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Penny Foolish, Pound Wise: Why Do We Still Use Pennies?

There used to be a time when a penny – a U.S. one-cent piece – could buy you something.

You could go to Bill’s Variety Store tucked in next to Choate Bridge, or the South Side Store near the South Green, and purchase a root beer barrel or a fireball or stick of licorice for one cent – hence the name “penny candy.”

If you wanted a tonic, for a nickel you could get a Garden City or a Twin Lights beverage – but if you added another penny, for six cents you could buy yourself a Coca-Cola.

You could also take your penny to the Boston & Maine railway tracks and double its diameter as the train ran by. Parents, for some reason, frowned on this practice.

Bill’s Variety, the South Side Store, Garden City and Twin Lights Bottling, and the B & M Railroad are no more. And good luck today finding a “penny candy” for less than a quarter.

Yet the penny persists. Why? It’s a mystery.

It costs approximately two cents for the government to manufacture and distribute a penny. Last year, the U.S. produced 8.4 billion pennies. You don’t have to be a Kumon whiz to do the math – the U.S. taxpayer was out about $84 million. The penny has cost more to make than it is worth in every year since 2006.

So much for Ben Franklin’s adage, “A penny saved is a penny earned.” Today, it is more a case of, “A penny made is a taxpayer burned.”

One theory is that we keep the penny for nostalgic reasons. We use expressions like, “A penny for your thoughts” and sing about “Pennies from Heaven.” “Penny Lane” was made famous by the Beatles and penny loafers by a generation of preppies.

And then there’s Abe Lincoln. Honest Abe replaced the profile of a Native American in 1909. Unlike, say, Andrew Jackson, Lincoln remains pretty popular.

The most common excuse for keeping the cent is that abolishing it might lead to inflation. Evil business people would round everything up by a nickel.

But this fear is not borne out by the facts. Canada began phasing out the penny in 2013. It employed a rounding up/rounding down formula. For example, if an item was $1.01 or $1.02, it would be rounded down to $1.00. Conversely, if the item was $1.03 or $1.04, it would be rounded up to $1.05. Many other countries have used this mechanism to phase out a useless coin.

Importantly, this only applied to cash transactions – anything done electronically remained the same – $1.03 stayed $1.03.

If Canadians could make this happen, why can’t we? We put a man on the moon, after all, which is arguably tougher than putting a puck in a net or cheese curds on top of French fries.

And then there are the Brits. In 1971, the UK didn’t just get rid of their old (huge) penny – they overhauled the entire currency regime. They kept the pound, but out went shillings, three-penny pieces, etc. In came what they termed “decimalisation.”

On February 15, the entire country made the switch – I was living there at the time. Nobody died.

So come on, America. Out with the cent! You will not only save $168 million, you’ll liberate millions of jars currently filled with pennies.

And once that’s done, we can turn our attention to the inch, the foot, and the yard.


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About The Author:

Robert Waite

Robert Waite

Robert is Managing Director at Waite + Co., a communications firm with offices in Boston, Ottawa and Toronto. He also teaches at Seneca College. He has more than 35 years experience leading communications, marketing and government relations functions for some of North America’s largest firms, including Ford, IBM, CAE, CIBC and Canada Post. He served as Press Secretary to Senator Edward W. Brooke (R-MA) and Senator Bob Dole (R-KS) and in the Reagan Administration. He is a three-time winner of the New England Press Association’s Best Column Award. He can be reached at bob.waite@senecacollege.ca.

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