A penny for your thoughts

Special pennies will soon be issued featuring different scenes from the life of Abraham Lincoln. The occasion has sparked new calls for the coin to be eliminated. The things are worth hardly anything, goes the reasoning, and weigh down your pockets. Better to just round up or down to the nearest nickel, as is done in other countries. I utterly oppose eliminating the penny. It gives our transactions the virtue of precision. What do you think?

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  • fw

    what are the cost benefits.


    as a certified public accountant I think i can address this one.

    we CPAs have a concept called “materiality”. is something relatively material? does it matter? this allows us to round numbers, and drop some ending zeros, in a way that improves the understanding of something. forest vs trees.

    so it boils down to cost benefit. what is it costing the govt and society to circulate pennies? would we save or lose by eliminating them?

    Pricing something at $19.99 is not an excercise in precision OR honesty.

  • I think the penny presents way too small an area to adequately portray any historical scene in useful detail. Another example of a failure in materiality.

  • WebMonk

    Get rid of them. Is the “advantage” of precision worth the hassle of the penny? (is that even an advantage?) Is there an inherent harm in rounding to a nickle, or is it just that a possible implementation could be bad? (there are some bad, dumb ways to implement it, but there are some pretty good ways to do it too)

    If there is an advantage of some sort to precision, is it worth the money by the govt loses in making pennies, and is it worth the hassle to people to deal with pennies? No to both.

  • This is an effect of currency depreciation and metals appreciation. Our monetary policies have made the penny nearly worthless. It can’t be long before the nickel shares the same fate.

    I’m in favor of eliminating the penny if that cost could be directly sent back to the taxpayers. Unfortunately that never happens with our government. 🙂

  • I predict that pennies won’t be in use much longer. I won’t miss them. They just aren’t very useful. If you can’t even put them in a parking meter or a vending machine, why carry them around? Most of mine end up in the Ronald McDonald House boxes that hang outside drive-thru windows.

  • How much does it cost to make a penny? Anyone know?
    I know they stopped making them out of copper, because the copper in a penny was worth more than a penny.

  • EconJeff

    We’ve eliminated the half-penny (as the article point out) and that hasn’t led to a significant loss of precision. When I do my taxes, I round to the nearest dollar. Other countries have also successfully dropped their lowest denomination of coin.

    The usual method of dropping them is simply round the value of the final purchase to the nearest higher denomination (5 cents in this case). If the final bill (after taxes) ends in 1,2,6, or 7 you round down; if the final bill ends in 3,4,8, or 9 you round up. Some times the consumer pays, other times the seller pays. It should even out to a net wash. There could be some gaming of the system, but few studies have shown that (e.g., stores could price items commonly bought alone so that the consumer would be forced to pay on single-item purchases.)

    Another way of removing the penny is always round up–and give the money to the government. So it would be a new tax. There could also be a mix of the above, with the money going to the government if you round up (a consumption tax of at most 2 cents per transaction) and similar options.

  • Joe

    In 2006 it cost about 1.4 cents to make a penny. .8 cents of that cost was the cost of Zinc.


  • Bryan Lindemood

    How would we ever raise money amongst Lutherans if the penny were to be eliminated!? 🙂

    What would the LWML put in their mite boxes?!
    (By the way, the LWML has found a way to raise millions of dollars through these “penny boxes”).

  • The Jones

    You know, if we stop lending out hundreds of billions of dollars, inflation MIGHT go down. Once inflation goes down, a penny MIGHT be worth more. If a penny is worth more, it MIGHT cost less to produce than it is worth. If it costs less to produce than it is worth, this whole debate MIGHT go away.

  • Josie

    We lived overseas (Japan) for 6yrs and never used the penny in cash transactions. Didn’t miss it a bit. But, when paying with CC or Debit you still pay the exact amount. Now we’re back in the states and I have to admit that I hate pennies.

  • The fact that the penny is still around over 200 years after its inception is a testimony to the overall strength of the US economy over that time period. We have never experienced the economic turmoil that many countries have had, even during times like the great depression of the 1930s.

