Editorial
Pennies Make Sense

The humble penny is under attack. A movement is afoot to eliminate the smallest unit of American currency from the monetary system of the United States. The argument is that no one uses pennies for much--offer someone a penny for their thoughts and they'll likely laugh in your face--it takes too many of them to add up to the purchase price of anything, pennies en masse are bulky, heavy and take up too much space and besides, it costs 1.2 cents to make them. On the face of it there doesn't seem to be much reason to keep on minting and circulating pennies.

While all these arguments possess a certain amount (a penny's worth?) of validity, there are nevertheless a number of overwhelming reasons for the U.S. Mint to keep putting out pennies and for the rest of us to go on using them. Chief among these is the inescapable fact that taking pennies out of circulation will cause massive, widespread inflation.

Adding one or two cents to the price of an item may not sound like much, but as was amply demonstrated by City Councilmember Eric Gioia's taking the Food Stamp Challenge last week, especially for people on limited budgets- the working poor, seniors, a growing segment of the middle class- increasing prices by mere pennies can make an enormous difference. An item formerly priced at 96 cents and then raised to an even $1 to compensate for a no-penny economy has gone up by 4 percent. Considering percentages, rather than simple dollar-and-cent amounts, gives a truer picture of the costs attendant on eliminating the penny- one that is not pleasant.

Many items are sold for 99 cents or a multiple thereof because toward the end of the 19th century, a store owner thought his clerks might be cheating him. Instead of charging even dollar amounts for his merchandise, he started charging 99 cents and going on from there to $1.99, $2.99 and so on. Supposedly this kept the clerks honest. Once begun, the practice became an institution. A supermarket circular issued last week listed 194 items on sale. Of these only 63- a little more than one-third- were priced in even-number amounts. The price of every one of the remaining 131 items ended in 9 cents. Raising the prices of those 131 items by even one cent to eliminate the need for pennies will put some foodstuffs out of reach of many of the people who can least afford such an increase.

We also point out that sales tax by law is charged for many non-food items. A 99- cent roll of paper towels, for example, costs $1.08 when state and local sales taxes are added in. There are few consumers who would welcome raising the initial price of a taxable item so that the total amount including tax can end in either a 5 or a zero because pennies no longer exist.

Many banks will accept and roll loose change, including pennies. The coins are still legal tender and by law must be accepted in payment for goods or services. For these and the reason's we've outlined here, pennies can and should remain a part of American currency. We literally cannot afford to do without them.