The great French writer Honoré de Balzac once wrote about
the difficulty many people have forgiving a man for being penniless. [Le Pere
Goriot]  We may all be penniless soon if,
as some predict, the Lincoln penny goes the way of the dinosaur. 

A recent Time article points out that our Canadian neighbors have already done away with
their penny effective Feb. 4 (anticipated savings of about $4 million a year).   Australia scrapped the penny in 1990.  But a recent poll found that two-thirds of
Americans want to keep the penny.  Unfortunately, it presently costs the U. S.
Mint two cents to produce a one cent coin (analogies to the U. S. Postal
Service may be forgiven).  Dueling
studies draw differing conclusions re what affect the demise of the penny would
have on consumers.  One claims the result
would be a “rounding up” tax on the populace amounting to as much as $1.5
billion over a 5-year period, but I discount this study because it was
commissioned by the lobbying group that represents (and is funded by) the
government’s exclusive supplier of penny blanks for minting.  A more recent study (2006) found that
consumers did not pay more when prices were rounded to the nearest nickel.  The Time article inexplicably fails to mention what has resulted in the 23 years since
the Aussie penny died. 

According to cointrackers.com, the Lincoln penny was made
of 95% copper & 5% zinc from 1959 – 1985.  Since ’85, it has been 97.5% zinc & 2.5% copper.  It’s basically a zinc core with a very thin
copper jacket.

Australia increased nickel production after scrapping the
penny.  Unfortunately, in this country
each nickel costs the U. S. Mint 10 cents to make, according to the Time article.  There’s nothing quite like the efficiencies of
government!   The good news is that nickels, which are 90%
copper and 10% nickel alloy, are said to be worth $0.069 each.  Because both pennies and nickels cost more to
produce than they are actually worth, François Velde, an economist at the
Federal Reserve Bank of Chicago, proposes getting rid of the penny and the nickel.

The Time article says that two-thirds of all in-store purchases are now made with debit
or credit cards, making it harder to defend keeping the penny.   So what will happen to the penny?  Perhaps we should look to the old, anonymous
nursery rhyme:

Lucy Locket lost her pocket / Kitty Fisher found it;

There was not a penny in it / But a ribbon round it.