    Someone mentioned precision. Some societies are precise societies. When you purchase something in Germany, of course you get your exact change back, down to the tiny eurocent. Other countries are approximate societies. In Romania, if you are expecting 0.43 lei in your change, you might get 0.50, you might get 0.40, you might get 0.45, or you might get yelled at for not having the right change to pay for the item in the first place.

    Along the lines of eliminating the penny: we should eliminate one dollar bills as well. It costs 4 cents to produce a dollar bill, as opposed to the 8 cents it costs to produce a dollar coin, but the paper bill lasts for 12-18 months before needing replacement, as opposed to the coin, which lasts for 30-40 years in circulation.

  • If we had stayed with real money, each penny would buy what a quarter buys today. The problem’s not with the penny; the problem’s with a Treasury and a Federal Reserve that conjures dollars and cents effectively out of nothing.

  • WebMonk

    Ok, the Fed system caused the problem. Reducing inflation wouldn’t bring up the value of the penny, since it would just devalue more slowly unless inflation were kept so low that the value of copper and zinc consistently rose faster – a completely unpredictable thing over the long term.

    Basically, unless we completely revamp the entire financial system, almost from the ground up, there’s no way that the penny can a useful thing. Never mind the amount that the govt loses in making the pennies, just based on the hassle of using pennies – get rid of them.

    If the US economy goes back to a metal-based backing, then we can revisit the issue, but until then get rid of the penny.

  • It doesn’t make sense to continue the penny, if it costs more to make the penny than the penny is worth.
    And lets stop advertizing our currency please. That makes very little sense if any. I don’t quite understand the issuing of all these special quarters and pennies and so forth. Though maybe it helps us understand our history and geography better. I don’t know when it became the job of our mints to educate the people concerning geography and history. I guess if the school system can’t do it, though, someone else might try.

  • Anon

    Make them once again of precious metal as required by the Constitution. The same for the rest of coinage. Restore paper dollars to silver certificates.

    What would happen if we did that?

    Short-term hurt, but I wonder if anyone has somewhat accurate predictions.

  • Anon

    I for one miss real pennies: you could use them for fuses until you had time to go to town and get a replacement.

  • Anon

    Bror, coinage has always said important historical and philosophical things about the countries minting them. Coin hoard can survive for millennia and can tell us a great deal. It makes sense for the mints to do this sort of thing, though I don’t think they have done them sensibly of late.

    As to teaching history and geography, since the State isn’t doing it (and never was supposed to) perhaps it is time for our churches to support our families in doing so. Genuine discipleship is going to require sufficient knowledge of ancient and church history to understand the ‘why’s’ of a number of things.

  • WebMonk

    “… as required in the Constitution.”

    LOL! Nice one. 🙂

  • Joe

    Anon – Article II, Section 8 states in pertinent part:

    “To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.”

    How does this require precious metals?

  • Joe

    Bror – the variety of coins is (in theory) an income generator. Coin collectors generally buy up the odd coins at price exceeding the cost of production. I am not sure if that is also the case with the commemorative quarters and nickels and pennies, but the mints have always made specialty items for the collector’s market. Note: I am not defending the practice.

  • WebMonk

    Sorry Anon, I thought you were joking about the precious metals being required for money.

    Wow, where to start. As Joe quoted the Constitution, there’s no requirement for precious metals. The word “coin” when used as a verb there meant something more along the lines of “create”. It wasn’t, even back then, understood to limit anything to metal coins, much less metal coins made of precious metals.

  • WebMonk, here’s the passage:

    “No state shall….make any Thing but gold and silver Coin a Tender in Payment of Debts”

    Pretty clear IMO. People could accept paper backed by promises, silver, or gold, but when it came to what you had to accept, it was limited to gold and silver.

    That means “no fiat or paper money,” and the Founders were pretty clear on that in other writings, too. They remembered the disaster of the Continentals.

    The effects today? Well, we would have a credit crunch for a time, and after a few years, people would learn the ropes and figure out that it was no longer a good idea to expect to pay back debts in cheaper dollars than they contracted. It would be a lot like Switzerland, which had real money until just a few years back. Prosperity, robust growth, and people would be less tempted to borrow the heck of out everything.

