Pennies soon may be a thing of the past -- nickels too

By Jeff Donn
Associated Press
Sunday, July 2, 2006

http://news.yahoo.com/s/ap/20060702/ap_on_re_us/poor_penny

PLYMOUTH, Massachusetts -- In this village settled by thrifty
Pilgrims, you can still buy penny candy for a penny, but tourist
Alan Ferguson doubts he'll be able to dig any 1-cent pieces out of
his pockets.

He rarely carries pennies because "they take up a lot of room for
how much value they have." Instead, like so many other Americans, he
dumps his pennies into a bucket back home in Sarasota, Fla.

Pity the poor penny!

It packs so little value that merry kids chuck pennies into the
fountain near the candy store, just to watch them splash and sink.
Stray pennies turn up everywhere: in streets, cars, sofas, beaches,
even landfills with the rest of the garbage.

A penny bought a loaf of bread in early America, but it's a loafer
of a coin in an age of inflation and affluence, slowly sliding into
monetary obsolescence.

For the first time, the U.S. Mint has said pennies are costing more
than 1 cent to make this year, thanks to higher metal prices.

"The penny is going to disappear soon unless something changes in
the economics of commodities," says Robert Hoge, an expert on North
American coins at The American Numismatic Society.

That very idea of spending 1.2 cents to put 1 cent into play strikes
many people as "faintly ridiculous," says Jeff Gore, of Elkton, Md.,
founder of a little group called Citizens for Retiring the Penny.

And yet, while its profile of Abe Lincoln marks time in the bottom
of drawers and ashtrays, the penny somehow carries a reassuring
symbolism that Americans hesitate to forsake.

"It's part of their past, so they want to keep it in their future,"
says Dave Harper, editor of Numismatic News.

Gallup polling has shown that two-thirds of Americans want to keep
the penny coin. There's even a pro-penny lobby called Americans for
Common Cents.

The Mint's announcement is a milestone, though, because coins have
historically cost less to produce than the face value paid by
receiving banks. They are moneymakers for the government.

U.S. Rep. Jim Kolbe of Arizona wants to keep it that way. But when
he asked Congress to phase out the penny five years ago he failed;
he intends to try again this year. If he fails again, he joked
recently, he may open a business melting down pennies to resell the
metal.

The idea of a penniless society began to gain currency in 1989 with
a bill in Congress to round off purchases to the nearest nickel. It
was dropped, but the General Accounting Office in a 1996 report
unceremoniously acknowledged that some people consider the penny
a "nuisance coin."

In 2002 Gallup polling found that 58 percent of Americans stash
pennies in piggy banks, jars, drawers and the like, instead of
spending them like other coins. Some people eventually redeem them
at banks or coin-counting machines, but 2 percent admit to just
plain throwing pennies out.

"Today it's a joke. It's outlived its usefulness," says Tony
Terranova, a New York City coin dealer who paid $437,000 for a 1792
penny prototype in what is believed to be the denomination's highest
auction price.

"Most people find them annoying when they get them in change," he
adds. "I've seen people get pennies in change and actually throw
them on the floor."

Not Edmond Knowles of Flomaton, Alabama.

No, he hoarded pennies for nearly four decades as a hobby. He ended
up with more than 1.3 million of them -- 4.5 tons -- in several
drums in his garage. His bank refused to take them all at once, but
he finally found a coin-counting company, Coinstar, that wanted the
publicity.

In the biggest known penny cash-in ever, they sent an armored truck
last year, loaded his pennies, and then watched helplessly as it
sank into the mud in his yard. They needed a tow truck to redeem
it. "I still got a few ruts in the yard," says Knowles.

His years of collecting brought him about $1 a day -- $13,084.59 in
all.

A penny saved was a penny earned for Knowles, but he took another
lesson from the experience too: "I don't save pennies anymore. It's
too big a problem getting rid of them."

Another problem: deciding what to make the penny from. Copper,
bronze, and zinc have been used, even steel in 1943 when copper was
desperately needed for the World War II effort. In 1982 zinc
replaced most of the penny's copper to save money, but rising zinc
prices are now bedeviling the penny again.

"I'm very surprised they haven't gone to plastic," muses Bill
Johnson, a wheat-penny collector who owns the Plimoth Candy Co. (It
uses an old spelling of Plymouth.)

Even in his shop where a penny still buys a Tootsie Roll, he leaves
a few pennies scattered on top of the cash register for customers
like Lindsay Taylor, of Westwood, who is buying $1.78 worth of
candy.

She is carrying no pennies because her sons have taken them for
their old-fashioned piggy banks, which automatically flip coins
inside. Her 2-year-old, she says, "just loves pushing the button."

Others have their own reasons for valuing the humble coin, which
borrowed its colloquial name from British currency. The "cent" —
meaning 1 percent of a dollar — has been struck every year except
1815, when the United States ran out of British-made penny blanks in
the wake of the War of 1812.

"It's part of the fabric of American culture," says David Early, a
spokesman for the government's Lincoln Bicentennial Commission.

The penny took on the profile of President Lincoln, beloved as the
Union's savior during the Civil War, on the centennial of his birth
in 1909. The first ones carried ears of wheat on the tails side, but
the Lincoln memorial has replaced those. Four new tails designs with
themes from Lincoln's life are planned for 2009, with a fifth
permanent one afterward to summarize his legacy.

This redesign, the first major one since 1959, has heartened penny
lovers.

Those who want to keep the penny coin include small merchants who
prefer cash transactions, contractors who help supply pennies, and
consumer advocates who fear the rounding up of purchases.

"We think the penny is important as a hedge to inflation," says
director Mark Weller of Americans for Common Cents. "Any time you
have more accurate pricing, consumers benefit."

Joining with the lobby, the wireless network Virgin Mobile USA
recently launched a save-the-penny campaign. Its penny truck will
travel cross-country to gather pennies for charity.

Scores of charities esteem the penny, which many Americans donate
without a second thought. Like shouts in a playground, pennies can
multiply quickly.

"People don't like carrying them around, so we dump them into the
nearest bowl," says Teddy Gross, who founded the Penny Harvest
charity drive in New York City schools. "By the end of any given
year most Americans have got a stash of capital that is practically
useless, but it's within easy reach of a young person."

Last year his children raked in 55 million pennies, which had to be
redeemed with help from the Brink's security company. They also
bagged about 200,000 spare nickels.

By the way, the Mint says nickels are also costing more to produce
than they're worth. Pity the poor nickel?