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Long Beard's Blog

31 May 2020

A Sensative Yet Healthy Debate

Coins | Long Beard

As the title implies the subject of eliminating the much beloved Lincoln Cent is the topic of this weeks blog. Before going any further, the intent is to discuss the matter with an open mind, keeping my own personal beliefs in check while at the same time unwilling to persuade others one way or another. In short, to open the long debated argument in a way which benefits the hobby and those who simply have a fascination with Old Abe.

Enjoy!


The Financial Side

Due to inflation, the cent's value as payment has been on a steady decline for decades. What cost one cent in 1960 now costs a dime. According to a Government Accounting Office study, the cent, with it's relatively low purchasing power, is used almost exclusively as change for cash transactions and rarely used as payment. Quite simply, the vast majorityend up in jars, drawers and vehicle compartments or tossed away all together. When looking at a person's earnings, each working second becomes worth one cent on average. Hardly worth the effort to pick one up from the sidewalk, perhaps one person for every hundred along a busy street. On the subject of time, it can also be said that the cent creates significant cost tofinancial institutionsas the bulk are rolled and exchanged or deposited. This involves time counting the rolls and completing the transaction. Not to mention valuable vault space to store them. Time and space are money. Ask yourself. When was the last time you spent a cent as opposed to rolling them and going to the bank? Most likely,as myself, they are hoarded.

The Cost

With the rising prices of copper and zinc the cost to produce each cent becomes 2.6 cents according to the latest annual report. The United States Mint is a business. As such, profitability is essential to exist. The biggest misperception is that they sell products at great profit which in turn off-sets any loss created with the cent. While this may seem true, cent production far exceeds all set sales combined.Another misconceptionsis elimination of the cent as it pertains to rounding. Most immediately assume that goods and services would rise due to rounding up. Which is far from the truth since rounding goes to the next closest denomination, meaning down would balance things out. So what about changing the composition? To be certain, alternative options have been a cost factor for decades. The 1974 aluminum cents and the switch from pure copper to zinc plated copper in 1982 are two examples. Other base metals/alloys, plastics and ceramics are options. Steel, for example, has already proven sufficient with the cents of 1943. What ever option they chose, if any, brings about another key factor. Vending and counting machines need to recognize them. Looking at the current global financial market, society has become increasingly dependent on electronic transactions and further fueling the elimination. I belief that in our life time the demise of the cent is inevitable.

The Collector Side

I for one love to hold a Lincoln cent by the edge between thumb and index finger (yeah, I'mlike that even with circulated coinage) admiring the beauty.Still, part of me believes that it has served it's purpose just as the half-cent. The other obsoletes I do not mention because someday they me see a return. So, what are some options should the cent be eliminated? Thinking about that over the years, I came to the conclusion that including the cent in mint sets only to be a happy middle ground. Not to mention doable considering the Kennedy Half, retired from circulation in 2001, is still struck at both facilities as inclusions to the sets. Granted, the public outcry would be great yet short lived. We collectors,, however, would still have our Lincoln Cents to collect for many, many years.



Comments

Stumpy

Level 5

Wow, a very volatile subject. I think that eliminating the cent in common currency and rounding to the nearest nickel is a sound strategy. Like Mokie said keep em in the special collector sets. When stationed in Europe in the 80s, we were paid in $2.00 bills, the reason as explained to us, no one in the states would use them. We also went without pennies, everything was rounded up or down, it worked! What makes this such a touchy subject is that even though there are different opinions stated here, I can agree with each and every one of them. How's that for a head scratcher? I was at a grocery story today and they had a sign posted that all coin change from cash transactions would be added to the "rewards card balance", so if you paid $20.00 for a $14.38 item you would get $5.00 and the 62 cents in change would be added to your rewards card. Anyway this goes some will be very unhappy. As I have said before "People abhor change". Welcome to 2020.

CentSearcher

Level 5

I don't know what I would do if the cent was removed from circulation, but my opinion doesn't make much affect on a nationwide decision that might come in the future. I just find all the cent designs going back to the late 1700s more appealing than most other coins

Golfer

Level 5

The cent may have to be discontinued at some point. The cost of making a cent in any metal composition will probably just keep increasing. We will just have to round up or round down at the register. With so many people using charge cards, the cent really could be done away with. Going to miss the cent.

Longstrider

Level 6

America loves it's penny's. I used penny on purpose here. Thanks. The endless debate goes on.

1943penny

Level 4

Yeah. I believe the main reason the mint keeps making them is because of children's piggy banks. Parents can gibe their children a few pennies every day and the kids think it is a lot of money. (just a theory). Canada has already cut it's penny supply starting in 2012. So I guess it would not be far fetched if they did cut them. It would make a lot of space in the reserves. But Then penny hunting would not be as fun in the near future. soon we wont be able to penny hunt at all which might decrease the amount of new collectors. Thanks for the informative blog, 1943penny

World_Coin_Nut

Level 5

In my mind there isn't a debate to be had. It makes no sense to mint them for circulation. Like Well Worn Copper said, they could be minted as needed in the future and I think that would satisfy many people. Keep making them for mint and proof sets.

Mike

Level 7

Since my time here i must of answerd this questiin maybe twenty times not counting threads. My stand is simple. I like it i will not get into the civis and economics of getting rid of it. There is more copper in the nickel than the cent. What happenes when someting is 1.99 . Do away with the cents then its 2.05 cents add the tax. I like it because of its history. It draws the kids to the hobby. Blog after blog the yns talk about what they find. Thats it for me thanks for the blog. And sharing your thoughts.

Mokie

Level 6

I think we should scuttle the Cent and maybe relegate it to special collector sets like we do with the Kennedy Half. The argument about sudden increase in prices is not a real concern to me because I have looked at the Canadian experience and found no issue in that regard. In Canada whole purchases are rounded up, not just each item. So for instance, if you buy $125.37 worth of groceries (the exact amount I purchased today at Costco) the Canadian model would only round it up to $125.40. Now for a single purchase, like a candy bar, the Canadian retailers have set their price at a whole number like $1.25 or 1.95 and the prices are rounded down almost as much as rounded up. Of course even with a single purchase, the higher the value of the purchase the less rounding factors as a significant cost. Bottom Line, I think the Cent has been the key entry into our hobby since the boom days of the 50's and 60's, that can still be the case if the government continues to mint them for collector sets.

Maybe furlough the cent for a couple of years and see if demand necessitates a fresh mintage. And I'm talking REAL demand, not allowing billions of them to sit in bank vaults like the SBA dollars, Presidential dollars, Sacagawea's and Innovation dollars did. If need be then strike off a few billion, but don't do anything to cause people to hoard them, such as change the design. It will be un-collectable by then anyway.

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