In CAS Conversations, we sit down with students, faculty, staff, and alumni to dive into their unique insights, experiences, and ideas. From classroom innovations and personal stories to community impact, CAS Conversations offers fresh perspectives from the incredible people shaping our campus and beyond. 

“A penny saved is a penny earned,” may not be true much longer.  

The United States Treasury has announced it will stop producing new pennies early next year, following a directive from President Donald Trump to retire the one-cent coin after more than two centuries in circulation. Once the US Mint uses up its final supply of blank penny “templates,” the penny will quietly exit the production line.  

The decision, first reported by The Wall Street Journal, is expected to save the government roughly $56 million a year in material costs. It has also sparked much debate over the penny’s place in American pockets and history. We asked Department of Economics Professor Gabriel Mathy, an expert on monetary history, to share the history and importance of the iconic penny, our nation’s oldest and most common coin. 

PH: So, it now costs more to mint a penny than a penny is worth! How did this happen? 

GM: A penny may be worth one cent at the cash register, but it costs more than that to make, thanks to inflation and rising metal prices.  

The penny started out as 100 percent copper, but the copper content was reduced several times, first during the Civil War due to war costs, and then again during World War II, when copper was needed for the war effort. In 1943, pennies were made with just a thin layer of copper over low-grade steel. (However, a few 1943 copper pennies were mistakenly struck, and they are now highly valuable and sought-after by collectors.) 

Other than 1943, pennies have been composed of 95 percent copper and a mixture of zinc and tin from 1863 to 1982. In 1982, copper got even more expensive, and the penny became 97.5 percent zinc.  

Despite all these cost cutting measures, the mostly-zinc coin now is more costly than a cent. It might be possible to continue producing the penny with an even cheaper metal like steel or aluminum, but each of these has its own drawbacks. In any case, this doesn’t seem to be the approach that the current administration is taking. 

PH: Can you share a bit about the history of the penny and how we got here? 

GM: The penny has a long history. It was originally the basis for the numismatic system of medieval Europe, which was created by Charlemagne in the eighth century. A pound of silver bullion as a hunk of metal was worth one pound, which was equal to 240 pennies, or 12 shillings, which were each worth 20 pennies per shilling. The denominations were based on Roman coins and weights and measures. This is why the symbol for the British pound is based on the L, from libra, the Latin word for pound. The symbol for shillings was an s for solidus, and pennies corresponded to a d for denarius.  

In the Roman Empire, silver and gold mines were operated by the state, which sent the metal directly to the mint, but Medieval Europe was fragmented and needed to encourage merchants to bring bullion to the mint. In the Carolingian monetary system, each monarch or sovereign could set the legal rate that a pound of bullion would be worth when minted into coins. By setting the legal rate of coins above the metal value, the sovereigns could collect some government revenue, called seigneurage, and give some to merchants to encourage them to bring bullion to the mint. 

The Coinage Act of 1792 established the US dollar as a decimal currency split into cents. A copper coinage was established for cents and half-cents, with the penny continuing until today, and the half-cent no longer minted after 1857.  

Our metric penny is worth more than the medieval penny, but the old name persists in everyday language. The US government calls that coin the cent and does not use “penny” officially.  

PH: Tell us a little bit about minting coins—where are they manufactured? 

GM: The US Mint produces coins at four locations: Philadelphia, Denver, San Francisco, and West Point, NY.  

On some pennies, you can identify which mint your penny comes from by looking at the mint mark. Philadelphia was the main mint, and so only exceptional series would carry the P mint mark as it was assumed that this was the mint unless otherwise indicated. The other mints carried a mint mark as standard practice: D was for Denver, S for San Francisco, and W for West Point.  

PH: What happens now to our old pennies? 

GM: For now, the penny will remain legal tender so it can be used as money the same way as before. It seems that old pennies will continue to circulate, and businesses will still price products to the cent. But as production stops for new pennies, they may become scarcer, and it may be difficult for businesses to get pennies from banks. Some businesses may start to round transactions to the nearest five-cent amount for cash sales.  

If you like pennies, it might be a good idea to keep them in your piggy bank. 

PH: Speaking of that, once production stops, will the numismatic value of pennies increase? Will people start collecting them like rare coins of the past?  

GM: This is certainly possible, though there are a lot of pennies out there, so it will take some time for them to develop a numismatic value. I would imagine that until banks no longer provide pennies to businesses for cash transactions, the penny will probably not be worth more than one cent, but it could be good to hold for the long-term, especially for coins in good condition. Those 1943 steel pennies can be worth as much as $10 if in mint condition and even worn steelies can easily be 25 times their face value. 

PH: What's next? Will we have to eventually worry about other coins—or even paper money as the world turns to plastic credits cards and Apple Pay?  

GM: It’s likely the nickel is next to be axed. While each penny costs about four cents to make, the nickel costs about 14 cents, so it’s also a money loser for the US government, according to the US Mint’s 2024 Annual Report. 

The dime and quarter are still earning revenue for the federal government, so they’re probably safe for now. Paper money is also pretty safe because it costs just a few pennies to make, so even one-dollar bills are very profitable. The hundred-dollar bill is highly in demand, likely for illicit activities overseas, and the federal government could easily print $500 or $1,000 bills, but doesn’t do so to discourage illicit or illegal activity.  

Electronic payments are even cheaper, as banks keep their own money as bank reserves at the Fed and so use these to clear payments when you use credit cards or Apple Pay. This makes the cost to the government of electronic payments basically nil. While there might be some nostalgia for the loss of the penny, cash payments are declining anyway, so if pennies become truly scarce, cash payments can be rounded to the nearest nickel or dime, while electronic payments remain in a true decimal system. Canada has stopped minting its own penny since 2012 and something similar happened there for cash payments.  

About Professor Gabriel Mathy

Associate Professor of Economics Gabriel Mathy currently focuses his research and teaching interest on the macroeconomics of the Great Depression, and on macroeconomics and economic history more generally. At AU, he teaches courses on economic history, macroeconomics, monetary economics, and international finance. Mathy has published in journals like the Journal of Monetary Economics, the Journal of Economic History, Explorations in Economic History, the Journal of Macroeconomics, and the Financial History Review.