    You would, more or less, end the “business cycle” of recessions, at least until the government started another war.

  • Anon

    Joe, you are suggesting then in context of Section 10 of Article 1 (there is no Section 8 of Article II, your citation is erroneous), that the States are allowed to make gold and silver coin, but the federal government can make fiat money?

    The Section 8 of article -I- attaching in the same sentence; standards of weights and measures, and set values of coins, both foreign and domestic, indicates that it is the coinage which are to have standard weights and measures, with set values. That is not consistent with fiat money, nor is it consistent with private banks issuing fiat money with the name of the United States upon that paper. At least, it sure seems that way.

  • PHW

    Dump the penny. They’re a waste of space and weight.

  • WebMonk

    Bike, sorry, but that is talking about individual states. That was to keep states from making competing currencies to the Federal money. That has no applicability to the Federal government.

    Anon, essentially your #24 first paragraph is correct. States are not allowed to make up their own money – they have to stick to gold and silver.

    A1S8 is giving a big list of things the Fed govt can do, among which is “To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;”

    Remember, “coin” as a verb meant “create”, not “make physical coins”. The federal govt was able to create money and regulate its value. At the time gold/silver was USUALLY equivalent to paper money, but fiat money wasn’t unknown and did exist both in other countries and in different forms in the American colonies. The power to regulate the value of the money they create gives the federal govt the power of making fiat money and this was realized back then. Some people didn’t like it, but it was recognized back then.

    You’re partially right – at the time, gold/silver was money and having accurate weight standards was a foundation of currency and so the weights and measures part was put in so that the govt could regulate the standards for currency. However, that didn’t take away the govts ability to make fiat money which was granted by “To coin Money, regulate the Value thereof”.

  • The Onion had a great idea: county pennies


    “Collecting all 3,143 county pennies will be a fun activity your family will enjoy for generations.”

  • Anon

    Webmonk, if you are right, and the Constitution gives Congress the power to make fiat money, then why was Free Silver such a controversial notion at the turn of the last century? Silver had a more volatile price than gold, and populist politicians such as Williams Jennings Bryan ran on platforms consisting in part of having silver debase the gold in our coinage, so that the debts of farmers (for example) might become less over time. How could there have been such a controversy if the Constitution gave the power to make up fiat money out of thin air right from the beginning?

  • WebMonk

    Anon, there are a variety of reasons that the Free Silver controversy was so big. One of the reasons is that even though the federal government had the power to debase the gold standard they were on, they had not and there were (and still are) many people who strongly disagree with the principles of fiat money (which in the Free Silver debates involved a debasing of the gold standard, not full-out fiat money) and believed the government should not use their power.

    There was virtually no debate over whether or not the federal government had the power to create fiat money or change from a gold-only standard, only over whether or not the govt should or should not do so.

    As you mentioned. technically the Free Silver issue was not really about fiat money itself, but rather the debasing the value of the current (at the time) gold coins. The principles are similar, but the specifics are different.

    Regardless, the debate wasn’t over whether or not the govt could or couldn’t debase the money, but rather whether it should or shouldn’t. Even in the Free Silver debates there wasn’t a questioning of the power of the federal govt to create fiat money or debase the gold standard, only whether or not the govt should exercise that power.

  • Nemo

    There was a dispute over the power of the federal government to print money, but it took place in the 1870s and 1880s, with the Supreme Court first ruling against the government and then reversing itself. Ironically, the Chief Justice (Salmon P. Chase) who wrote the decision declaring paper money unconstitutional was the former Secretary of the Treasury who not only was instrumental in printing the money under dispute, but whose portrait appeared on the bills he later ruled unconstitutional.

    See more at http://en.wikipedia.org/wiki/Legal_Tender_Cases

  • WebMonk, if the states were forbidden from making anything legal tender, and Article 1 does not give the federal government power to make fiat money, than by the 9th and 10th articles of the Bill of Rights, the federal government does NOT have the right to make fiat money.

    Yes, judges disagree with me on this one, but a plain reading of the text of the Constitution leads, with one minor inference, to this conclusion. Congress was given only the power to “coin” money, and people understood in those days that that did not mean to “print” it.

