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(Originally Published in the 1989 Farmers’ Almanac)
Millions of Americans have wondered for years why the Government continues to mint pennies which no longer have any purchasing power, are useful only for the purpose of making change, and are generally treated with great disdain. No one knows how many pennies are in existence today, perhaps over 200 billion of them in vaults, baby banks, shoe boxes, or cookie jars, stored away and forgotten. Meanwhile, the U.S. mint keeps churning them out, 9 to 14 billion of them every year, and there are apparently no plans to stop this procedure.
The annual report of the director of the mint claims that a “profit” of approximately 40% is made on the pennies minted, so that on $100 million dollars worth of pennies they make $40 million, which is turned over to the general fund of the U.S. Treasury. But the distinguished Alan S. Blinder, Professor of Economics at Princeton University, says, “The Mint’s idea that pennies should be produced simply because they are ‘profitable’ is indeed odd.” This profit, called “seignorage,” comes from the government’s exclusive right to issue coins and to hold back part of their value for its own use. Is this not a hidden tax? Would it not be more sensible to discontinue the manufacture of pennies, thus saving their $60 million dollar annual cost as opposed to a $40 million theoretical profit, and remove from circulation a coin, useful in its day, but now a valueless and irritating unit in our coinage?
Only tradition explains our stubborn attachment to the penny. But sometimes traditions get ridiculous. Surely the smallest currency unit a country uses should be related to its average income. Yet countries with lower standards of living than the U.S. have minimum currency units worth more than 1¢ –while we have been minting the penny for two centuries.
There have been serious efforts in the past to revise the U.S. coinage system. In the early 1950’s Edward W. Mehren, an executive of the soft drink industry, conducted a widespread and nearly successful campaign on behalf of a set of coins which he contended were needed to properly value items sold. But it was a complicated proposal, and although it reached the floor of congress, and extensive hearings brought out its many merits, it failed to pass.
The purpose of coinage and currency is to facilitate trade, and to avoid the awkwardness and inflexibility of primitive trading through barter or exchange. The primary consideration in their use is convenience, and when coinage fails to provide this convenience and is inflexible, then it becomes necessary to adjust the system to fit a changed scale of values.
The Farmers’ Almanac believes that such a point has currently been reached, and that with the combined effect of doing away with the penny and adding a new coin to the present sequence of coin values, many problems could he solved. The coin which we propose, or at least whose possibilities we wish to explore, would be a 12½-cent piece to be called one “bit.” This name already has common acceptance, “a quarter equals two bits” in the vernacular. This perceives the dollar as being cut into eight equal pieces, half a dollar is four bits, 75-cents is six bits. While our money is based on the decimal system, we should note that division of units into eighths is also important. Witness the New York stock exchange and other securities markets which list stocks in increments of one-eighth of a dollar, “78½,” “78â…,” etc. , so thinking in eighths is not unusual.
This coin would be important because it would add flexibility to the rigidity of our present coins and would bridge the gap between the dime and the quarter and up the line make possible coin combinations which would produce 22½ cents, 27½ cents, etc., all the way up to 97½ cents, and make sensible combinations needed to price items at their true value. It would also make possible a different method of calculating sales taxes. If the sales tax worked out to 37 cents or 38 cents it could be averaged to 37½ cents; if 36 cents, round down to 35 cents; if 39 cents, round up to 40 cents. The rounding up or down is common practice, and averages out equitably in the long run. By this method all need for pennies would be eliminated.
Here illustrated is a suggestion of what the one bit coin might look like. We would visualize it as being made in a size between the nickel and the quarter, its metal might be gold-toned, and it might have some physical feature of construction such as making it the thickness of a dime, thus causing it to be identifiable by feel as well as by look. If the suggestions of the Farmers’ Almanac were carried out, it would have the face of the Statue of Liberty on one side, and thus be a tribute to women as a replacement for the Susan B. Anthony dollar, and on the reverse side the scales of justice to make a coin that would symbolize liberty and justice for all.
The Farmers’ Almanac has approached two members of Maine’s congressional delegation, Senator George Mitchell and Congresswoman Olympia Snowe, about introducing legislation calling for the issuance of the proposed 12½ cent coin. The Farmers’ Almanac truly believes there is a need for this coin, that it would be practical and useful, that it would solve many monetary problems, and that its time has come. So we present to the loyal readers of the Farmers’ Almanac and to all the American people the thought that perhaps, just perhaps, our suggestion of a 12½-cent coin makes quite a bit of sense!
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