) as what we circulate now. I’m no mathamatician by far. Off the top of my again, they used the decimal system for our currency & coinage. After the revolution & our independance. Seems there was way to much confusion and non acceptence from one region to another, accepting coins. Hence our forfathers came up with a system that we still use today. I guess if the mint is making new numistmatist out of new people. Then one would have to think the penny they would want to keep. It seems to me it is the most popular with most collectors. New … old, and inbetween. There hasen’t been much respect for the penny since i was a kid. Kids threw them away! I’m talking in the 50-s and 60-s. I was taught different. Money didn’t come easy. Most of my friends felt the same, growing up with depression era parents, they had a whole different perspective about money. We learned from them. I guess you call that respect.
Well anyway. There is a shortage here and maybe your right. But i did write an article about how much money Americans throw away every year around the country. In the billions with a B.
Let congress decide anything and they will screw it up, like everything else. Let the mint decide metallic composition of all coins. Keep the penny.
Pennies should be made of 95% copper with a 5% stabilizing alloy. Nickles should be made of nickle. Dimes, dollars, tens, 20’s and 100’s should be made of of silver and resized. The paper should be depository notes, if at all.
What we currently have is a crude paper time-barter system. When the masses wake up from their socialist dream, they are going to be very, very unhappy.
And very poor.
:o)
We wouldn’t have this problem if we stuck to gold, silver, and copper for coins as prescribed by the coinage act of 1792 and eliminated deposit creation by banks which is the primary source of inflation which is what causes this problem in the first place
Al, even if Congress did “screw (everything) up,” in order to “let the mint decide,” you’ll need the consent of 75% of Congress. Otherwise, letting the mint decide is illegal.
I recommend that the United States stop making pennies entirely. They are virtually valueless and add hassle in countless ways daily. Retailers can round to the neares nickle just fine; I understand some other countries are already doing this.
I love pennies I saved a five gallon bucket of them. I am keeping them all until they are worth a lot more (metal prices) I predict the mint, governmet or someone will be buying them back legally someday. I do agree they are not worth very much right now, althogh the hundreds of dollars my bucket is worth is a big deal to me.
Same goes for nickels. I love coins they are beautiful. I don’t think any of the coins in production should go away but I do hate zinc. Its a real crap metal. Just make them out of copper again. We can afford it.
I acnt w8 4 the NEW pennies !!!!
The “penny crisis” won’t affect vending in the slightest. Additionally it’s a wise choice, and honestly if people will be confused over pennies vs. dimes they should be better educated. The feel, weight, and sight are all different - the color is immaterial.
The proposed solutions to the “penny crisis” that relate to the type, value, content and existence of coins are addressing the symptom, not the root cause: the Federal Reserve is creating dollars and lots of them, and the Congress has decreed that the Federal Reserve’s dollars are money and have to be accepted.
If the Federal Reserve were to be more restrained and responsible, or if the Congress were to permit people to use as money whatever is mutually agreeable (or ideally, both) this wouldn’t be a problem.
Figure the odds on either of those happening, without first seeing dramatic changes in the electorate, and the voters’ knowledge of economics.