Viewpoint: Lots of Cents Out There for Taking|
August 29, 2013
I have been thinking about this lately and wanted to explore the U.S. Mint’s coinage population and how it works. The number of coins produced is well known, coins surviving has to be estimated. I chose the cent to study instead of all denominations as the numbers are too large to fully grasp.
The U.S. Mint publishes monthly coinage production statistics that amount into the hundreds of millions of coins. The Mint does not (as far as I can tell) publish the number of coins taken out of circulation, by returns by the Federal Reserve Banks or others. I am not sure if I have read any article on the full cycle analysis of the U.S. Mint coinages in Numismatic News. Forgive me if you have addressed this subject already.
I cannot find any official statistics on the U.S. coinage destroyed each year. I have read some professional reports, including “Statistical Analysis of Coins Lost in Circulation and Coins Carried” by Gregory G. Wood, [http://www.ccsenet.org/journal/index.php/ijef/issue/view/272] addressing the percentage of coins lost or hoarded. Wood states in this report that more coins are produced then returned to banks, by a large number in fact.
Wood tells us that coins of higher value are less likely to be lost or destroyed while in circulation. OK, that makes cents? He goes on to say “the purchasing power of a currency decreases over time, at some point coins of small value should be discontinued and/or new coins of higher value should be issued.” How coins are carried, used and lost is important to calculate to determine the justification of their (coins) continued use, especially small denominations such as the U.S. cent.
In a 1996 GAO report to congress titled “The Future of the Penny,” an interesting factoid is found. The GAO’s calculations showed that in 1995, the circulation rates were 34 percent for pennies. These numbers tell us that for almost two-thirds of the billions of pennies produced, the trip from the Mint to the Federal Reserve to the commercial banks and finally to consumers is a “one-way trip”—they are not seen again in circulation.
U.S. coins are lost at a higher rate than Euro coins. Since U.S. households produce about 45 percent more solid waste by mass than those in the EU. Now that makes cents? In Wood’s study he derives that U.S. coins, specifically the one cent coin, has a current (2012) loss rate of 74 percent. This is 8 percent higher than the GAO estimate (66 percent) of 1996. So if all is correct then we are losing more cents now than before. Kind of like getting old, you start losing your cents, eh? That is a huge number, if it is to be believed?
The Mint’s circulating coins mintage indicates there were 6,015.20 million circulated cents minted in 2012. That’s 6,015,200,000 cents in 2012 (yes that is just over 6 billion cents). Using Wood’s 74 percent loss rate reduces that number down to 1,563.95 billion cents left in circulation, with 4,451.25 billion cents lost.
Let’s assume the Mint averages over a 10-year period 4 billion cents made per year. That would be 40 billion cents minted for the decade. Remember these are circulated cents, not counting the minting of collector cents and proofs. For the total decade of circulated cents minted, a 74 percent loss rate of 40 billion is 29.6 billion cents lost. That is $296,000,000 dollars of coinage [cents] lost the last 10 years. Where are these coins now? Many are being left behind in parking lots, shop counters, coin counting machines and hoarded in 5-gallon glass water bottles.
The U.S. Mint should calculate the number of cents lost, hoarded or mutilated and then report that to the public and congress to add further evidence in the debate on keeping low denominations of coins (the cent and nickel). I am a cent collector and do not want to see the cent go away. However, I am opened minded and the more I understand the facts the more I am inclined to say, yes it is time for the lonely cent (and probably the nickel) to fade away and be eliminated.
Military bases overseas have eliminated cents and round up and down and there does not seem to be any problem. This was done to save transportation cost and has worked fined after a bit of getting use to. Change is hard for us to adapt to, but small change may need to be let go.
I remember when I was a kid I would find copper cents on the ground all the time. Then that stopped for many years and I never found one red cent. Lately though I seem to be finding more and more cents all over the parking lots! I stop and pick them up and take them home to look at later, but that is another story. Hey, there is $296 million in cents out there somewhere and I just need to keep looking for it! Happy days are here again!
This “Viewpoint” was written by Jay Elder of Portland, Ore. To have your opinion considered for Viewpoint, write to David C. Harper, Editor, Numismatic News, 700 E. State St., Iola, WI 54990. Send email to firstname.lastname@example.org.
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