    And back to the original subject; if the dollar were still pinned to 1/20th of a troy ounce of gold, the penny would be worth something and we wouldn’t be having this discussion.

  • WebMonk

    Excellent link. I had studied the Julliard case, but had never gone back to study in depth the Hepburn case which it overturn.

    One of the interesting things that struck me about Hepburn was its strong base on general principles of the Constitution and what the broad powers of the government ought to be. Ultimately the concrete basis for Hepburn was in the due process clause of the 5th Amendment, and the USSC determined that the bills were equivalent to taking away value because they were worth less than gold specie/coin.

    A good argument, but it had very little basis on concrete decisions of past courts. Julliard went back to past decisions of various types for almost every point along their path of reasoning. That’s probably why it’s so frequently used in classes.

    Ultimately, Hepburn tended to be the reasoning of Chase divorced from past cases. I think his reasoning was pretty good and I tend to have strong sympathies for his view and that life would be better if the govt operated along the lines he describes. But, Julliard has a strong trail of concrete decisions leading back to Marshall, and so while it might be nice if Hepburn were kept, there’s little question that Julliard came to the correct conclusion based on decisions of the previous 70 years.

    Was it the correct decision based on what ‘ought’ to be? Debatable.

    Was it the correct decision based on what Constitutional interpretations said since the beginning of USSC history? Definitely.

  • Joe

    I guess I typed II instead of I in my citation – but the language is still the same. Congress can make any kind o’ money it wants.

    “Congress was given only the power to “coin” money, and people understood in those days that that did not mean to “print” it.”

    That is just not even historically accurate. There has been paper money since the founding. Early paper money may have been tied to gold and/or silver but your statement goes beyond that claiming the mere act of printing a certificate is unconstitutional. This is just not supportable.

    But really what would a return to the gold standard mean? Nothing because the gov’t gets to decide how much gold and/or silver equals a dollar. There is no static ratio. In fact, the ratio was changed over time while we were on the gold standard:

    1792: 371.25 grains of silver, 24.75 grains of gold.
    1812: fiat money (no gold or silver backing).
    1834: 23.2 grains of gold.
    1837: 23.22 grains of gold.
    1862: fiat money (no gold or silver backing).
    1878: back on gold.
    1900: silver dropped from standard completely 23.22 grains of gold.
    1933: 13.71 grains.
    1968 -1975: several different ratios were used.


  • WebMonk

    Bike, unless you have some source for it, “coin” certainly was understood to include “print”. It was used that way several times in different situations at that time, including the Constitutional Convention. Another example is that the “Continental” dollar was fiat money and it was referred to as coined money. That’s just off the top of my head and I am sure there are numerous other examples.

    In the creation of the Constitution, they specifically rejected stating the govt could make fiat money, but likewise they specifically rejected stating the govt could NOT make fiat money. They left it up in the air.

    So, after that the USSC had to determine whether or not legal tender was constitutional. There was disagreement and obviously Chase and yourself hold that legal tender is not constitutional. However, Marshall, Strong, Gray and other say it is constitutional.

    Everyone can take sides, but the official arbiters of what is and isn’t constitutional have decided legal tender is. We may disagree with them, but our disagreement doesn’t change what the constitutionally appointed judges of the constitution have decided.

  • WebMonk, your line of reasoning holds only if the 10th Amendment had not in fact been passed. All powers not expressly given to the federal government are reserved to the states, and to the people. It’s worth noting, per Joe’s comments, that this principle was only overcome during wartime, specifically in times when the District of Columbia was threatened by enemies.

    And at least once ruled to be unconstitutional, and rightly so. If the states can’t recognize anything but coin as legal tender, neither can the federal government, and our 96% loss in value in the dollar in the past century is witness to the wisdom of those who put those clauses in the Constitution.

  • WebMonk

    Bike, you’re missing the entire point of what the cases said – that the power to create fiat money IS granted in A1S8. If the power is granted in A1S8, then the 10th amendment doesn’t affects the topic.

