Keep the Penny? : Least of U.S. Coins Raises Most Debate

Pennies are born by the billions each year in Denver and Philadelphia. Then they are gathered up and loaded on trucks, 5,000 coins to a bag, for the journey from the U.S. Mint to the bank. So much for the easy part.

America’s hands are waiting.

Pennies are tossed down wells, turned into earrings, hidden under upholstery, thrown away, swallowed by seals, pitched against buildings, collected in mayonnaise jars, converted to washers, left in the shadows of dresser drawers. More than 6 billion pennies vanish from circulation every year, the Treasury estimates.

Not long ago, the one-cent coin symbolized the virtues of thrift and economy. Pennies inspired songs and folk philosophy. You could even buy things with them. Today, they are accused of no longer pulling their 2.5-gram weight, of not meriting the space they take up in our pockets. A lobby has even sprung up in Washington, with the goal of stamping them out.

‘Pennies From Heaven’

“Today, if it rained pennies from heaven, only a fool would turn his umbrella upside down,” Princeton economist Alan S. Blinder wrote in the recent Business Week column that sparked the latest penny controversy. “The money caught would be worth less than the ruined umbrella.”

Withdraw the penny? People at the Treasury, which produced 9.4 billion of them last year, don’t think that idea makes any--well, let’s just say they don’t approve. “There’s still a great demand for the penny, and we will meet that demand,” said Hamilton Dix, spokeswoman for the U.S. Mint.

After all, much is at stake in penny politics. Penny proponents say that eliminating the coin would cost consumers billions of dollars, as prices and sales taxes all got rounded off to the next nickel. The controversy does not end there. An Arizona congressman has complained that two 1983 Lincoln cents poisoned a dog in his home state. (He was attacking the zinc industry, trying get the Mint to put more copper and less zinc into the coin).

Evokes Old Values

But if the penny has become a pauper, it remains a symbol of bygone values--and image is rarely overlooked in Washington.

Daniel P. Cahill, the Mint’s associate marketing director, sent Blinder a personal note maintaining, among other things, that withdrawing the coin would be unwise “governmental-public relations.” Inflation has fallen during the Reagan Administration, he pointed out, but abolishing the penny would serve as a symbol of the contrary.

A technical point: The word penny does not appear anywhere on the penny. The term, which has Germanic roots, refers to the British coin used in Colonial days and for years after the Revolution. “We always enjoy it when people call them pennies,” said Robert Hoge, museum curator for the American Numismatic Assn. in Colorado Springs. “Pennies were the standard coin of Britain from the time of Charlemagne.”

The American 1-cent piece has outlasted half-cent, 2-cent and even 3-cent rivals. The coin featured the head of an Indian from 1859 until the Abraham Lincoln, honoring Lincoln’s 100th birthday, replaced it in 1909.

The Lincoln penny’s introduction was such an event in the coin world that avid collectors threatened to overrun a Treasury outpost on Wall Street. The 10 police officers on duty there “found themselves helpless and had to send for extensive reinforcements,” wrote Ted Schwarz in his 1980 book, “A History of United States Coinage.”

Since that riotous debut, the coin has become the most widely used in American history, with an estimated 95 billion of them now in circulation.

Indeed, it took the price spiral of the 1970s and early 1980s to rattle the penny.

Hoarding Caused Shortages

Soaring copper prices led to several penny shortages as people hoarded the coins, hoping to melt them down if the metal became valuable enough. Prices never stayed at levels that justified stockpiling, however, and the specter of widespread penny-melting never materialized.

The hoarders caused headaches for bankers and shopkeepers. Many businesses offered bonuses of 10 cents or more to customers who turned in 100 pennies. As inflation skyrocketed, meanwhile, the coin’s purchasing power sank steadily. In September, 1976, the Treasury said that it might pitch the penny for good.

That idea did not catch on with the incoming Carter Administration, but shortages persisted into the 1980s, so the Treasury sought a cheaper, more stably priced material than copper. The stakes involved in switching metals were monumental: to hard-pressed mining industries, the Mint had been a reliable, long-term customer for tens of thousands of tons of copper each year.

Copper tried to defend its position, but zinc, aluminum and steel came forward--and the sparks began to fly.

The copper industry produced experts who warned Congress that the proposed coin of zinc with a thin copper veneer, if punctured and exposed to moisture would ooze the equivalent of battery acid into people’s pockets.

Zinc Won Out

But zinc mounted its own spirited campaign. Zinc lobbyists denounced the pocket-acid theory as highly unlikely if not impossible. They also found a radiologist who testified that aluminum pennies, if swallowed, would not show up on X-rays. “That pretty much eliminated aluminum from consideration,” Werner T. Meyer, president of the Zinc Institute, recalled with some satisfaction. The case for steel was undermined by fears that mischievous people might use magnetic pennies to jam the slug-detection mechanisms in vending machines.

Zinc prevailed. In a 1982 move that the Mint did not publicize, it gradually switched from the copper cent to a zinc coin with only a 2.5% copper content on the surface. “We didn’t want to call attention to this, for fear there would be increased hoarding” of the old copper pennies, Dix explained.

The contest for the penny was over--except for a curious footnote. Late in 1984, an 8-year-old, female Japanese spaniel was brought to the University of Arizona’s veterinary diagnostic laboratory. The dog had been trembling for three days, and seemed to be constipated.

