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Should we abandon the penny and nickel?

A college age woman recently stopped at the entrance to a local fast food restaurant, reached down and picked up a penny. I was so surprised by her action that I almost bumped into her.

“Why did you do that?” her companion asked. “It’s money,” she replied. It was time for me to shift into my reporter mode and eavesdrop.

The young woman who picked up the penny explained that she has a large glass jar at her residence and places spare change and money she finds, including coins from washers in the college dormitory, in the container. From experience she knew once the jar was full, she had roughly $100.

Too often coins dropped on a sidewalk or floor will remain there. Many of our younger residents would not bend over to pick up a penny or nickel.

Firemen, who are often astute observers of human nature, will use a “dropped” coin for amusement. They will glue a coin to the sidewalk in front of a fire station and watch the reaction of passersby.

Few individuals under the age of 40 will stop and attempt to pick up a penny, nickel or dime held fast to the sidewalk with industrial strength adhesive. However, as the value of the coin rises, the age of interested passersby falls.

Veteran firemen note that few individuals who apparently lived through the Great Depression will pass up any coin. Glue a quarter or a $1 coin to concrete and even some teens can’t pass up the opportunity.

The development of monofilament fishing line, which is difficult to discern in sunlight, plays a role in another favorite trick of firemen.

They will tear off a corner of a $20 bill and glue or tape it to an empty envelope, with the corner clearly visible. Attach a long piece of that almost invisible fishing line and the trap is baited.

That line is jerked away when someone bends over to pick up the envelope containing what they hope at least $20. Victims of the prank have been known to follow the still moving envelope inside the station, prepared to claim the wind blew the envelope out of their hand.

If the old adage that history repeats is true, then copper pennies the college student picks up will be pulled out of circulation, with legislation before Congress calling for making the coin out of steel. Thieves are stealing copper because of the metal’s high price, which helped raise the cost of minting, transporting and storing the one-cent coin to 2.41 cents as of Sept. 30. The unit cost for the nickel was 11.18 cents.

For the sixth consecutive year, the cost to produce and distribute the cent and nickel has exceeded their face values. During the 2011 fiscal year, the two denominations were produced at a loss of $116.7 million, or nearly triple the loss of $42.6 million recorded during the preceding year.

If our math is correct, the penny and nickel resulted in losses of $359.8 million to the U.S. Treasury from 2006 to 2011.

Seigniorage — the difference between the cost of the metal or bullion plus minting expenses and the value as money of the pieces coined — constitutes a source of revenue. For the 2011 fiscal year, production of the dime, quarter and $1 coin for circulation generated seigniorage of $488.8 million, offsetting the losses from the penny and nickel.

Government seldom profits from experience. Perhaps it should try learning the way businesses do. • • •

Larry Fugate is a veteran journalist and former editor of The Pine Bluff Commercial. He can be reached by e-mail at fugatel@sbcglobal.net or at (870) 329-7010.