The above graph shows the mintage figures of pennies and dimes by the United States Mint during the years 1970 through 2006 (source: http://www.usmint.gov and Yeoman’s Red Book). The blue line above is the number of pennies, and the lower purple line is for dimes. The vertical scale is in billions of coins produced that year.
The most interesting thing about this graph is the trend in penny mintage 2002-2006. In each of those years, fewer pennies were produced than in any year from 1974-2001. This indicates that the last five years represent historic lows in penny production, akin to those from the early 1970s. My question to you is “Why is this happening?” I came up with a few ideas, but none stand up to the evidence. Let’s go through them one by one.
Obviously the Mint overproduced pennies in the 1990s, and doesn’t need to mint as many to satisfy demand.
This was my first idea, and it’s a simple one. The Mint makes pennies according to commercial demand, and an above-average supply of circulating pennies would lower the pressure for new ones. If there are enough pennies, the Mint can afford to slow production for a year or two. We can see a few of these previous ‘fallow years’ in the mintage graph’s penny data. There is a slowdown around 1986 following a record year in 1982. Other slowdowns occur around 1992 and 1997. These slowdowns seem to be about 5 or 6 years apart, which is remarkably regular. After each slowdown, production quickly ramped up again within a year or two, and resumed once more that levels comparable to recent years. Given the regular nature of slowdowns, we were due for one circa 2002 or 2003, and indeed penny production decreased at that time. What makes our post-2002 slowdown different isthe length and severity of it. The current slowdown is markedly deeper than other slowdowns in previous decades, and this slowdown has lasted for 5 years, certainly not brief. Even more, the last high spike on the graph, 1999-2001, is very narrow and peaked, unlike the rounded high points in the 1980s and 1990s. If the 1982 spike didn’t cause a slowdown like the post-2002 period, then why did the 2000 spike cause such a drop? This doesn’t add up. Clearly, something else is responsible here than just a penny surplus.
Well, since people are using credit cards more often these days, people are getting pennies back in change less often.
This is another tempting idea. Indeed credit card usage has been on the rise steadily since the 1980s, but the catch is that it would affect all coins equally. In this world of electronic money, do people still need as many coins? This is why I also graphed dime production above. If this theory were correct, we’d see a comparable drop in dimes as well, since the same credit transaction prevalence would lower the demand for all other coins just as well as for pennies. Why dimes? Process of elimination makes it the only coin comparable to the penny. Half dollars and dollar coins just don’t circulate, so they shouldn’t be representative of coin usage. The mintage of nickels and quarters has been artificially inflated by collector demand for the Westward Journey Nickel Series and the State Quarter Series. The dime, like the penny, is the only widely circulating coin to stay with a consistent design for the duration in question.
Let’s look at the dime mintage. It wavers up and down as time progresses, but it generally matches the mintage trend in pennies, especially after 1985. But it is evident that dime mintage is trending upward. The post-2002 dime mintages is holding strong and steady, near 1990s levels. It’s nowhere near its 1970s levels (unlike the penny mintage).
If electronic money were the culprit, then we’d be seeing a comparable reduction in dime usage, down to 1970s levels. The mintage figures say otherwise; businesses still need dimes, as many or more than they did just a decade ago. In time, once their respective series have completed, we might see the same trends with quarters and nickels. That remains to be seen. However, the cause of lowered penny mintage isn’t affecting dimes as noticeably.
Maybe businesses are getting serious about take-a-penny-leave-a-penny trays.
This is a reasonable idea that affects the penny but not the dime. I can only assume that hundredths of a dollar are being increasingly eschewed in cash transactions by businesses. This may be verified when I can investigate nickel mintage data after the transition settles down. Still, me personal experience says otherwise. I get over a hundred pennies back as change every two months, and it’s a memorable oddity when a cashier does round the price. If there’s widespread price rounding going on, at a level that would have a noticeable impact on penny demand, I’m not seeing it.
One last idea… the increased prevalence of convenient self-service coin counters is coaxing the change jar army of uncirculating coins back into the fold.
Coinstar machines, CoinMaster, and legions of bank hosted kiosks keeping popping up, offering to convert your change into bigger bills. People like their cash big. After all, people are more likely to neglect the smaller coins, more likely to toss and forget a penny but keep some dimes handy just in case. I’ll admit it’s a stretch to claim that this idea affects pennies more than nickels, and again it jives with experience. I’ve witnessed many customers using these machines, and most are dumping mixed pennies, nickels, and dimes (and sometimes quarters). But if you combine this idea with the fact that more and more vending machines don’t accept pennies anymore, it might, just might, add up to a noticeable impact on mintages.
I end this discussion as an open question. Why are penny mintages at historic lows, but not dimes? Please share your thoughts, and together maybe we can solve this mystery.
(I could say so much more about how screwy and archaic the American cash system is, but I wholeheartedly agree with this thorough article and its recommendations on how to overhaul US currency. It says everything I’ve been meaning to say, but in a more succinct manner, save for one point. The real villain is INFLATION, the thief of time that steals value away from our smaller stuff until it isn’t worth what it’s stamped on. Fight inflation!)
Today in Alternate History ran my April Fools Day article about Nunavut. Thanks, Mr. Historian!
Here’s a good article about sloppy science in graphic design.
Nifty Wikipedia Thing: the $4 coin
What I’m Reading:
"The Confederate Navy: a Pictoral History" by Philip van Doren Stern
"Jack London: Sailor on Horsback" by Irving Stone