Uncurrent Events: When Change Changes: Denominations, Metal Compositions, and Historic U.S. Coinage

Late in May 2025, the U.S. Department of the Treasury announced that the placement of new pennies into circulation will end by 2026.^[1] Informing this decision is the prohibitive manufacturing cost of the one-cent coin: nearly 3.7 cents, according to the U.S. Mint. The five-cent coin also costs more than its face value to produce: nearly 13.8 cents.^[2] While the denominations and metal compositions of everyday coins might seem unchanging to the occasional observer, the recent decision on the penny does not lack precedent. Many different types of coins originally produced for circulation throughout U.S. history have retired into collector albums, their stories now told in history books following years of everyday exchange among busy hands.

The United States briefly minted a visually striking two-cent coin. Images courtesy of Heritage Auctions.

As one example, the penny is not even the smallest denomination of coin ever issued by the federal government. From the end of the eighteenth century until shortly before the Civil War, the United States produced a half-cent coin, considerably larger in diameter and thickness than today's one-cent coin. Mintage of the half-cent coin stopped in 1857 with passage of legislation ordering its end.^[3] Beginning in 1864 and ending in 1873, the United States minted a two-cent coin.^[4] Even more short-lived was the twenty-cent piece, authorized for production in 1875 and retired just three years later.^[5] Other noteworthy examples of retired denominations include two different three-cent pieces, one made of a copper-nickel blend and the other of silver.

The United States Mint produced two different types of three-cent coins in the nineteenth century. The type pictured above was a copper-nickel blend. Another type was made of silver. Images courtesy of the National Numismatic Collection, National Museum of American History.

Returning to more-recent coinage, circulation challenges have frequently affected the penny over the preceding several decades. One such challenge emerged in 1951 from metal demand during the Korean War. According to the U.S. Coin Task Force, penny circulation struggled again during the 1970s and early 1980s. Some individuals at the time hoarded pennies, believing that copper prices would rise to make the coins more expensive than their face value. Many others simply found pennies inconvenient to carry around, opting instead to store them at home. The difficulty of getting pennies moving persisted into the 1990s, even after the U.S. Mint in 1982 switched to making pennies with copper-plated zinc as a cost-saving strategy. When the COVID-19 pandemic caused widespread coin circulation challenges, the penny once again came under scrutiny.

On the other hand, the same 3:1 copper-nickel composition has comprised the five-cent coin since 1866, other than for a period of several years during World War II, when military demand for nickel required a brief transition to a blend of copper, silver, and manganese. Though major change often comes slowly to the world of currency and coin, even the five-cent piece has received some cost-saving attention in recent years.

Economics has much to teach us about making wise choices in response to the fundamental problem of scarcity. Thus, regularly laying out costs and benefits in the production of our national coinage can prove very useful to the judicious stewardship of taxpayer dollars over the long term. Penny for your thoughts?

^[1] Oyin Adedoyin, "Treasury Sounds Death Knell for Penny Production," The Wall Street Journal, May 22, 2025.

^[2] United States Mint, 2024 Annual Report, p. 12.

^[3] Laws of the United States Relating to the Coinage (Washington, DC: Government Printing Office, 1904): p. 44.

^[4] Ibid., pp. 44-46 and 50-66.

^[5] Ibid., pp. 68-69 and 73.

© 2025, Federal Reserve Bank of St. Louis. The views expressed are those of the author(s) and do not necessarily reflect official positions of the Federal Reserve Bank of St. Louis or the Federal Reserve System.