posted July 27, 2001 10:24 AM         

By Larry Copeland, USA TODAY

The lowly penny is under siege again.

Over the howls of penny aficionados, an Arizona congressman introduced a bill this week that would eliminate pennies from daily business transactions.

"Pennies have virtually no value," says Rep. Jim Kolbe, R-Ariz. His "Legal Tender Modernization Act" would not kill the penny, but it would make the coin obsolete. Checks would still be made to the exact amount. But the bill would require merchants to round up or down to the nearest nickel on cash purchases.

Proponents of the penny argue that rounding would create a de facto tax on the poor, who conduct more transactions in cash. Americans for Common Cents, a non-profit group representing mining and coin-manufacturing interests, says merchants would always manage to round up, costing consumers $600 million year.

Mark Weller, the group's executive director, says the bill also would hurt charities that collect millions in donated pennies.

Previous attempts to eliminate pennies died in Congress in 1990 and 1996. Weller and others say polls consistently find that 60%-65% of Americans want to keep the penny.

But Kolbe's bill likely would resonate with many Americans who believe the penny has become a relic. The coins were eliminated at U.S. military bases in Europe in 1980 to cut the expense of transporting them. Officials say complaints stopped after a few months.

Other nations, including France, Spain and Britain, quit producing low-denomination coins in recent decades because production costs kept going up while the coins' purchasing power went down.

Efforts to eliminate pennies are usually over "seigniorage," which is the difference between what it costs to make a coin and the coin's value.

Because so many people hoard pennies rather than keep them in circulation, the mint had to produce 14.3 billion of them last year. Each costs about eight-tenths of a cent to produce. The mint made about $29 million on pennies in 2000, says spokesman Matt Kilbourne.

However, Kolbe says that transporting and distributing the coins pushes the cost of each penny to more than nine-tenths of a cent.

His bill also would allow the federal Bureau of Engraving and Printing to print currency and postage stamps for other nations. So if the mint stops making pennies, it could reap a windfall, he says.

Kolbe's critics contend that his goal is to free up production capacity to make more Sacagawea dollar coins. Kolbe has said he would like to see that coin replace the $1 bill.

The 1-cent coin — the word "penny" comes from British slang for pence — has been around since 1787. It retains a firm place in the nation's psyche and in its lore: "A penny saved is a penny earned." A penny for your thoughts. Pennies from heaven.

Kolbe's office wouldn't assess the bill's chances for passing. "We know that we have a long process ahead of us," spokeswoman Neena Moorjani said Wednesday. Gar Travis of the American Numismatic Association believes the coin's demise is a way off yet. "Americans have a fondness for our coinage," he says. "Whether a congressman makes a proposal or not, that doesn't make it a law."

posted July 27, 2001 11:08 PM         

notes are

5dollars 10dollars 20dollars 50dollars and 100dollars.

above 5cents they round up below 5cents they round down.

posted June 12, 2003 06:24 PM         

Who here would vote the penny out? I wouldn`t because the weight of them in the bottom of my purse would make a mugger think twice

posted June 14, 2003 02:18 AM         

If it happens you will see a move by retailers to price merchandise so that with tax added the total will break just over the even nickel intervals to take advantage of cash buyers.

Banks have been trying for years to do away with cash transactions and of course they love credit cards because they create the credit out of thin air and charge interest on money that never existed.