Canada’s decision to eliminate its small cent 92 years after it gave up its large cent probably means that there will be increased pressure on the U.S. Treasury and perhaps Congress, to take a fresh look at the elimination of a denomination whose history goes back to Thomas Jefferson’s “Notes on Coinage” (1786) and Hamilton’s “Report on the Establishment of a Mint” (1791).
Despite the close proximity of the two nations, which share the longest land border in the world and their interrelated economies, in the final analysis it will be politics, not economics, that determines whether the U.S. follows its neighbor and uses an argument of “saving money” to end 219 years of cent production.
The denomination has been produced each year at the U.S. Mint since it commenced in 1793, with the exception of 1815, even in the most economically bleak times. In 1933, for example, the Mint produced more than 20 million cents (no nickels, dimes or quarters) and 1.7 million half dollars, plus an odd lot of gold coins. During an earlier depression in 1837, 5.5 million cents were also produced.
With multiple sizes and designs since it first went into production in 1793, the cent’s history has been that of America itself. For more than a century, that has been tied to Abraham Lincoln, whose portrait was introduced in 1909, using the design by Victor David Brenner.
The Lincoln Memorial was added to the cent reverse in 1959 for the sesquicentennial of the Great Emancipator’s birth. In 2009, to mark the bicentennial, four different reverse designs were utilized showing Lincoln’s log cabin, the rail splitter, his years in Springfield and finally the presidency with the unfinished Capitol Dome.
Its composition has changed, too, most recently to zinc with a copper plating since 1982 when the rising price of copper threatened to bring the coin’s nominal metal value to more than its face value.
More Lincoln Memorial cents have been produced (1959-2008) than all of the other coins, combined, from each of the other mints in the world, from the beginning of history when coinage began (about 750 B.C.) until the present.
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Now, its fate seems driven by the Mint’s accounting analysis as much as metal cost. The current cost of the cent is 2.41 cents apiece; the nickel’s cost is, by the same calculations about 11.8 cents. (The dime and quarter costs still are well below face value and sunk costs right now – but that would change if the cent were eliminated.
That’s because the Mint calculates the cost of making a cent (or any other coin) to include amortizing the cost of its physical plant, die shop and all aspects of production and maintaining a mint over the total number of coins produced annually. Eliminate the five billion cents made each year and the Mint is suddenly amortizing its fixed costs against fewer coins. That will put upward pressure on dime and quarter costs. The accounting analysis is maddening, because in its zeal to include all costs, it lacks focus on the practical need in the economy for pocket change.
What finally comes from all this may entail yet another change in the cent’s composition or the outright elimination of all but a collector’s version – and that might be in a precious metal, rather than the familiar coppery color that is there now by plating rather than by true composition.