Pennies from Hell: How America is Being Crucified on a Cross of Zinc

January 8th, 2009 by Al Lewis (alewis)
Lincoln’s 200th birthday marks the start of a protest by more than thirty Concord (MA) merchants against the legal requirement that they handle pennies.  They are refusing to accept them in payment and are ”rounding down” all cash transactions to the nearest nickel to avoid giving them out in change.  This act of civil disobedience is inspired by Concord’s own Henry David Thoreau, in the town in which the first revolution began. 
 
Start with the fact that most people view pennies as worthless.  The undeniable evidence for that:  the government mints them at a rate 3000 times faster than the population grows.  Obviously they wouldn’t need to mint nearly that many if people actually used them.   Instead, pennies disappear into coffee cans, sofas, and the occasional toddler, at a rate of about $30 per person per year — a de facto tax, but one which raises no revenue.   They are also a waste of zinc, much of which is imported, and cost taxpayers much more than a penny apiece to mint. 
 
Basically the government taxes us to import trash, and then taxes us to dispose of it.
 
Even so, the Concord protest is about much more than pennies.  It is about the ability of government to improve our lives.  Consumer confidence is hovering at the lowest level ever.    Yet the government is launching the most ambitious spending program in human history, a program likely to fail if consumer confidence remains low.  The existence of the penny is a visible, everyday, inconvenient reminder of government incompetence and control by special interests, in this case the zinc lobby.  How can we have confidence in Washington to institute major policy decisions wisely when they can’t even stop importing litter at taxpayer expense? 
 
However, the opposite scenario can be envisioned too.   There is indeed a way to solve the penny problem without tying up Congressional time, without a heavy-handed mandate, and without consumer opposition.  President Obama could sign a simple one-line Executive Order saying “Businesses which agree to round down cash transactions may refuse to handle pennies.”    It is well-established that the Executive Branch can make exceptions to the Legal Tender rule (such as allowing toll booths to refuse pennies), without involving Congress.  Hence we are one signature away from ending the tyranny of the zinc lobby.
 
Because a penny costs more than a penny for retailers to handle, businesses can save themselves money by not dealing with them, and instead rounding down.  Most consumers will appreciate the extra savings and faster checkout lines.  Everybody wins.  Anyone who disagrees with the above need not participate.  Businesses which prefer to hand out four pennies instead a nickel in change may continue to do so, and customers who prefer to receive four pennies, or to pay with pennies, may continue to frequent those businesses.   No one is being forced to turn their pennies in.  As an aside, the Concord protesters encourage customers to instead toss them into conveniently placed jars, in the spirit of Lincoln himself (”with charity for all”).
 
The significance of this easily implemented, creative, win-win one-line Executive Order far transcends the pennies.  It signals a willingness of government to “think outside the box” and find innovative solutions for many of our more pressing national problems too.   Consumer confidence will climb with each rounded-down money-saving cash transaction, transactions which — instead of being an everyday reminder of government incompetence — become an everyday reminder of government’s ability to solve problems. 
 
Perhaps the penny isn’t worthless after all.

*Note that many of the statistics and history in this proposal come from two sources:
(1) This USA Today Editorial. We recommend this highly readable essay by Robert Whaples, Chairman of the Economics Department at Wake Forest University.
(2) This New Yorker Article by from 2008-03-31 by David Owen.

"The fifty-five gallon drum is completely filled with pennies, sir.  Should it be taken to the bank?"

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42 Responses to “Pennies from Hell: How America is Being Crucified on a Cross of Zinc”

  1. harvardeconomist Says:

    You always look at things in a way no one else has. I had never given this topic a second thought but now I am ready to write to my Congressman. You need to get more PR for this site — most economists don’t even know about it. Owen’s article was good too.

  2. friendoftheearth Says:

    Mining is also an environmental nightmare. That by itself is a good reason to eliminate pennies.

  3. America is Being Crucified on a Cross of Zinc | dairyfactory.com Says:

    [...] America is Being Crucified on a Cross of Zinc [...]

  4. econojunkie Says:

    this is the best idea on the site. A coalition of environmentalists, consumer advocates and retailers could put an end to pennies in months from when word leaks out. We shou,d all take our pennies to Washington and throw them over the White House fence and chant WE WANNA ROUND DOWN

  5. billcampbell Says:

    I won’t even pick them off the street

  6. paula Says:

    my managers and me have been wanting to round down or round up-as one of my managers puts it-for 5 years but we didnt even know where to begin with this-and we are so on board with this-and actually-its brilliant-we are constantly opening rolls of pennies to leave out-right there-on the counter space-where our customers pay-simply for the reason that the other customers do not even have to wait for them to find those pennies.and theres something else-when customers do get a penny back for their change- thats what they use to put into the tip jar-thats probably the worst of it-because-as one of managers says…”its just simply insulting”but then i say…maybe-they do it because they simply just do not want any more pennies…

  7. alewis Says:

    tell, take out the “round up” part which would annoy customers, and I think you’ve got a plan. Just round down. But make a big dal out of it –you won’t take pennies, period. but only round down

  8. williampitt Says:

    I’ll tell you why people put the pennies in the tip jar, or at least why I do. Two reasons. First is that it beats throwing them away or having them accumulate in your pocket, until they get transffered to (in my case) a plastic container. (Used to be a Tropicana nottle but they stopped using bottels as packaging.) Second is that when the server’s back is turned you can throw the pennies in and make a lot of noise so the server thinks he is getting a real tip. It’s not that the service was bad and I have certainly never intened to insult anyone.

