I’ve read a few arguments here and there for getting rid of the cent in the U.S. The two arguments are the cost to mint them, and their lack of purchasing power.
The question then is: Whatever you call the smallest denomination of a nation’s currency, what should an average user of it be able to go to the store and buy with it? A piece of candy? A nail or a screw? A can of vegetables?
Is a denomination of currency still useful if a single unit of it cannot buy anything?
One measure is, Would you bend over to pick one up? I gather that many/most Americans would not pick up a cent that they saw lying in the street, presumably because it’s not worth the effort. If that’s so, then I’d think that the cent is too small to be minted as a coin.
Inflation robs purchasing power over time. The cent, nickle and dime, etc once had a lot of purchasing power. The smallest units are good for accounting purposes. At one time the Mill was used (though never minted) 1/1000th of a dollar.
I’d argue that it should be less than the unit needed to buy even the cheapest something.
Let’s say the cheapest thing on the market is a shmoo and it costs 1 TinyCurrency (TC). If you don’t have a unit of currency smaller than a TC it becomes inconvenient to try and adjust pricing by small amounts. Think about it in terms of cost or production going up or down by a small amount. The only option to adjust pricing for one shmoo is a 100% price increase or 100% decrease (aka free). You can minimize issues by bulk sales , like 10 TC to buy 9 shmoos, but that doesn’t work for people that don’t want to consume shmoos in bulk.
We’re to the point where the penny is around 1% or less of a lot of the lowest cost items. That much granularity in pricing is overkill. More granularity than 100% of the lowest cost item swings too far IMO.
The question shouldn’t be “what can you buy for a penny”. The question should be “do you want everything to be rounded up to the nearest nickel?” Without pennies, we’ll be paying more for everything not divisible by 5 cents.
That’s not necessarily true. For example, in Australia the 1 and 2 cent coins were abolished in 1992. Since then, prices in shops are still marked in cents (e.g., $1.87, or $9.99), but when you pay, the total price is rounded to the nearest cent if you are paying with cash. So, if you bought just that item marked as $1.87, and offered a $2 coin for it, you would get 15 cents in change: the total would be rounded down by 2 cents. (This rounding would not happen you paid by credit card or EFTPOS: then you’d pay the exact price of $1.87.)
I will pretty much bend over to pick up any coin, cheap-ass bastard that I am.
The smallest coin in Thailand is the 25-satang piece. The main unit of currency is the baht, and 100 satang = one baht, but they don’t have any coins smaller than 25 satang. Right now, 25 satang is about 7/10 of one US cent. Some city bus fares end in 50 satang, and grocery-store prices will often be rounded to the nearest 25 satang, so it’s good to use for those. I had one shop clerk buy my entire three bahts’ worth of 25- and 50-satang pieces she saw in my hand, because she didn’t have enough in her cash drawer.
And really, we’re at the point where it doesn’t even matter that much. Even if every retailer went out and raised all the shelf prices up to the nearest nickel, that would mean an average price hike of two cents.
(And every state with a sales tax already has a rounding system. And they do it for electronic payments too. And nobody notices, cares, or probably even knows.)
What were the smallest coins in use in early England?
On the 'Net I find that in the 14th century, one silver penny was the price of a gallon of medium-quality ale, or two chickens, or two dozen eggs. (A penny might also buy 5 salted herrings, 2 pounds of cheese, or a cheap serf’s tunic.) Silver farthings (quarter-pennies, very tiny) were minted as early as the 13th century (and were also hand-made by cutting a penny into quarters) and would buy (using the above scale) a quart of ale, half a chicken, or six eggs.
I’d guess there were copper coins in use in Plantagenet-era England, some with less value than the silver farthing, but my Google skills have failed me — I can’t find any mention.