Rep. Zack Space - D, Ohio wants to melt pre-1982 pennies (cents)

[MTHead-migration]

Note to Forum Admins: It is not my intention to make this a political post; I am only trying to relay information that might be of interest to collectors. Certain political identifiers had to be hyphenated in this article. The Forum censor software replaces these words with *spoon* which might cause some readers confusion.

 

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Southern Ohio company seeks penny profits

But critics say lawmaker's aid could cost taxpayers

Thursday, November 1, 2007 8:14 AM

By Jonathan Riskind - jriskind@dispatch.com

 

A small southern Ohio company and the freshman congressman who has taken up its cause say the lowly penny, ignored by many or simply tossed into drawers and jars, could mean big bucks and good jobs for a struggling region.

 

So when Rep. Zack Space amended a coin-composition bill to allow Jackson Metals of Jackson, Ohio to melt down pre-1982 pennies, which contain more valuable copper than the current copper-plated zinc cents, the Dover, Ohio Demo-crat proclaimed a major legislative victory. He said it could create more than 30 jobs and save all American taxpayers money.

 

But as is often the case in Washington, the issue isn’t quite that simple — victory is still a ways away. Opponents of the idea say that the while the company might profit by selling the copper, taxpayers would be big losers.

 

The bill, which would authorize the U.S. Mint to change the metal composition of coins to make them less expensive to produce, is no longer on a fast track. It was supposed to be approved Wednesday in the House Financial Services Committee, with the blessing of bill co-author and committee Chairman Barney Frank, D-Mass.

 

But Democratic Rep. Jerry Costello of Illinois raised concerns about how changing the metals in nickels and other coins — though not pennies — would affect a contract a company in his district had to supply materials to the Mint. Now a hearing on the bill will be held next week, with possible committee passage put off at least until the following week.

 

Officials at the Mint declined to discuss the Jackson Metals issue. But the U.S. Treasury and Mint banned the melting of pennies and nickels last December. The rules became final in April, largely putting a halt to Jackson Metals’ operations.

 

And Treasury and Mint officials clearly prefer a Senate bill that allows them to alter coin composition but does not have the provision benefiting Jackson Metals.

 

Because the coins have become more expensive to produce than their face value — about 1.6 cents per penny and nearly 10 cents per nickel — melting and recycling the coins as scrap metal could cost U.S. taxpayers more than $1 million a day, the Treasury and Mint said.

 

The Mint says nothing specifically about Jackson Metals in its rules. But because of the value of the metals such as copper, nickel and zinc used in current coins — a big reason the Mint wants the authority to use cheaper metals — and “anecdotal reports suggesting this activity might be occurring,” the ban is warranted, the rules say.

 

The owner of Jackson Metals, Walter Luhrman, said in an interview this week that the Mint has it all wrong. He stressed that he, and probably a number of other interested parties, had called the Mint to find out whether there was any prohibition on the melting of coins — and was told there was not.

 

In any case, Luhrman said, his company does not cost taxpayers money, it saves taxpayers money

 

He first contacted Space about his plight in January, after the initial rules came out halting his company’s main penny-melting activities. He has given money to Repu-blicans such as Sen. George V. Voinovich of Ohio in the past but has not contributed to Space.

 

Space quickly took up the cause and has issued multiple press releases calling for Jackson Metals to be allowed to melt down pennies. That culminated in the freshman Dem-ocrat persuading Frank to include the Jackson Metals provision in the coin bill.

 

Luhrman argues that he culls out pre-1982 pennies, which used more copper than the current copper-plated zinc ones, and sells some to collectors, but then redistributes the three-quarters of the pennies left over to areas of the country where there are shortages. He maintains that, as a result, the Mint could produce fewer pennies each year. That would be no small item when you consider that that 6.58 billion pennies were produced this year at a cost ranging from 1.4 cents to 1.6 cents, according to the Mint.

 

“Our activities can save the Mint $20 million to $30 million a year,” Luhrman said. In addition to some 30 well-paying jobs, his company would pay a local trucking company some $2 million a year to haul all those pennies, he said.

 

Beth Deisher, editor of the national hobby magazine Coin World, published weekly in Sidney, Ohio, doesn’t buy that argument. She said that she knows of no penny shortage in any particular area that leads the Mint to produce more pennies overall.

 

The Treasury banned melting cents and nickels “because of the replacement costs of those coins,” Deisher said. "If there are shortages, he (Jackson Metals) is creating them."

 

A bigger debate has raged for years over whether the penny even needs to be produced any longer. Some say that losing the penny would mean higher, rounded-up prices.

 

With the Mint planning to come out with new pennies in 2009 to mark the bicentennial of President Lincoln’s birth and centennial of the first Lincoln penny, the coin’s death probably is not imminent.

 

But Deisher, for one, doesn't see much sense in the coin's continued production.

 

"It's difficult to say that it is good for anything but collecting these days," she said. "It's practically useless in commerce. It's hard to justify why our government insists on making this denomination today."

 

For his part, Luhrman says his business plans aren’t affected either by the overall legislation’s goal of cheapening the penny or by efforts to kill off the penny. With billions more copper-laden pennies still in circulation, there’s plenty of time for his venture to profit if Space’s legislation is approved, Luhrman said.

 

- Gerald Tebben of dispatch.com contributed to this report.

 

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[Revenant]

That congressman should have his head examined. This is bone headed.

[MTHead-migration]

That congressman should have his head examined. This is bone headed.

 

It goes far in explaining why we still have a rag-paper dollar.

[Zoins]

That congressman should have his head examined. This is bone headed.

It goes far in explaining why we still have a rag-paper dollar.

Or do you mean the bone headed people who put them in office

[just-john]

can't make cent's of it.Thats would only work if a magician was used and the pennies

Magically appeared in Ohio .Mr Space also must get them for free . Like all governmental programs it will cost taxpayers millions in the end.