    You can disagree with their rulings, but that’s what they’ve ruled. The first major case and the only one to rule legal tender to be unconstitutional, Hepburn, never touched on the 10th amendment. It was focused on whether or not A1S8 granted the power to the federal govt. It decided it didn’t, based mostly on their understanding of big-picture principles of the Constitution, and some on the 5th amendment.

    I think Hepburn is accurate in its analysis of the larger principles of the Constitution, but inaccurate in its analysis of the specific words of the Constitution. The Constitution has more than one internal inconsistency between general principles and actual details IMHO, and this is one of them.

    The next three USSC rulings over the next 14 years all overturned Hepburn. All three of them stated that A1S8 did grant fiat money power to the federal govt even while A1S10 denied it to individual states. All of them, and especially Juilliard, based their decisions less on overarching principles of the Constitution, but on past decisions in various cases stretching back to Chief Justice Marshall. They didn’t make up their support; their support came from past cases and wording analysis.

    The 10th amendment wasn’t an issue.

    “If the states can’t recognize anything but coin as legal tender, neither can the federal government”

    If you say so, but the Constitution states otherwise. At least multiple justices ruled it does so in A1S8, and they used a lot of supporting decisions from previous rulings on different but related topics from the previous 70 or so years.

    If you really want to disagree with their decisions, you need to at least engage them. They based the decisions on the premise that A1S8 does give the power, and then also give a couple other ways in which other powers that aren’t directly tied to legal tender also suggest legal tender power is allowable.

    Go read the decisions and start picking them apart about how they may have mis-interpreted A1S8 and the previous applicable decisions that had been made.

  • Nemo


    The phrase in question is “The Congress shall have Power … To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.”

    You are arguing that “coin” is limited to metals, as opposed to paper money. Does Congress, then, not have authority to determine the exchange rate with nations that use fiat money, since the power only extends to “regulate the value…of foreign coin”? (emphasis added)

  • WebMonk

    Nemo, that actually got mentioned in one of the decisions. I can’t remember which one since they’re blurring together a bit at the moment, but they did mention it sort of in the same way you’re using it if I remember correctly.

    “Coin” isn’t just limited to metal chunks, though that is its root history. Back then, as now, it can refer to more than just metal coins or the making of metal coins.

  • Guys, what the core of your argument is is that “coin” doesn’t mean “coin.” Here’s some other scholarship on the topic:


    More or less, the very records of the Constitutional Convention note that phrasing to allow fiat currency was struck from the Constitution for a purpose.

    And again, we wouldn’t be having this discussion about the penny if a dollar were still worth 1/20 of a troy ounce of gold. We could also probably buy a candy bar for that penny, just like our great-grandfathers could.

  • Anon

    Webmonk, are you saying that fiat money is unConstitutional, but because the judiciary has abandoned its oaths, and goes by precedent rather than by covenantal text and amendation, it is ok after all? Is that an accurate summary of your argument?

  • WebMonk

    Bike, I’m sorry you are ignorant of the various meanings of “coin”. In spite of your lack of knowledge, “coin” does have several different uses and those uses have been around for hundreds of years. If they had wanted to signify strictly metallic money, they probably would have used “specie”.

    Bike, earlier, I mentioned that the specific power to create fiat money was denied to the Constitution, but that ALSO the specific prohibition against creating fiat money was rejected. Go back and read #34. I’ll repeat myself – BOTH the prohibition of, and the specific power to, create fiat money was rejected when making the Constitution. It was left up in the air.

    And if you think that link talks about the usage of the word “coin”, I’m going to have to paraphrase a certain swordsman, “I do not think that link means what you think it means.”

    Anon, no that’s not what I’m saying. I’m saying the Constitution is in some conflict with itself on the issue. IF one goes mostly by the overall, big-picture leaning of the Constitution, then the power of fiat money would probably be denied to the govt. However, the actual text of the Constitution certainly favors the power of fiat money. Neither one is 100% cut and dried, but the specific wording comes close.

    However, in judicial decision making, the specific statements of something, be it a business contract or the US Constitution, trump general concepts. The judges followed the proper judicial path by interpreting according to the explicit wording of the Constitution and according to how the Constitution had been applied in related fields.

