In 1857, Congress did away with the halfpenny. I can find precious little about it in any newspaper of the day. “The president has approved the coinage bill,” The New York Times said succinctly on its front page on Feb. 24. End of story.
The pertinent part of that coinage bill, for this discussion, was buried after a semicolon at the end of section four, almost as an afterthought. It says simply, “and the coinage of the half cent shall cease.”
By that measure, things haven’t changed much since those days. The reaction to President Trump’s decree that the U.S. stop minting pennies, also made in February but 168 years later, was similarly quiet, despite stories by traditional media, chatter on social media and some websites dedicated to all aspects of coins. Two months later, few people are talking about it.
Coinage and the Constitution
Things seem similar to 1857 — that is, except for the procedure. The Constitution clearly states that Congress alone has the power “to coin money.” The president’s decree, therefore, was likely not enforceable, some observers say, and it’s not entirely clear whether the minting of pennies has ceased, although with approximately 114 billion of them in circulation, it might be a while before anyone notices any change (pun intended).
“Circulation” is an interesting word. A lot of pennies end up in jars, where owners hope to accumulate enough to actually afford something, provided they can find a bank that will exchange them for higher denominations. Pennies don’t circulate as they once did. As I have noted before, Americans lose or inadvertently throw away about $68 million worth of coins per year, according to Reworld, a recycling company.
The cost of minting nickels
The pertinent question now seems to be: What about the nickel?
The U.S. Mint reports it costs 3.69 cents to mint each penny, which has been a chief argument of the anti-penny crowd, including the president. But it costs 13.78 cents to produce each 5-cent nickel. The dime still costs only 5.76 cents to produce, but its cost jumped by 8.7% from 2023 to 2024, so its days of profitability may be numbered, as well.
The Federal Reserve lost $85.3 million last year by minting pennies. But without pennies, experts say it would need to begin producing more nickels, because it would be the least valuable form of currency.
CNN reported that even an increase in only 850,000 nickels this year would negate any savings from not making pennies. It quoted Mark Weller, executive director of the Americans for Common Cents, as saying nickel production might have to increase by 2 million or more to meet demand, which would end up costing more than what the government currently loses on both pennies and nickels.
“In most countries, the lowest domination coin is the most minted coin,” he said.
In other words, things are never as easy as they may appear at first blush.
Tariffs and inflation
Federal Reserve Chair Jerome Powell said this week that, as a result of new and large tariffs on certain foreign goods, the nation could enter a period of high inflation and a slowing economy, something that would defy the Fed’s normal prescription for high inflation, which is to raise interest rates.
He cautioned, however, that it’s too early to know how things will play out.
Inflation in the price of certain metals could affect which coins remain a part of the currency.
A cashless America?
Still, I’m guessing you may not notice. A survey of bank account holders by DepositAccounts found that 66% said they don’t always carry cash anymore, while 61% said they had used cash five or fewer times in the previous month and 30% haven’t withdrawn money from an ATM during that time, either.
It also found that 38% said they had encountered businesses that were no longer equipped for handling cash.
We’re a long way from becoming a truly cashless society, but we’re a lot closer to becoming one that would prefer to not have pennies or nickels weighing down its collective pockets.
Just as with the halfpenny 168 years ago, it could all happen without many of us even noticing.