One of President Donald Trump’s least controversial executive orders was to end the minting of the U.S. one-cent coin after 233 years. But the action was nonetheless significant, as it is emblematic of the sudden rapid change in the commercial usage of legal tender in American life.
For the first 70 years of U.S. history, only copper, silver, and gold were officially used in coins. After the Civil War broke out, paper currency was introduced. In recent years, credit cards and digital currency like Bitcoin have increasingly replaced coins and paper currency as the country moves toward a “cashless” system of payment.
The one-cent coin in the U.S. is usually called a penny and is the smallest denomination of money currently used in financial transactions. It seems quite appropriate that this would be the first unit of hard currency to be cancelled.
No longer made of pure copper, the penny is now made mostly of zinc with a coating of copper. Nevertheless, the cost of minting new pennies is about three cents per coin. President Trump’s order ceasing production of the penny is thus part of his pledge to eliminate inefficiency in federal government spending.
The penny goes back to American colonial days when a variety of foreign coins were accepted in transactions. As an English colony, English money was used most, and that included the English copper penny. But soon each state began minting its own coinage.
After 1776, but before the adoption of the U.S. Constitution in 1789, several states minted their own coins, including one-cent pieces.
In 1792, the federal government minted a trial coinage, including a one-cent piece. The following year, 1793, the U.S. mint began producing coins on a yearly basis, and it has continued to do so every year since.
That first coinage included a half cent, large one cent, half “disme” (from the Old French word which means “tenth”), disme, quarter dollar, half dollar, and dollar. The half-cent and one-cent coins were made of copper; all the other coins were made of silver.
In the years that followed, the half-cent was discontinued, and two-cent, three-cent, and twenty-cent coins were minted before they too were later discontinued. The half disme became the nickel and the disme became the dime. In 1796, gold coins were minted for the first time in one dollar, $2.50, $5.00, $10.00 and $20.00 denominations (also known as quarter eagles, half eagles, eagles, and double eagles). Very briefly, a $50.00 gold coin was minted.
Because coins were minted every year and dated, coin collectors or numismatists began removing them from circulation for their collections.
The U.S. mint also produces every year special “proof” coins and official commemorative coins which it sells to collectors at a premium. At three mint locations — Philadelphia, Denver and San Francisco — nickels, dimes, quarters, half dollars and dollars are also still produced. Normally, coins produced in Philadelphia have no mint mark, but coins made in Denver have a “D” on them, and those made in San Francisco have an “S.”
Although the penny will no longer be minted, they will not disappear overnight. Billions of pennies remain in circulation. Pennies minted before 1981 have been almost entirely removed by collectors because they are now valued at a premium.
Since the number of coins minted each year varies, and some mintages were quite low, the numismatic value of coins varies considerably. The rarest of these are worth thousands of dollars each — a few of them worth even much more.
In the Lincoln penny series, begun in 1909, and continued until now, the two most valuable are dated “1909-S” with the coin designer’s initials “vdb” on them, and
“1914-D.” Depending on their current condition, these rare coins can be worth a fortune.
Soon enough, the penny will disappear from circulation, and prices for goods and services will be rounded out to the nearest nickel. But it costs 14 cents to mint a nickel, so it is likely only a matter of time before the five-cent coin disappears from daily usage as well.
President Trump’s executive order also indirectly raises the domestic issue of how long all coins and currency will be used in American commercial transactions.
As already noted, businesses and financial institutions have quickly adopted new forms of payment which are in traditional digital dollars and cents numbers, but which no longer use coins and paper bills.
The use of bank checks and credit cards is already almost universal, and the electronic charge to bank and credit card accounts via the internet is becoming routine.
Also growing, but much more controversial, is the usage of cryptocurrency, including Bitcoin and others. These “invisible” currencies are not only less transparent than other forms used for transactions, their detractors consider them, in present usage, less secure. Their proponents, on the other hand, contend blockchain transactions are the wave of the future.
Older Americans remember a time when they paid mostly with coins and paper money. A few might even remember when a penny actually bought something — even if only a piece of candy or a stick of gum. Aside from a few collectors, Americans now being born will have a very different sense of what “money” means, and the idea of a penny will be a distant memory.
Barry Casselman is a writer for AMAC Newsline.
Why not just eliminate the nickel?