Penny Debate: How Small Issues Create a Huge Argument
The Penny Debate was a discussion that took place in the United States Congress in 1856 over the question of whether the newly created one-cent coin, known as the penny, should be made from copper or a cheaper material such as nickel. In this essay we will see how Penny Debate as a small issue has create a huge argument and financial changes.
At the time, the U.S. Mint was producing pennies made of 88% copper and 12% nickel, which were relatively expensive to produce. Some members of Congress argued that the penny should be made entirely from copper, while others advocated for a cheaper alloy to be used.
The debate became heated, with some politicians arguing that the use of a cheaper metal would devalue the currency and harm the economy, while others argued that the cost savings of using a cheaper alloy were necessary in order to keep the penny in circulation. There are several arguments that have been made for keeping the penny in circulation, but one of the most common is that the penny has a symbolic value that goes beyond its actual monetary worth. Proponents of keeping the penny argue that it serves as a reminder of the country's history and traditions, and that removing it from circulation would be a symbolic loss. Additionally, they argue that rounding prices up to the nearest nickel, as would be required if the penny were eliminated, would result in higher prices for consumers over time. Another argument for keeping the penny is that it has a positive psychological effect on people. Some studies have suggested that people are more likely to donate to charity or make small purchases when using pennies, as opposed to rounding up to the nearest nickel or dime. This effect is known as the "denomination effect" and is thought to be related to the feeling of satisfaction that comes from using smaller denominations of currency.
Those who support keeping the penny in circulation argue that it has symbolic value and is an important part of American history and tradition. They also argue that rounding prices up to the nearest nickel would lead to inflation and would disproportionately affect low-income Americans. Additionally, supporters of the penny point out that other countries, such as Canada and Australia, have eliminated their smallest denominations of currency and have not seen significant cost savings as a result. On the other hand, those who advocate for eliminating the penny argue that it is an inefficient use of resources, as it costs more to produce and distribute the coin than it is actually worth. They also argue that rounding prices up or down to the nearest nickel would not have a significant impact on the economy or on consumers. Some proponents of eliminating the penny also argue that the coin is used less frequently than it once was, and that it no longer serves a practical purpose in everyday commerce.
Ultimately, Congress decided to continue producing pennies made of copper-nickel, and it wasn't until the early 20th century that the composition of the penny was changed again, this time to a mixture of copper and zinc. The Penny Debate is notable for highlighting the complex economic and political issues that can be associated with seemingly small decisions about currency and coinage, and it remains a fascinating historical footnote in the history of the United States Mint.
