Thursday, March 13, 2008

Small Change: Why Not Abolish Coins That Cost More to Make Than They're Worth?

There's nothing like two weeks in Austria and England to make an American accutely aware of how much U.S. currency has diminished in relation to the euro and the pound. The euro currently costs over $1.50 and the pound over $2.00. It is especially remarkable that the U.K., deeply involved with us in Afghanistan as well as the debacle in Iraq, has managed to do so much better economically than the United States. Evidently foreign policy is not the only area in which the Bush administration lacks skill.

So it caught my eye when The Chicago Tribune reported yesterday that, due to the increasing price of metals, pennies and nickles now cost the U.S. Treasury double their face value to make. The price of copper quadrupled over the last five years, while the price of nickle and zinc tripled. The U.S. Mint lost $99 million on penny and nickle production in fiscal 2007.

And the U.S. Mint's response? "Save taxpayers $100 million a year" by replacing the copper, nickle and zinc in the coins with cheapter metals. Is this the best idea the Treasury can muster?

If the government really wants to save taxpayers money--not to mention, improve the convenience of cash transactions--it really should consider abolishing these coins altogether. And for good measure, why not get rid of the dime and the half-dollar as well? If we must split dollars for old times sake, we could still retain the quarter and round all cash totals to the nearest one. But hasn't the time long since passed when pennies, nickles, dimes and half-dollars add any value to our economic lives?

While we're on the subject, it wouldn't hurt for the European Community to do the same. The annoyance and uselessness of such small change is the same there. In fact, the European countries compound the problem. The euro, in addition to 1, 2, 5, 10, 20, and 50 euro-cent coins, is also available in 1 and 2 euro coins. The pound, in addition to 1, 2, 5, 10, 20, 25 and 50-pence coins, is also available in 1, 2 and 5 pound coins. So much coinage is cumbersome, costly and a really unproductive use of the earth's metals.

The Tribune reported that a House subcommittee had a hearing March 11th about the Mint's proposal. Time challenges and the mechanics of dealing with vending machines were discussed. Only one member was brave enough to suggest abolishing the penny entirely. Another predicted "some good amendments coming for this." One can hope.

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