Americans fear the penny will drop

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Americans are being encouraged to hunt behind the sofa for their lost pennies and to take their dusty jars of old loose change to the bank if they want to save the country's historic one cent coin.

The copper-coloured penny, which for 100 years has featured the gaze of Abraham Lincoln, is facing ever more shrill calls for its abolition. The reason is the soaring cost of replacing the billions of coins taken out of circulation and kept in jars each year.

It is no longer possible to be sure about the number of pennies in existence but the best guess is around 300 billion. End to end, they could be wrapped round the Equator 150 times. The trouble is, about a third are out of regular circulation.

More than half the coins produced by the US Mint now have to be pennies. And because pennies are 97.6 per cent zinc - plated with copper - this decade's commodities price boom means they are now more expensive to make than they are worth. Including production and distribution, the Mint says it spends at least 1.23 cents for each new one cent coin.

Meanwhile, inflation has largely stripped them of their purchasing power. They are worth less in real terms than the UK's halfpenny when it was withdrawn 22 years ago. In wealthy cities such as New York, many businesses routinely round to the nearest five cents when giving change, to speed things up at the cash register.

Surveys show only one in four Americans support abolishing the penny, fearing retailers will use the changeover to raise prices surreptitiously.

But there is a new Bill before Congress that would eliminate the penny. Robert Whaples, economics professor at Wake Forest University, North Carolina, is among those campaigning in support of the change.

"Eliminating the penny will have a negligible impact on inflation and on convenience store costs and profits, but it will save time for customers and clerks, which may be worth about $730m per year," he has said in a new paper.

"The total effect on buyers and sellers from rounding current totals to the nearest nickel would be very, very small."