Clinicians spotted in an X-ray what appeared to be a tiny, flattened figure eight in the dog’s stomach, and surgically removed two pennies that were stuck together. The 11-pound pet died five days after the operation.

Zinc Poisoning Case

In an interview, Dr. Gavin L. Meerdink, the university veterinarian who performed the post-mortem, recalled a colleague’s bewildered reaction when Meerdink asked the age of the coins: “He said, ‘I don’t have any time for your sick humor,’ and I said, ‘Well, if they’re after 1983, you may have a case of zinc poisoning.’ ”

In fact, the Arizona veterinarians detected zinc contamination in the dog’s liver and other tissues, and Meerdink informed the Treasury Department of the findings. Shortly after that, then-Rep. Eldon Rudd (R-Ariz.), noting the troubles of his state’s copper industry as well as the potential risk of zinc poisoning, introduced legislation to put more copper back into the penny. The bill did not pass, however.

According to Meerdink, zinc dissolves more easily in stomach acids than copper does, and there is a tendency for it to “start bubbling up from the mint mark” on the newer penny, when exposed to acid in the laboratory.

The Mint stands by its coin, however. It says there has been only one similar incident involving a human--a baby--and that the penny was removed with no harm done.

“We don’t see this as totally risk free--nothing is,” said George Hunter, the Mint’s assistant director for technology, “but we consider the risks extremely small.”

Uses Coins as Washers

Meyer, who keeps tabs on the penny for the zinc industry, called the dog incident a once-in-a-lifetime fluke. “It’s a very useful coin,” said the engineer, who confesses to drilling holes in pennies and using them as washers when he works around his suburban Connecticut home.

In a world where virtually nothing costs one cent anymore, there’s another, more fundamental question about the penny: Is it worth continuing in any form?

At the request of the Mint, pollsters employed by Walt Disney asked some 12,000 visitors to Walt Disney World in Orlando, Fla., what they did with their pennies. The survey, taken early last year, found that people treat their pennies in radically different ways.

Of the Disney visitors under 18, for example, 13% said they threw them out, but fewer than 2% of those 50 or older confessed to discarding them. About half of all those polled said they used pennies daily. Another 21% said they took them to the bank; 6% said they collected them. About 16% said they just let them pile up, and 3% said they discarded them (4% did not respond to the survey).

Other signs suggest that inflation has robbed the penny of much of its allure. A Purdue University professor found last year that the penny discount was starting to vanish from restaurant menus. Prices such as $8.99 or $9.99 increasingly were replaced by nickel discounts, such as $9.95 or $10.95. The conclusions, based on a survey of 428 newspaper advertisements, represented an about-face from the findings of a similar study five years earlier.

Vending Machine Changes

Remember penny vending machines? Forget them. Gumball and peanut dispensers typically take a nickel or more these days, “except for some leftovers in remote places like northern Wisconsin,” said Walter Reed of the National Automatic Merchandising Assn. in Chicago. The penny accounted for only 3% of machine sales in 1985, according to Vending Times magazine.

In his assault on the penny, Blinder of Princeton complained that billions of dollars’ worth of time are wasted each year as people fumble in their pockets for exact change. “I have no doubt that (abolishing the penny) will eventually happen,” he said. “It’s a miracle that it hasn’t happened so far. The penny is really a useless coin.”

The Coin Coalition lobby is working to convince Congress of that, although it admits it is an uphill battle. It wants to get rid of both pennies and dollar bills to make room in cash registers for the new, dollar coin it advocates. “The bottom end of our currency is getting ridiculous,” complained James C. Benfield, executive director of the group, which has the support of businesses such as vending machine companies and convenience stores.

Blind Prefer Coins

The idea also has the backing of the blind, who can distinguish dollar coins from other coins, unlike paper money, which all feels the same.

Despite the opposition, many Americans remain devoted to their pennies, however. No one really knows what it would cost society to take them away, because no one knows how merchants would respond.

Benfield, whose major success as a lobbyist came in helping to get daylight saving time moved up three weeks, said that transactions involving checks and credit cards need not be modified at all. If cash sales were always rounded to the nearest nickel, gains and losses would offset each other, he added. (A price of $5.78 would rise to $5.80; a price of $8.77 would go down, to $8.75.)

Blinder argues that so many shopkeepers would round prices down to the next nickel that abolishing the penny would actually reduce inflation.

The Cleveland Plain Dealer has disagreed emphatically, however. In an editorial, the newspaper reckoned that taking away the penny would cost Americans more than $9 billion a year, assuming that each made five purchases a day and each price was rounded up by an average of 2 1/2 cents.

Demand Has Dropped

There are other unknowns. Government officials are baffled by the fact that demand for new pennies has dropped during each of the last four years, but penny-bashers should jump to no conclusions. The explanation could be that people are keeping their pennies in circulation longer, at least partially reflecting the end of hoarding. Another theory is that pennies simply are being used less often.

Americans, meanwhile, continue to find things to do with their pennies besides make change. Perhaps the most popular is flinging them into bodies of water.

Animals that swallow coins usually excrete them without ill effects, according to veterinarians, but such foreign objects can pose hazards. Several years ago, the post-mortem on a seal named Max at Chicago’s Lincoln Park Zoo found several hundred pennies in Max’s digestive tract, along with some nickels and dimes, a brass ring and a medallion.

(The Los Angeles Zoo reports no such unfortunate incident in recent memory, although, “There was an orangutan here once that had a nickel in one of its air sacs,” said veterinarian Ben Gonzales.)