Giving a Talk on "Do Cents Still Make Sense?" on Friday ... Final Input?

[astrostu]

Hi, folks. A few months ago, I made a thread where I said I'd be giving a talk at my local coin club about the 1¢ coin and the current controversy surrounding whether or not it should be eliminated. I got a fair amount of feedback but I didn't actually make the presentation until about 4 weeks ago. So I thought I'd get some more input from folks who have more advice or who may not have seen the original thread.

 

The presentation (I just practiced) is about 25 minutes long, which is 10-25 minutes SHORTER than most at our coin club (this is a good thing ... attention spans are not the longest).

 

The first ~10 minutes I spend simply going through the historic designs of the 1¢ coin since 1793. On each slide I have pictures of the coin, the composition, and the purchasing power in 2008-adjusted historic inflation rates.

 

I then have 2 slides that take maybe 3 minutes to go through that show a graph of inflation rates throughout time and then the relative purchasing power of $1 today corrected for inflation since 1776, basically showing that the 1¢ coin is worth ~4% of what it was worth when it was originally made.

 

I then have two slides that I plan on expanding a bit that go over the keep vs. eliminate arguments. At the moment, they're just listed. I plan on changing that to have one on each slide and then list counter-arguments for. In other words, I'm trying to be as unbiased in giving the presentation as I can, which was something that was recommended in the original thread I posted. At the moment, this part takes about 10 minutes to get through.

 

The next two slides talk about what's likely to happen. I show the new designs for 2009. Then I have quotes from Moy and Paulson basically saying the cent ain't goin' no where. And point out that while we have a new administration coming in, Obama has more important things to worry about than whether or not to eliminate the 1¢ coin (plus, he's from Illinois, but I don't really get into that). This part takes about 2 minutes.

 

I end with a slide saying, "What do YOU think should happen?" which I hope to turn into a discussion where club members actually discuss their own thoughts about whether we should keep it or get rid of it with me being a moderator or devil's advocate. If no one wants to talk, then I'll just end it there.

 

 

So based on that, what do folks think? Good format? Bad format? Add stuff? Eliminate stuff? Something I haven't thought of?

 

 

Oh, and if you happen to be in the Denver/Boulder area, stop on by and see it and let me know what you think! Our club just got a new website (designed by me) that has directions and info!

[bsshog40]

It sounds like it's going to be a fun discussion by your itinerary there astro. I can't be there but I think I'm up in the air on the cents. I have a ziplock full of them that just take up space, but I also like collecting them in my dansco. On the public side, I would think they've gotten worthless, but on the numismatic side I think that it would really drive up all the prices on any cents that are already hard to get.

[EZ_E]

1¢ coin is worth ~4% of what it was worth when it was originally made.

 

I think that this is probably a very conservative figure. Imagine, if you gave an ordinary kid a cent back in 1794 then he'd probably mess his britches. Give a kid a quarter today (same as a cent back then according to your figures) and they'd look at you like you'd messed your britches!

[awb]

Yes, I thought I read that when the half cent was discontinued after 1857, it had the buying power of a quarter, making a cent worth about fifty cents at this time, some 60 years after your comparison.

 

:shrug:

[astrostu]

1¢ coin is worth ~4% of what it was worth when it was originally made.

 

I think that this is probably a very conservative figure. Imagine, if you gave an ordinary kid a cent back in 1794 then he'd probably mess his britches. Give a kid a quarter today (same as a cent back then according to your figures) and they'd look at you like you'd messed your britches!

 

It's based purely on inflation rates, which of course are estimates any earlier than around the Depression. But I'll make sure to emphasize that it's likely conservative.

[astrostu]

Yes, I thought I read that when the half cent was discontinued after 1857, it had the buying power of a quarter, making a cent worth about fifty cents at this time, some 60 years after your comparison.

 

:shrug:

 

Based on the inflation rates I found, the half cent was worth around 12¢ in 1857. These were the only ones I've been able to find, put out by Robert Sahr, of the polysci department at Oregon State University.

 

If you or anyone else knows of a place I can get historic inflation rates that show otherwise, please let me know!

[awb]

Maybe my memory is off by a factor of two. If the 1857 half cent corresponded to 12 cents today, then an 1857 large cent would be worth about a quarter today. That is 4%, which would mean there was no change in the buying power of a cent from 1793 to 1857? That sounds fishy to me, but I don't have any data to prove or disprove.

[astrostu]

Maybe my memory is off by a factor of two. If the 1857 half cent corresponded to 12 cents today, then an 1857 large cent would be worth about a quarter today. That is 4%, which would mean there was no change in the buying power of a cent from 1793 to 1857? That sounds fishy to me, but I don't have any data to prove or disprove.

 

What the data from this guy show is that pretty much until the Great Depression, there were periods of inflation followed by an almost equal amount of deflation. So $1 went from around $25 in 1776 to ~$15 around the War of 1812, then rose back up to ~$25 by around 1850. It fell sharply due to the Civil War but rose back up during Reconstruction to $25 by the turn of the century. Fell again after WWI to ~$12, rose slightly during Great Depression to $15, but then since WWII (and being off the gold standard and having the Federal Reserve system) it's been falling.

 

Again, this is based on the only data I've been able to find, so if someone has a source that says differently, let me know.

[WoodenJefferson]

You might have one or two people challenge your figures, but most of the poeple who will be there will believe 90% of what your telling them anyway.

 

Good Luck

 

Cool website...I clicked on every tab. Very organized.

