The History of the Penny and Why It’s on the Chopping Block

In a flurry of activity at the start of a new administration, President Trump announced we may soon see the end of the penny, citing its production costs. This, of course, raises several questions. Without pennies, what will you give someone for their thoughts? What will any of us pick up to have good luck? And what will go into penny presses in amusement parks and boardwalks across the country?

In all seriousness, this decision from Trump is not unprecedented. After all, Canada did it in 2012 and had a majority support from Canadians. So what does the end of the penny mean for the American economy, how did we get here and how will it impact your wallet?

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The Origin of the Penny

The penny is actually very old as a concept. It was originally called a Denier and minted by Pepin the Short, the King of Francia and father of Charlemagne, around 755 AD. From there the concept was borrowed by King Offa of Mercia, a part of modern-day England, where the term penny was first, pardon the phrase, coined.

Fast forward a thousand years later, and the penny as a term has been used by the British to refer to the smallest denomination of their currency for a very long time. It was a concept that, unlike tea, Americans did not throw overboard when the revolution came and went, and the U.S. Mint produced the first American pennies in 1787. After depicting Lady Liberty, eagles and Native Americans for over a century, the penny’s current face, showing Abraham Lincoln, was set in 1909. Barring a few changes in the composition of zinc and copper, the penny has been mostly unchanged to this day. 

Why Consider the End of the Penny?

As mentioned before, Canada also opted to get rid of their pennies and stopped producing them in 2012. A video by the YouTube channel CGP Grey explains the situation rather succinctly. The argument for getting rid of the penny in Canada was simple — it costs more money to produce than the pennies add to the economy. Also, it would make currency more efficient and doing without them will have a minimal impact on prices for the average consumer. 

The argument is practically identical in the United States today. According to the U.S. Mint, pennies cost 3.69 cents to produce per penny, adding up to a bill for taxpayers at nearly $120 million last year. A significant portion of the American public doesn’t even end up using these newly minted pennies, as more than 40% of American adults don’t use cash at all in a typical week.

So that’s the argument in a nutshell. Pennies cost more money to make than they add to the economy. Plus, economists are reasonably certain they can be phased out of the economy with few negative effects.

What Happens Next?

If this goes through, there are a few models for the United States to look at. In addition to Canada, several other formerly British territories got rid of their pennies as well. Australia stopped minting pennies in 1991, as did New Zealand in 1988.

Should we see the end of the penny, the average American won’t notice a difference and most likely will still be using pennies, at least for a few years. The main difference is that, if you use pennies to give exact change during a transaction, those pennies will be sent back to the Treasury to be melted down, which is what Canada did. Given that there are currently 240 billion pennies circulating in the American economy, it will be a slow decline for the humble penny that will take awhile.

Without pennies, the price may be rounded up or down to the closest five-cent denomination, which will mean sometimes you may shave off two cents or pay two cents more. If you pay with a credit or debit card, your purchase will be charged the same as always. In the long run, the government, and therefore taxpayers, may save hundreds of millions of dollars a year.

There is also a movement to get rid of the nickel. The cost deficit is even greater for them, according to the U.S. Mint, tracked at 13.8 cents for every nickel. Some even argue that, without pennies, the demand for the nickel as the new smallest denomination of U.S. coin will increase, costing the taxpayers even more money. 

Less Coin, More Cash?

It should also be noted there are some pro-penny groups, such as Americans for Common Cents. They are lobbying against the removal of the penny, citing the impact it may have on charities that rely on small donations, amongst other arguments. The advocacy group is funded primarily by Artazn, a mineral company that is the sole provider of the zinc blanks used to make pennies. They also fear that jobs may be at stake without penny production.

For any concerned coin collectors out there, rest easy: dimes and quarters still cost less to produce than what they add to the economy, so they are not on the chopping block. 

As for the penny, Trump may still need to wait on approval from Congress, but if the production of the penny stops, most people believe it will be an easy and relatively painless thing to do. That little glint of copper on the sidewalk that portends good fortune may soon be gone, but hundreds of millions, if not billions, of taxpayer dollars may be saved. The fact that this process will take years to complete gives us some breathing room to consider possible new names, too. The Nickel & Dime Hoarder doesn’t roll off the tongue quite as well.

William Fewox has worked as a freelance writer since 2017, and his work is featured in literary magazines such as The Aquarian, The Navigator and The Historian.