  9. alewis Says:

    NEWS FLASH

    Concord Teacakes found this posting and is going to DO IT. In Concord, MA (The birthplace of Civil Disobedience), on February 12 (LIncoln’s 200th birthday) they are going to refuse pennies, starting at (time subject to change) 9:00 AM. Be there — it’s opposite the West Concord train station

  10. phdcandidate Says:

    I bet if as part of your Civil Disobedience you threw a whole bunch of pennies onthe sidewalk outside the store, no one would pick them up. Maybe eventually a homeless person would, but even then, not right away. The likelihood of picking up germs from a penny on the stree just isn’t worth it. NOTHING about pennies is worth it

  11. pennies_s**k Says:

    I wonder if throwing money on the street counts as littering? That would be funny to get a ticket for littering but at the same time being required to accept them.

  12. patrick Says:

    I don’t even pick them up off the floor of my living room. That’s what vacuums are for

  13. I HATE PENNIES! Says:

    Hooray for Concord Teacakes! There is not much that I hate more than getting pennies in change!

    However, I say let’s get rid of the nickel while we are at it. Sure, people still use the nickel somewhat frequently, but we could effectively lop off an entire column. Just think of the ink we would save alone.

    For those that think it is bad to lop off an entire column in prices, we effectively already do it, when tax is calculated for instance. Suppose that your lunch bill is $5.50 and there is a 7% tax. Essentially you should pay 38.5 cents in tax, but I bet you don’t pay 38.5 cents!

  14. IHATETHEMMORETHANYOUDO Says:

    teacakes rules! know what I hate the most? when you are looking through your change jar for quarters because you are going to go somewhere which has meters but you can’t find the quarters because they are under a blanket of pennies.

  15. pilingiton Says:

    Maybe it’s just me but you could add that handlng pennies feels dirty on your hands. they have kind of an oily film. Dimes and quarters feel clean on your hands. Am I the only one who notices this?

  16. Kaycie Says:

    I agree that pennies should slowly be taken out of our currency. If it cost just as much to make one than what it is worth, what’s the point? I would rather save the $29 in tax money from making them and use it for gas money. Also, as bad as the economy is, I feel that rounding the currency could save money and we need as much help as we can get.

  17. commuter Says:

    you’ll need it if Al’s gas tax becomes law

  18. alewis Says:

    I generally put up all bona fide comments and I put up this one even though it is wrong. If you actually READ the POSTING on the “Green Dividend” you’ll see that it self-finances. Most people will be better off due to receiving the divident even as the price of gas rises. If you drive a lot of miles in an SUV then you will be worse off but frankly you deserve to be

  19. tomlyons Says:

    I noticed that Obama said today that each government activity will have to be cost-justified. That means pennies should be the first to go.

  20. Brendan Says:

    I feel compelled to wish you good luck getting arrested in Concord. Do you think that bail could then be posted in pennies?

  21. alewis Says:

    Yes, if I get arrested please bring all your pennies to the stationhouse and post bail that way

  22. alewis Says:

    If I am wrong and it DOES require an Act of Congress (as opposed to an Executive Order) by the time the zinc lobby gets this to the Supreme Court it will be moot –everyone will have adopted the “rounding down” by then.

  23. Anonymous Says:

    This is a stupid idea. There are easier ways to solve this than getting rid of the penny altogether. Why not just do what was done during WWII, make the pennies out of a less expensive material?

  24. tomlyons Says:

    That’s like saying let’s get a faster typewriter instead of moving to word processing. Pennies are obsolete, plain and simple. They got rid of the half-penny when it was worth the equivalent of about 8 cents today. So pennies are 8 times s worthless as the last coin we got rid of.

  25. robert Says:

    2 birds w/ 1 stone. no more add -on of sales taxes.include sales taxes in prices of goods and services, round-up prices to end in “0″. eliminates errors,improves efficiency and instills truth in advertising/pricing.include charity option to rid oneself of rest of change.

  26. gdwitch Says:

    You know those little cans to collect change for causes could become a
    common pool for stores and customers to toss all pennies in there. It
    needs to be marketed with a purpose and slogan–something good pennies could do on the way out. This is such a terrific cultural moment to give people a practical way to join in the common good, reduce waste, have fun, throw money away.

  27. alewis Says:

    (1) Yes, sales taxes should be in the price. That way if you’re paying in cash you know exactly how much to pull out. I think the problem, which probably averages out over time and in any event is totally trivial, is that buying X number of items with sales tax already in does not always equate to the same amount of sales tax as the same items with sales tax added on. Also, the system could be gamed. Durgin-Park (and just for the record I am not old enough to remember this — my father told me) used to offer lunch for $0.99 because the Commonwealth only taxes food over $1.00. Even so, a little sanity should prevail over a trivial revenue loss and make us a penny-less society.