[physics-fan3.14]

The only input I have is make sure you check your fly before you go up

 

Good luck, and tell us how it goes :thumbsup:

[EZ_E]

I've had pet rabbits, pet dogs, pet cats and my daughter has even had a pet lady bug but I've never had a pet fly to check on... What...? Oh! ....nevermind.

[cladking]

It would be easy to go much too far with counterarguments. You can say the Earth is spherical without giving equal time to any of the other ideas.

 

By the same token you can say pennies are wasteful and inconvenient and make a case that doesn't need counterargument. The fact that some are making money at the expense of the entire economy is irrelevant since the pennies remain a waste and a drag. There are those who would claim that "you can't pay tax without pennies" is a counterargument but this is simply untrue.

 

Lincoln was much more a Hoosier than an Illinoian.

[astrostu]

Well, for counter-arguments, one of the main claims I've heard is that charities would loose lots of money if the cent were eliminated. The counter-argument is that more than 20% of their take is nickels or larger coins, and so if just 1 out of 5 people who gave a cent before gave a nickel, then charities wouldn't have any lower take. In fact, they'd have more money and much less man-power to count it all.

[astrostu]

Perhaps I should also mention what the pros/cons arguments that I'm using are.

 

Keep: Charities will lose money, businesses will rig prices to always round up, other countries have kept their insignificant lowest coin, copper/zinc mining and refining interests, and sentimental/historic reasons.

 

Get Rid Of: Businesses will save ~$300 million in lost productivity, cost of transportation, cost of the metal and manufacturing, most other countries have gotten rid of their lowest coin in the last decade, historical precedence (half cent elimination in 1857 when it was worth 12x what the cent is worth today), no one uses it except little old ladies at the grocery store making everyone wait, and you can't use it in automated machines (tolls, parking meters, vending machines).

[cladking]

Perhaps I should also mention what the pros/cons arguments that I'm using are.

 

Keep: Charities will lose money, businesses will rig prices to always round up, other countries have kept their insignificant lowest coin, copper/zinc mining and refining interests, and sentimental/historic reasons.

 

 

 

Most businesses will find rigging prices to round up to be a virtual impossibility. There is simply no way on the average grocery store purchase to rig prices in such a way that the total will be significantly more likely to round up. This applies to the majority of cash transactions. Indeed, in the few places this could be a factor (like the gas station) it's the consumer who can rig the transaction to round down.

 

The best reason to keep the penny is because it is a psychological factor in peoples' estimation of the value of money. When this estimation decreases there is inflation. Elimination of the penny would affect this estimation and it would have some effect on inflation. This is why the coin should have been eliminated during a period of calm inflation such as the early '80's.

 

 

[EZ_E]

I'd say that it is possible to eliminate the cent and maintain the status quo.

 

According to the Latest Coin World pg. 70:

 

As of November 2008, the U.S. Mint had struck 456,700,213,642 Lincoln cents for circulation. Add hundreds of millions mor Lincoln cents produced for numismatic products like annual Proof sets and Uncirculated Mint sets.

 

Get your redbook out and add up the total mintage of the wheat cents then subtract it from the figure above and you'd get one heck of a large figure for Lincoln Memorial cents that few collect. With 305 million Americans that would leave a very large number for each of us. But pass a law that if, by chance, a merchant does not have sufficient stock then the have the option of rounding to the nearest whole figure.

[EZ_E]

And to put the figure of c. a half a trillion cents into perspective:

 

Once could spend a million cents per day and it would take over 1000 years to reach a half a trillion. Do the math.

[rrantique]

I've had pet rabbits, pet dogs, pet cats and my daughter has even had a pet lady bug but I've never had a pet fly to check on... What...? Oh! ....nevermind.

 

 

Not

[jgrinz]

The good side

 

It takes the government $0.0167 to make ONE cent

 

They would SAVE billions if eliminated

 

If they keep it - Change it

 

CANADA has gone to plated coins ...

In a similar move on February 8, 2008, a bill was introduced in the U.S. House of Representatives that would allow for changing the metal components in U.S. coins due to the rising cost of commodities and the declining U.S. Dollar. No such bill has yet been signed into law but could be coming if the penny stays.

 

This also would save billions

 

( Most information found via Wikipedia )

 

[astrostu]

The good side

 

It takes the government $0.0167 to make ONE cent

 

They would SAVE billions if eliminated

 

If they keep it - Change it

 

CANADA has gone to plated coins ...

In a similar move on February 8, 2008, a bill was introduced in the U.S. House of Representatives that would allow for changing the metal components in U.S. coins due to the rising cost of commodities and the declining U.S. Dollar. No such bill has yet been signed into law but could be coming if the penny stays.

 

This also would save billions

 

( Most information found via Wikipedia )

 

And that's one of the counter-arguments to it costing more than 1¢ to make 1¢ -- just change the composition. So while I won't have counter-arguments for everything (like mining interests or sentimentality), I will for some things.

[michael]

oh my they do make (sence) cents!!

 

1) historical coin and lets many collectors start collections out of pocket change

 

2) no rounding so no built in inflation

 

3) with the current declining spot commodity medals markets the cent is no longer unprofitable to make

 

4) the cent has been circulating since 1793 if not before with the state colonial coppers and it is a pride and longevity thing

 

5) it is free will to use, as no one forces you to use cents............................

if you dont like it you do not have to use it just use your debit/credit cards or checks to pay or if you use cash just do not take them from the cashier

 

6) many other reasons for people who do like to use and see the cents in change too many to go into here

 

7) also i want the cent to continue it does not hurt anyone and for many it is useful and helpful and currently is self sustaining as it costs less than one cent to make