It's been a fact for years that commodity prices have driven the cost of producing the U.S. one and five-cent coins over their face value. Many countries around the world have found themselves in this situation. While many have eliminated their smallest denomination coins, the U.S. has been reluctant to join the trend. Here are two items pointing toward solutions in another direction.
The first comes in the form of a press release.
Concurrent Technologies Corporation (CTC) has been awarded a competitively bid contract by the United States Mint to conduct research and development for more economical alternative metallic materials for the production of all circulating coins. The award has a contract value of $1.3 million over a two-year period.
"CTC will undertake studies to identify issues with current coinage materials and recommend potential alternative metallic materials for future coins," said Dr. Joseph R. Pickens, CTC Chief Scientist and technical lead for the new contract. "Our metallurgists will consider a wide range of coinage alloys and fabrication processes and propose their best recommendations to the United States Mint." Through outreach with key stakeholders, leveraging research from the United States Mint's extensive coinage experience, and application of the alloy development experience of CTC, the contract's objective is to develop cost-effective solutions that minimize issues for stakeholders who use coinage on a daily basis.
In its recommendations to the United States Mint, CTC will address various factors, such as the effect of new metallic coinage materials on the current suppliers of coinage materials; the acceptability of new metallic materials; costs of metallic material, fabrication, minting, and distribution; metallic material availability and sources of raw metals; coinability; durability; effect on sorting, handling, packaging and vending machines; appearance; risks to the environment or public safety; resistance to counterfeiting; and commercial and public acceptance. "This is a great opportunity for CTC to implement our materials expertise, currently used to solve Department of Defense problems, in an entirely new area," Dr. Pickens said.
To read the complete press release, see:
Concurrent Technologies Corporation Awarded United States Mint Contract to Research Alternative Metals for the Production of U.S. Circulating Coin
While the Mint explores alternative compositions, David Ganz offers his suggestion in today's New York Times. Arthur Shippee also noticed this article. Here's an excerpt
While eliminating the penny has been debated for decades, it is not a realistic option; the penny has tremendous symbolic value and removing it would have the effect of raising prices — particularly for people of modest means, who use currency the most — because retailers would round up. Reducing the size of the coins is impractical because of the cost of recalibrating vending machines and the need to ensure that the coin is not interchangeable with any foreign coin.
Changing the composition of the penny by using less costly materials is the only feasible alternative. The Mint, part of the Treasury Department, has changed the size or composition of the cent more than a dozen times since 1793. Two of the most recent alterations were the switch to zinc-coated steel in 1943, caused by the wartime shortage of copper, and the switch to zinc with copper plating in 1982, a response to rising commodity prices.
Past debates have brought forth a variety of unconventional suggestions: plastic (used as sales-tax tokens — representing fractions of a cent — in the 1930s, but cheap-looking), industrial porcelain (Germany and Thailand tried this, but it breaks easily); and vulcanite rubber (used as currency in Guatemala early in the last century, but too exotic for American tastes).
Metallic alloys are probably the best choice for a new-composition penny and nickel. The precise choice needs to reflect four values: cost effectiveness, security of supply, aesthetic acceptability and minimal disruption to vending machines. (Pennies are not commonly accepted by machines, but are sometimes inserted anyway; a penny of a different composition could cause machines to jam.)
In a 1976 study of the penny, the Research Triangle Institute rejected chromium, tin, titanium, copper-aluminum-nickel-zinc derivatives and zinc mixtures. At current prices, none of these would be cost-effective. In practical terms, that leaves two basic metallic groups: an aluminum alloy, which is better, heavier and stronger than the pure aluminum cent proposed in the 1970s, but still expensive, and steel, which is the clear favorite for affordability and security, but poses technical challenges.
The best approach is to meld the two. Aluminized steel is ideal because it is available coiled — squeezed by rollers and then put into a lasso-like form that can be fed directly into a coining press. It would work for the penny and the nickel — and the dime, if it is ever threatened.
To read the complete article, see:
Wayne Homren, Editor
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