    (2) Fabulous idea about the charitable collections. We will emphasize it. If I offered prizes for comments you’d win but I’d be broke already because there are so many good ones.

  28. bethc Says:

    You should advocate for the pennies to go into a jar to retrain any mint workers who are laid off as a result of this. It’s a win either way. Either you raise enough pennies to help them or else even by raising (literally) tons of pennies it isn’t enough, thus making your point that pennies don’t amount to anything

  29. econguy Says:

    the nickel also costs more than a nickel to make. Doesn’t this mean more nickels and would wipe out the savings?

  30. alewis Says:

    hmmm…let me make the counterargument. I don’t think the number of nickels needed in change varies whether or not you use pennies. Example: 8 cents in change requires a nickel and three cents but now would just require a nickel, not two nickels.

    Also most of the benefit of getting rid of pennies is to consumers and retailers. Even assuming you are right (and I can’t make the math work out your way) those benefits remain

  31. Maggie R Says:

    Pennies out of circulation? Pros and cons.

    What in the heck would we, or the government do with all of them? Could they be re-cycled “cost effectively” to provide goods, services [and alternative job opportunities for those now displaced government penny makers] or alternative energy?

    Also, I wonder how many government workers it takes to manufacture a batch of pennies? How many tax payer dollars could be saved [when taking into account government worker lay-offs, pensions, unemployment services]?

    If we are going to propose taxpayer savings opportunities, I sure there are billions of $$$ that could be saved by streamling other governmental agencies; “streamlining” being the key point here. If all Americans aim to keep their pennies circulating [rather than stockpiling them in jars for "penny poker"], then it seems the government could suspend penny manufacturing for quite a while and save money that way. And by the way, do we really need silver dollars in this day and age of electronic slot machines?

  32. concordresident Says:

    that is a really good question, what to do with the ones we have? Since it costs more than a penny to make one, does that mean the government will spend more than a penny to buy them back from us? I like the idea of charity jars in Concord but what happens when the charity gives them back to the bank?

    I do think one of the advantages of getting out of pennies is that the govt could then have a silver dollar coin for vending machines, tolls etc and there is room in the cash register for it

    one more thing, CONCORD RULES. All rebellions worth their salt start here

  33. v Says:

    I am a strong believer in digital change. Every person should get one from their bank, a credit card type thing where all change is stored. For example, if you buy $21.37 from a grocery store with $25, they’d give you $3 in bills and you’d tap your card on some console and 63 cents would be credited to your card. Once you build up $5 or $10 worth, you can trade it in at your bank for bills. If these cards are printed cheaply, they can be given to homeless people for charity! Also, you can print advertisements on it, which could reduce implementation cost. Or have special “use your spare change card to buy from our sale bin!” promotions. It’s probably useful for charity PERIOD. We have the technology, why not adopt?

  34. Us Coins Says:

    Happy Sunday! Very good story. Thank you for sharing.. Enjoyed “from Hell: How America is Being Crucified on a Cross of Zinc | ThinkOOB” although maybe not everyone did. More insight from the ultimate insight gang. Added a subscription to your feed.

  35. SingaporeJoe Says:

    If I may add. I’m an American Expat (and double taxed, but that is another discussion) living in Singapore. Singapore got rid of pennies and rounds down today and guess what, it works! So why doesn’t the US look to one of it’s smaller trade partners and learn how to do it.

  36. billm Says:

    After the penny, will you move on to the paper one dollar note? Personally, I shun them. I don\’t keep them in my wallet. I always ask cashiers for dollar coins as change. I turn them in for coins at merchants who know me. I spend them freely and ignore anyone who makes a face.

  37. Pennies from Hell: How America is Being Crucified on a Cross of … | BanknTrades.Com Says:

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  39. Anonymous Says:

    In a month spent in Australia the only penny I saw was decoratively mounted in the bottom of a wooden bowl. The only prices I saw in the pennies range was in the grocery store, and the final bill was rounded down. We don’t need pennies either.
    Australia also figures their national sales tax into the price of an item so there is no surprise at the checkout stand. The stated price includes tax and is rounded.

  40. Luke Says:

    http://www.newyorker.com/reporting/2008/03/31/080331fa_fact_owen

  41. Mitch Says:

    I have been frustrated by this issue for years.
    You go in a store and the price for the object is $1.01.
    They’ll wait for you to hand them another dollar and then look for another roll of pennies to break and count, all the while there is a line of customers with money to spend in their hands wating. I always ask myself (how much did they loose?)
    Great artical. I’m glad to see my thoughts have not been wasted as much as the pennies are!

  42. Nadine Clement Says:

    I started a petition to abolish the penny (1 penny costs 1.7 pennies to make losing americans 48 Million dollars a year) and I need support. I am trying to get ten million people to sign. Will you sign and spread the word? :) Thank you for your time!

    http://www.change.org/petition​s/stop-the-production-of-costl​yuseless-pennies

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