Continuing my research on Dr. Ron Paul economic theme which is one of his pillars I came across to this title “Make No Cents Until It Makes Sense Act”. So what do you think?
Well this is the short title of Dr. Ron Paul Bill H.R. 4127 which was introduced on November 8, 2007.
This bill says:” To amend title 31, United States Code, to prohibit the further minting of 1-cent coins until the Secretary of the Treasury and the Chairman of the Board of Governors of the Federal Reserve System certify in writing that there is not a surplus of 1-cent coins already available for use in transactions, and for other purposes.”
Bill can be read here: http://thomas.loc.gov/cgi-bin/query/z?c110:H.R.4127:
So the question I got out of reading that bill was “What prompted a ranking member of the subcommittee on Domestic and International Monetary Policy, Trade and Technology to write such a bill?”
This question became the driver to my research; here is my findings and opinion:
So what a penny is and what a penny is made of?
It is the one-cent coin and it is commonly known as the penny; the name is derived from the British coin pence. Over 300 billion one-cent coins, with 11 different designs, have been minted since 1787.
It was the first currency authorized by the United States and the first one-cent was struck in 1787 by a private mint. It was known as the Fugio cent, 100% cooper. In 1815 no one-cent coins where minted due to the shortage of cooper created by the 1812 war with Great Britain.
It became legal tender by the Coinage Act of 1864.
In 1909 to commemorate President Abraham Lincoln 100th birthday the Lincoln penny was minted and was the first U.S. cent to include the words “In God We Trust” and 1959 the Lincoln Memorial was added to the reverse of the one-cent count to mark Lincoln’s 150th birthday and making it the first and only coin to have the same person on both sides. The statue of Lincoln is inside the Memorial!
So today a one-cent coin is made of Copper Plated Zinc, Weight 2.5 g and this is the details:
- 2.5% Copper equivalent to 0.0625g of Copper
- and the balance with Zinc equivalent to 2.4375 g of Zinc.
One can see a penny contains more Zinc than Copper.
Click here to read more about the composition of a penny and other U.S.A coins:http://www.usmint.gov/about_the_mint/?action=coin_specifications
So now that we have a good idea about the penny lets talk about the approximate raw material costs for minting a once-cent coin with today's metal prices.
- Raw material: Zinc and Copper
- Average cost of 1 tonne of Zinc: $3,440
Average cost of 1 tonne of Copper: $6,220
Estimated raw material composition cost per penny:
- Zinc = 0.038875 of a cent
- Copper = 1.516125 cent
Approximately raw material cost needed to mint a once-cent coin is 1.55 cents.
This cost does not include transportation, storage, broker feeds and all other costs associated with putting a one-cent into circulation so one can see that the cost to mint a one-cent is higher than the actual face value.
The United States Mint issued a press release on April 17, 2007 indicating that.
OK, so let’s think about this for a moment, next year is the bicentennial (200 years) of Abraham Lincoln’s birthday and the US Mint plans to issue four new versions of the penny to be released on a rotating basis.
So I ask fellow citizens of this great nation, knowing what you know
- Does it make economical sense to continuing minting the one-cent if there is not a shortage of it?
So perhaps that is the message Dr. Ron Paul was trying to bring to the floor by introducing his Bill H.R. 4127. Because his position in the house he sees and know what is going on behind doors that has the posibility of affecting our economy specially related to monetary issues.
One can see he is doing what he can to fight literally for each penny.
He is fighting the status quo to make sure each penny is well expended by Congress.
Wishing you a great healthy and prospect 2008.