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Should America keep the penny?

Canada recently announced plans to eliminate its penny, but most Americans favor keeping ours -- despite the cost to make it.

By MSN Money Partner Apr 5, 2012 2:38PM

This post comes from Brian O'Connell at partner siteMainStreet.

 

A new report shows that while Canada may be eliminating its penny, Americans don't want to part with their copper. What may be surprising is the amount of money consumers save by keeping the penny.

 

Recurring surveys -- the latest released today -- by the Washington, D.C.-based Americans for Common Cents shows 66% of Americans favor keeping the penny in the nation's currency system. (The ACC is a consortium of 50 groups that are working to highlight the benefits the penny provides to the economy and consumers.)

 

But groups like Citizens for Retiring the Penny point to Canada's recent decision to ditch the penny and are lobbying for the U.S. government to do the same thing.

 

That effort may be an uphill fight, as Americans' support for the penny has remained stable over the years.

 

Consider the track record of support during the past 20-plus years. In 1990, a Gallup poll showed that 67% of Americans favored keeping the penny in circulation. Furthermore, 62% of survey respondents said they would oppose legislation to keep the penny off the market. In the past 10 years, two bills introduced in Congress that would eliminate the copper currency failed to generate support.

 

A 1996 report by the Princeton, N.J.-based Opinion Research Corp. found that 73% of Americans wanted to keep the penny in circulation.

 

That's strong support for the venerable penny, especially amid gathering evidence that eliminating it could cost consumers some serious coin, according to the ACC.

 

"These results confirm the strong and unwavering support the penny continues to receive from America," Mark Weller, executive director of the ACC, said in a statement. "Americans understand that eliminating the penny would lead to a rounding process and cost them hundreds of millions of dollars in higher prices." (Post continues below.)

The ACC has shifted into high gear after the announcement that the Canadian government had decided to eliminate its penny. The government has asked the U.S. Mint to study ways that could make production of the penny cheaper, but a recommendation probably won’t be out until after the fall election season, the ACC says.

 

Uncle Sam eliminated the halfpenny more than 150 years ago, and groups like Citizens for Retiring the Penny say the cost of producing the penny means it's high time to take the ubiquitous coin out of circulation, too.

 

"The halfpenny was eliminated in 1858, when it was worth over 10 times what the penny is worth today," says the CRP in a statement. "Assuming that the timing was correct before, this means that we should have eliminated the penny 50 years ago. The penny is now worth so little that nobody even picks it up off the ground, despite the old 'lucky penny' adage."

 

The group says it costs the Mint $100 million to produce 7 billion pennies annually, about 33% of which goes to paying for the zinc needed to make the coins.

But consumers may have a vested interest in keeping the penny in play. In the ACC survey, 77% of respondents said they were against rounding cash transactions to the nearest nickel, fearing it would lead to higher consumer prices. "The alternative to the penny is rounding -- something that Americans abhor," the ACC's Weller adds.

 

For now, any talk of eliminating the penny is premature, even as Canada goes penniless. With bigger economic problems on its docket, don't expect Congress to follow Canada's lead anytime soon.

 

More from MainStreet and MSN Money:

7Comments
Apr 6, 2012 11:12AM
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I am a coin collector, and I love my Lincoln Cents, but get rid of the penny. The 'rounding' issue is not anywhere a big as it's being made out to be. When I buy 1 can of green beans priced at 3/$1.00, I pay 34 cents! That's already rounding up more than half a cent. What a rip off! When calculating interest on a loan, or interest in my bank account- it's posted to the nearest penny. Mutual fund transactions go out to 3 digits for both price and share numbers, but if I sell the whole lot, the result will be paid off to the nearest penny. Plus, the "rounding to the nearest nickel" is only required for CASH transactions, and only for the TOTAL of the transaction, not the individual items. That's the only time that the penny would make a difference. Get rid of the penny- it's too expensive.

 

By the way, pennies could still be minted for collectors, much in the way that commemorative coins are regularly produced now. They are "real" money, but are not released for general circulation. There is a HIGH markup for special [proof] collector coins- the mint makes a profit on these!

Apr 6, 2012 10:18AM
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If I owned a store I'd be sure to set my prices so that after tax everything would be to the nearest nickel.
Apr 5, 2012 11:36PM
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get rid of the penny and nickle and paper $1 bill. use the $1 coin and $2 bill in it's place. give tax incentives to vending machine producers/owners from the savings. price increases will be immediate but will also be minimal at best. as for carrying aound coins instead of paper, think how many singles you carry now. maybe 5? at the approximate weight equal to a quarter then you will quickly adapt to the $2 bill and a few $1 coins. the real problem will be at strip clubs as G-strings will need to be more supportive.  think about what really cost up to $1 these days. not much for the annual savings that would be realized. the trick will be to figure out how to block increased govenment spending of this savings. maybe a bill that directed exactly where the savings are spent to be voted on by the people and not congress.
Aug 24, 2012 5:32PM
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Yes ! Drill a hole in it and use it as a Washer ! It's cheaper than buying an Iron one for 5 cents .

 

Think about all of the money you save by not buying metal washers and also you help get rid of

 

those pain in the **** pennies. By the way a penny costs about 3-4 cents to make.  Shows you

 

how much "Cents " the people in Washington have in their brains.

Aug 24, 2012 7:16PM
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Edman,

Can you please elaborate on the "econmic impact" you referred to in your closing statement (as one can assume, but I'd like to hear what your thougts are).

 

Personally, I believe the Pennies demise is a matter of time (as is the legalization of marijuana, and prostitution – gambling in all 50 states, as well); I give it to 2030.

 

From the sounds of it, I guess for some time we will still be hearing... "Order now for just $9.99 plus shipping and handling..".

 

From  cost standpoint, if it were not cost effective, the Gov would stop producing the penny. As you can see, thru the past 3 decades, the material has drasically changed. Now, the penny almost looks like its made out of some type of plastic... (not like back in the day, when you threw one off of the Empire State Building... todays pennies would float upwards...

 

So I guess the question beggs: Cost effectiveness or Economic relivance.

Remember, back in the day the was a 1/2cent coin.

Aug 24, 2012 5:35PM
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I'm really tired of seeing the argument that 1 penny costs 1.73 cents to produce and therefore pennies add to the national debt... This is completely wrong.  This does not take into account the velocity of money - the number of times money changes hands during a 1 year period.   For years, velocity has been pretty steady at 17.  Therefore, with an average life expectancy of 40 years for coins in general, a penny can produce $6.80 (17x40) worth of economic benefit.  Sure, velocity for pennies is probably less than the average for all money since they tend to collect in jars and drawers until someone takes the time to roll them.  But even if an average penny changes hands only a few times per year, the economic impact is much greater than its cost.
Jul 6, 2012 7:29PM
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No one seems to like $1 or $2 coins here.  Maybe if they were aluminum and didn't weigh so much--but then they would cost too much to make (It would also help if they got a decent design).  Get rid of the penny and the nickel: both are now nearly worthless.  In the 1920's in Germany one had to have a wheelbarrow full of Deutschemarks to buy a loaf of bread.  That's one of the reasons why the Germans became thrifty.  Is that what it's going to take here?  Expect a lot of restless natives as the dollar continues to drop in value.
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