I received a 1942-D cent in my change the other day. The value of the copper in it is approximately 2.25 cents. Gresham?s Law says these 95-percent copper coins should not still be turning up in my change, but they are. Sure, copper cents are becoming harder and harder to spot, but they are still there.
Maybe Gresham?s Law isn?t working. It says bad money drives good money out of circulation. Put another way, it says that when given the choice of spending two coins of equal face value, a person will keep the one with the more valuable metallic content and spend the one with the inferior metallic content.
That should mean over time that the copper will disappear. I have no doubt it will. It is just taking longer than I ever would have believed possible a generation ago. After all, the mainly copper alloy hasn?t been used in the cent since 1982.
Aside from the person who called me this week wondering who he could hire to value his tubful of coins for him, perhaps many Americans and many collectors are just treating the cent as too unimportant to bother with.
My evidence? All I can offer here is my own action. The 1942-D cent went into my plastic container full of coins that I eventually will take to the bank for counting. There are other copper cents in there also.
How many readers are actively scanning their cents for copper and then keeping them? I would like to know. E-mail me at email@example.com. I think the Treasury also would like to know. A decision needs to be made now that even the copper-coated zinc cent has a melt value higher than face value.
If the Treasury figures there is another 24 years of possible circulation left in the zinc-based coin it will react entirely differently than if it believes the American people will hoard them.
Then there is a companion problem facing the Treasury. What is to be done with the nickel? The melt value of the alloy is now 7.24 cents, almost 45 percent over face value.
I remember when ads appeared in this paper in the 1960s offering to pay 7 percent over face value for silver coins. You know what? People sold them for that price.
True, nobody is advertising to buy U.S. five-cent pieces. Nobody may ever find it worth the bother. I don?t know. Perhaps Coinstar will start quietly siphoning the denomination out of its national network of coin counting machines and ship them to a smelter.
Certainly by the time silver coins saw a 45 percent premium associated with them, they were pretty well absent from change. Right now I know of only one person who has told me that he is saving U.S. nickels for the metallic value. My interpretation of his comments to me is that it is more a lark, a stroll down memory lane, rather than a serious attempt at hoarding. He is old enough to remember the 1960s also.
Perhaps the five-cent coin also represents too little value, even with a 45 percent premium, to inspire a public effort to hoard. Hoarding may not happen. Then again, if it starts, now that we have the Internet, the word will get out much quicker than it did in the 1960s.
If someone decides hoarding is the thing to do, the idea will spread within hours. We could find ourselves without nickels to spend. The irony here is that in the coin shortage leading up to the Coinage Act of 1965, it was the nickel and the cent that stayed in change and supported the cash economy.
It should be remembered also that the impulse to hoard once it occurs is very difficult to reverse. Hoarding started in the 1960s long before the metallic content of silver coins exceeded face value. People are willing to wait.
I remember talking to a neighbor in the early 1980s as one of the periodic spot cent shortages was occurring. She asked if the cents she had, which weren?t even of the Wheat-back design, were worth keeping. I gave her all the facts that I knew, including the fact she could not sell them for more than face value then or likely for a long time to come. Her response, ?I think I will keep them anyway.?
Send comments to Dave Harper at e-mail address firstname.lastname@example.org.