The fight against the penny (CNNMoney)

[eppur_se_muova]

While China's industrial growth makes pennies more expensive, Rep. Kolbe wants to do away with the coin altogether.

By Christian Zappone, CNNMoney.com staff writer
June 1, 2006: 5:02 PM EDT

NEW YORK (CNNMoney.com) - As the soaring price of zinc going into pennies pushes the cost of production above the coin's value, one congressman is rekindling plans to eliminate it. Representative Jim Kolbe, R-Arizona, told CNNMoney.com he plans to reintroduce legislation to eliminate the penny in the coming weeks.

"Most people still think the penny has no purpose and we should get rid of it," said Rep. Kolbe, who introduced legislation in Congress in 2001 that required the rounding of cash transactions to the nearest 5 cents.

Although the Legal Tender Modernization Act did not pass, getting rid of the penny has taken on urgency for Rep. Kolbe, as the average price for zinc has shot up from 35 cents a pound in 2002 to 63 cents a pound in 2005 -- driven in large part by increased demand from China.
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The cost of producing the coin has risen from .97 cent per penny in 2005 to 1.4 cent per penny. At that rate, the Mint would spend some $44 million producing pennies this year, nearly $14 million more than in 2005.
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more; http://money.cnn.com/2006/06/01/news/newsmakers/penny/index.htm?cnn=yes

Some thoughts:

--Most people are aware that there used to be such a thing as a "half-penny", not just in Britain but in colonial America as well. The English "farthing", whose name may have been derived from "fourthing", was one-fourth of a penny. There have been such things as "half-farthings", "third-farthings", and even "quarter-farthings", i.e. one-sixteenth of a (British) penny. Britain quit minting farthings in 1956.

--Such "upward creep" due to inflation has occurred many times, in many different currencies, particularly in the WWII and postwar hyperinflationary years, when new currency units replaced old ones having values millions or even billions of times less.

--The smallest coin in circulation has been referred to as a "mite" in many cultures, starting in the Roman empire and continuing through colonial America. The American "mite" appears to have referred to a half-farthing, i.e. one-eighth of a cent, although I did once see a reference to an American "mite" which was worth only one-tenth of a cent. Perhaps this was true of a post-Revolutionary coin, or more likely one minted by one of the states prior to the Federalization of the Mint. Anyone who knows the answer, please post.

--How much does it cost to print a 1-cent stamp? Should store owners start giving one-cent stamps as change? Given the increasing frequency of postal rate increases, wouldn't this be more convenient for many people? Two suggestions: either print self-adhesive stamps in which the backing, as well as the stamp is perforated, or print stamps with no adhesive. Then they could easily be pocketed, and singles, pairs, torn off to make change.

--Oh, and finally, the American one-cent piece is just that--a "cent", as it says on the reverse of the coin. The "penny" is a British coin, just as the robin is a British Isles bird. Try looking for the word "penny" in any literature from the US Mint--you'll get a surprise.

[fedsron2us]

1. Hmmm. I do not see much sign of pennies being shipped to China

so that they can be melt down into their base metals. As the coins stay in circulation for years and are used in many individual transactions I am not sure whether it is accurate to say that their face value in any one of these exchanges reflects their true worth. Usually when politicians start talking about reforms to eliminate smaller value coins that serve 'no purpose' it is usually a pretty good indicator that inflation is about to take off.

[sam sarrha]

2. they want to send the Zink the pennies are made of to China..