Why is it no one in United States government has the courage to stand up and say what is so obvious? The 1-cent denomination is obsolete in 21st century America. It is far too costly to continue to produce. It doesn’t circulate. And it has little purchasing power.
Canada’s minister of finance announced March 29 that Canada will halt production of its 1-cent coin this fall, citing the fact it costs 1.6 cents per coin to produce and most Canadians consider it a “nuisance.”
Fiscal Year 2011 marked the sixth consecutive year it has cost more than the face value for the United States Mint to produce both the 1-cent and 5-cent coins.
In 2004 as production costs for both denominations hovered near their face value Mint Director Henrietta Holsman Fore tried to initiate research to identify lower-cost alternative metals. The idea was deep-sixed shortly after she left office in 2005 and was not revived until five years later when Congress gave the Mint marching orders via the Coin Modernization, Oversight, and Continuity Act of 2010.
The enabling legislation was Congress’ response to the rising costs of metal in the production of the 1-cent and 5-cent denominations, both which now cost more than double face value to produce. Though the measure was driven by a need to reduce the cost of producing the two lowest denominations, the act authorized the Mint to explore metal alternatives for all six denominations: the copper-plated zinc cent, copper-nickel 5-cent coin, copper-nickel clad dime, quarter dollar and half dollar, and the manganese-brass clad dollar coins.
According to Mint officials, the research initiative is the largest undertaken in more than 40 years. Concurrent Technologies Corp. located in Johnstown, Pa., is directing the alternative metals research and development initiative in conjunction with the Mint under a $1.5 million contract awarded to the firm on Aug. 24, 2011. The contract runs through June 30, 2013. However, the Mint is required to provide a detailed report with the recommended selections to the Treasury secretary and Congress by Dec. 14, 2012.
One member of Congress has already introduced legislation proposing that the two lowest denominations be made primarily of steel, which he claims would be cheaper to make than the current compositions. Perhaps cheaper. But for less than face value?
Interestingly, Canada has already produced 1-cent coins made of a multi-ply plated steel alloy. It did so for more than a decade, and manufacturing cents from that alloy now costs more than the coins’ face value.
New Zealand, Australia, the Netherlands, Norway, Finland and Sweden get along fine without 1-cent coins. The United States could, too. The United States stopped producing the half cent in 1857 because of costs and lack of utility. It’s time the 1-cent denomination be retired and be given a seat of honor in the obsolete ranks. ■