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In the early 1800s, a half-cent would buy a meal. A century later, five & dime stores, selling useful items for only a nickel or dime, were common in every city. Now, a century later, they have morphed into dollar stores with many items costing two or three dollars. And the machines that dispensed a gumball for a penny or nickel 50 years ago, now demand a quarter.

Time marches on and so does price inflation. According to the government’s Consumer Price Index, goods and services that cost 9.9 cents in 1913 now cost $2.13 – 23 times as much. Wages and salaries have gone up similarly. Our money today is worth only one-tenth as much as it was worth in 1948. Yet despite this inflation, we still have the same coins as our great-great-grandparents did 100 years ago. The penny is now worth so little that it costs twice its value to produce one, and producing a nickel costs more than 11 cents.

It is time to think about retiring our smaller coin denominations.

Currently, our money is based on the dollar and the penny – one-hundredth of a dollar. A relatively easy way to change our monetary system would be to base it on the dollar and one-tenth of a dollar – the dime. Transactions could then round to the nearest tenth of a dollar instead of to one-hundredth of a dollar.

In the past, efforts to eliminate the penny have failed mainly because so many people feel a nostalgic connection to it and because our literature is permeated with references like “a penny for your thoughts,” penny ante, and “penny wise and pound foolish.” But like the British pound which Americans haven’t used since the Revolution, we can still keep the quotations and nostalgia long after we retire the coins.

If we changed to a one-tenth dollar system, it would also make sense to retire the quarter since its value of 25 cents would not fit the standard. This would leave the dime, the half-dollar coin, and the dollar coin. In the past, vendors have been reluctant to carry the larger denominated coins partly because their coin drawers did not have enough sections to hold pennies, nickels, dimes, and quarters as well as half-dollar and dollar coins. By retiring the penny, nickel, and quarter, there would be plenty of room. Also, by retiring the quarter, the dollar coin – which is often mistaken for the similarly-sized quarter – would be more easily accepted.

Making such a change would be a big deal. Vending machines would need to be altered or replaced. Cash registers might change and cashiers would need to be retrained. And everyone would need to get used to this new system and get over our nostalgia for the past.

So the best way to make this change would be to set a date far in the future – say 20 years. Then everyone could get used to the idea, children could learn in school, and those still holding tightly to their pennies could pass away. Getting agreement in Congress will surely take many years, so now is the time for Congress to begin thinking about legislating a change that would take place in 2035 or so.

Poll

Do you think we will ever retire smaller coin denominations?

28%59 votes
15%32 votes
6%14 votes
2%6 votes
10%22 votes
23%47 votes
8%18 votes
2%6 votes

| 204 votes | Vote | Results

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