Time For The Steel Penny?

An idea that was in the spotlight a few years ago is back on the floor of Congress. Concern over costs and a desire to Buy American with real American money has brought the idea back. It’s a simple one – make low-denomination coins out of cheaper metals, not the more expensive alloys presently being used.

What would this change mean? The goal of the bill is to use pure steel to make pennies, nickels, dimes, and quarters. A study shows that the US federal government could save $2 billion over 10 years if they made this change.  Besides cost-savings, the switch-over would bring a boost to miners and smelters of American ore, and the idea certainly seems to fit with the current mood across much of the country.

Since 1982, the old copper penny has been replaced with pennies made from 97.5% zinc and 2.5% copper, as a solid zinc body with a copper plating. It costs 1.8 cents to make one. A nickel is an alloy of 75% copper and 25% nickel, and cost 9.4 cents to make. The dime and quarter, both of which were 90% silver until 1965, are today 91.7% copper and 8.3% nickel, with a copper core and copper-nickel alloy plating. The half-dollar is the same, although the bill doesn’t plan to change those, or the mostly copper dollar coin – but that is another controversy for another time.

Coins are expensive to make, and especially with low-denomination coins like the 1-cent and 5-cents coins, you can see that they cost much more to make than their face value. With the idea of saving taxpayer money spent minting circulation coins, the Coin Modernization, Oversight, and Continuity Act, 2010 was put into law, so that the Treasury would carry out research on the materials used for coinage, with part of the goal being to reduce costs. Every two years the Mint releases a report on their activities in this area, but so far, no actual changes have been made.

So the arrival on the floor of Congress of a Bill that already died back in 2011 is perhaps no surprise. Both the old and new bills are sponsored by Steve Stivers, a Republican congressman for Ohio, and this time he has more help from other Ohio members of congress, via a fellow-Republican, Pat Tiberi and a Democrat, Joyce Beatty. The hope is that the bill will enjoy more success with bipartisan support. The law also specifies that, if possible, the steel should be American, and of course Ohio is a big steel-producing state.

There is nothing in the legislation that would affect coins for collectors, the change is only for those lower-denomination circulation coins. So while of course of interest to collectors, who will probably quickly put together a mint set if this happens, it will have little impact on collectors. It might raise the value of coins currently in circulation a little, as they become ‘collector’s items’. How successful this legislation will be in not know right now.