I found the U.S. Mint’s 2004 Report (PDF), which, on pages 34 and 45, suppplies this information.
In 2004, the cost of making a penny was 0.93 cents, including administrative costs. (Down actually from the previous year, when it was 0.98 cents.) The raw manufacturing cost seems to be 0.90 cents per coin. Also, the Mint distributed about $71 million worth of the damn things that year, if I’m reading the tables right.
Also, the cost of making a nickel was 4.56 cents; a dime 3.14 cents; a quarter 7.33 cents; a half-dollar 16.97 cents; and a dollar coin 21.14 cents — making the dollar the cheapest coin to make per unit per face value. However, the government actually makes the largest total profit on quarters: almost $400 million in 2004.
Why don’t they just retool the penny so it’s cheaper to make?
Either that, and round everything, but you get a “credit” on the rounding. Something costs $1.01, they round it to $1.05, but you have .04 credit on your next purchase. Over time your credits can be applied to purchases so it should all balance out.
That sounds excessively complicated to me. Every shop would have to create an individual account for every customer in order to keep track of the “credits”.
It is easy really. Each store would have a little paper card they give you with ten circles on it. When you pay, the clerk with take out a little stamp and marks the number of pennies you have credited on that purchase. When you want to use your remaining pennies, you just present the card and the clerk X’s off the one that you used. You just keep a little binder of cards for each store or chain that you frequent and present them as needed. Seamless.
Or, you could just round the prices off at the register, saving the whole “card punching” and carriage of yet another type of loyalty card in one’s wallet or purse…
“Seignorage” is the profit or difference between the intrinsic value of coinage versus the official stated value that the king or government takes for themselves along with the right to regulate money, or in the modern case print currency. Nickles and cents are anachronistic in the sense they represent a certain intrinsic value that has exceeded their stated official value, a common problem years ago when money was scarce - it tended to make money even more scarce.
Seamless? You’ve got to be kidding. You expect people to carry around a card, for each store they regularly patronise, and waste their own time, and that of everybody in line behind them by fiddling around with their little books or cards? What’s next–bringing back counterchecks and abolishing debit card payments?
It’s time to end the dysfunction of our currency system rather than continuing to accommodate it.
BTW I didn’t see if it’s been mentioned, but the report mentioned by the OP said that nickels also cost more than their face value to make.
South Africa got rid of its 1c and 2c coins some years back. Supermarkets would automatically round down your total to the nearest 5c, for example your R45.67 purchase would become R45.65.
I agree with the poster who said that it is not in any way different from rounding to the nearest 1c, something we are all comfortable with.
If pennies and nickels were abolished, I’d think that, in the effort to compete, stores would be just as likely to round down as up, depending on the article. If this were the year 1900, when many small articles still cost a nickel or three cents, then yes, abolishing the small denominations would have a huge negative effect on the consumer. But that’s just not true any more. And keep in mind that the rounding need not occur on each item bought, but on the total bill.
Wait, it just hit me: let’s find a Republican solution to this. Let’s get rid of the penny, but also cut everyone’s income tax by $20 bucks to make up for the difference of rounding up purchases by as much as two cents. That $20 bucks would cover 1,000 purchases in which the price has been rounded up from $xx.03 to $xx.05.
Senator Frist, you may thank me in your speech introducing this fine bill.
“What a delightful little store. Do you run it all by yourself? You must be awfully clever to do that. Everything’s laid out so beautifully and the shelves are just too too much!”