  • Anon

    But only those powers expressly delegated to the federal government by the Constitution are lawful powers usable by the federal government. The powers granted are limited and explicit, the powers denied are numerous and unmentioned. Any powers beyond that are not lawfully exercised. That is why some opposed the Bill of Rights – fearing that some might imagine that the government, and not God, granted rights, and that those not granted in the Bill of Right, were reserved to the government.

    And the existence of a long chain of abuses and usurpation does not make them right, lawful, or tolerable.

    Thank you for improving my understanding of what you were meaning.

  • WebMonk

    Anon, have you ever even bothered to see what reasoning the cases used and why they came to the conclusion that the Constitution DOES expressly grant the federal government the power to create legal tender?

    Of course not.

    Go look it up, study it, and come back with some sort of intelligent objection to their interpretation. All you’ve done is claim again, without any explanation, that the Constitution doesn’t give the power.

  • Nemo

    WebMonk @ 41: And if you think that link talks about the usage of the word “coin”, I’m going to have to paraphrase a certain swordsman, “I do not think that link means what you think it means.”

    You got to it before I did. I read the link. It asserted. It didn’t argue. I’m not convinced.

    Bike @ 39: Guys, what the core of your argument is is that “coin” doesn’t mean “coin.”

    No, the core of our argument is that “coin” the verb doesn’t mean exclusively what you think it means.

    Webster’s 1828 dictionary gives three definitions for “coin” (the verb)

    1. To stamp a metal, and convert it into money; to mint.
    2. To make; as, to coin words.
    3. To make; to forge; to fabricate; in an ill sense; as, to coin a lie; to coin a fable.

    I think that we can rule out 3 right away, as it has nothing to do with this context. That means that both definitions 1 and 2 are legitimate. Now, which one is proper? I suggested above that limiting “coin” to definition 1 leads to nonsense when considering regulating foreign coin. Besides, as Joe noted @ 33, limiting “coin” to metals doesn’t solve the problem of the devaluing penny, as Congress still has power to “regulate the Value thereof.”

    Anon @ 42: But only those powers expressly delegated to the federal government by the Constitution are lawful powers usable by the federal government. The powers granted are limited and explicit, the powers denied are numerous and unmentioned. Any powers beyond that are not lawfully exercised.

    Yup yup. Now, where does the authority to restrict immigration come from again (hint, immigration does not equal naturalization; they are two separate processes, so don’t point me there)? And yes, the Supreme Court has also addressed this, but you would probably consider that a usurpation of power on their part.

  • Anon

    Webmonk, at this point in the discussion, you are reading in to what I am posting. You did not respond to what I posted, but to what you imagined I was insisting on, when I’m open to being shown that I’m wrong. The case isn’t as clear as I had been previously led to believe, but I do still insist on the reality of the written Constitution over and against the rule of men, and I do not accept that a “long chain of abuses and usurpations” suffices to amend the Constitution. I still believe that the powers not expressly granted are in fact reserved to the People and the States.

    What do you say about -those- things? Your argument seems to suggest that you disagree with the founders on the matter of the Constitution, but perhaps I am misreading you?

    The power to restrict immigration would come from the powers delegated to the President to be commander in chief, and for the establishment of the Army and the Navy. Likewise the reminder that the several States still have the right to levy organized units from among the unorganized militia, which consists of all adult non-felon, able-bodied males. (from which the Congress has a right to levy units to comprise the Army. In a way it is one of those ‘duh’ things, as one the characteristics of a nation-state is that it has borders and the right to defend them.

  • WebMonk

    Absolutely, there are chains of abuses of the Constitution that have essentially become law though they conflict with both the express statements of the Constitution and with its general spirit. The legal tender issue isn’t one of them.

    Absolutely, all powers not expressly granted are reserved. Legal tender is expressly granted.

    Legal tender is a less than crystal clear issue, as I’ve said before, but it’s certainly clear enough that it can’t be characterized as an “abuse”. Some do hold it to a bad set of rulings, but even they have to admit that there’s a very reasonable basis for making the false rulings.


  • WebMonk

    “Some do hold it to BE a bad set …”

  • Anon