The US Penny Ends its Historic Run
On Wednesday, Nov. 12, the U.S. Mint in Philadelphia pressed America’s last penny for circulation to the general public. As a key part of America’s vast history of currency, the penny has had an epic run. In 1793, 232 years ago, the first official U.S. penny was struck at our nation’s first mint – the newly established Philadelphia Mint.
The U.S. Mint is part of the U.S. Treasury Department that is responsible for producing America’s coinage. Today, there are four active coin-producing mints – Philadelphia, Denver, San Francisco and West Point. Its sister-agency is the Bureau of Engraving and Printing, which prints America’s paper currency.
The first penny America produced was referred to as the large cent. In the early days of America’s coinage, pennies were a lot larger that today’s counterpart, about the size of a half-dollar coin. The first large cent design is called the Flowing Hair Cent, named for its design featuring the goddess Liberty with flowing hair. Today’s modern-sized penny was first introduced in 1856. For you coin historians, the lowest denomination coin the U.S. ever had was the half cent, or half penny, which was minted between 1793-1857.
Up until 1837, all U.S. pennies were made from 100% copper. After 1837, the copper was often mixed with cheaper metals such as tin and zinc to help reduce production costs. Since 1983, U.S. pennies are composed of 97.5% zinc with a 2.5% copper plating.
So, what brought about the demise of America’s penny? Earlier this year, President Trump instructed the U.S. Treasury to stop producing pennies, arguing the costs far exceeded any benefits. The U.S. Treasury then completed its previously scheduled production of pennies which ended on Nov. 12. The U.S. now joins countries such as Canada, Australia, New Zealand and Hong Kong who have also stopped producing their one-cent (or smallest denomination) coin.
The U.S. Treasury estimates there are roughly 300 billion pennies still in circulation. To be clear, the penny has only stopped being produced. It has not been eliminated or discontinued as a form of currency. They are still legal tender and can be used at your local checkout counter. Only Congress has the authority to eliminate or discontinue a denomination of U.S. currency. Currently, however, a number of bipartisan bills have been introduced in both the House and Senate to officially discontinue the penny.
The main argument for getting rid of the penny is its rising cost. According to the U.S. Mint, over the past decade, the cost to produce a single penny has risen from 1.42 cents to 3.69 cents. That’s nearly four times its face value. In 2024, the U.S. Mint produced 3.172 billion pennies. At a cost of 3.69 cents per penny, that equates to more than $117 million spent producing pennies last year.
Another eventual nail in the penny’s coffin is its low use. Today, cash is used in fewer and fewer purchases. According to the U.S. Federal Reserve, in 2024, cash accounted for just 14% of all consumer purchases. This is down from 31% in 2016. By comparison, the use of debit and credit cards has soared from 44% in 2016 to 65% in 2024. Finally, the penny simply has very low purchasing power. In today’s world, a single penny buys almost nothing.
Going forward, there shouldn’t be any drastic impact to how we shop. Noncash transactions – such as with a debit or credit card – will continue to be priced to the penny. For cash transactions, however, there might be a slight twist to the process. There are currently no federal laws or regulations that govern businesses in this new environment. Many businesses have since adopted a “rounding policy” where the checkout price is rounded up or down to the nearest five cents. For example, a checkout price of $9.88 would be rounded up to a final price of $9.90.
232 years is a long time. But as they say, nothing lasts forever. The mighty penny has run its course. But without question, it certainly leaves behind a lasting and powerful legacy in the history and founding of our nation’s currency.
Mark M. Grywacheski, Investment Advisor
Quad Cities Investment Group is a Registered Investment Adviser.
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