Currency

Penn. Town Cites Federal Reg About Pennies as Payment That Expired 50 Years Ago

News outlets repeated the claim while Internet commenters were skeptical.

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A story about a man in central Pennsylvania who tried to pay a $25 parking ticket he believed was unjust in pennies went kind of viral on the Internet this week. Officials from the town, Chambersburg, told the man, Justin Greene, he could not pay his fine with pennies, citing a federal regulation pinned to their bulletin board which said that federal law specified "pennies and nickels as small change and not legal tender for debts in excess of 25 cents." It took a borough employee some time to find the rule on the bulletin board, and Greene complained it wasn't fair because the sign was hard to see. 

More importantly, however, despite the regulation being repeated uncritically by other outlets who picked up the local paper's story, that small change regulation hasn't been on the books in about 50 years. Snopes explains the rule came out of a law passed in the 19th century that was superseded by the 1965 Coinage Act, which specifically identified coins as legal tender. 

An official from the Treasury Department confirmed to Reason on background—because, he said, he did not want it to appear that a Department spokesperson was saying local municipalities could not decline to accept pennies—that the regulation the town cited does not currently exist. The spokesperson, however, pointed to a FAQ page that he said says local businesses and municipalities can choose not to accept payment in coins.  

According to Jason Cohen, the finance director of Chambersburg, who spoke to Reason today, borough officials became aware the regulation was outdated because of Internet comments left on the local paper's article on the story. Cohen said no one had ever questioned the regulation before, so it's likely been copied and kept on the bulletin board for half a century. The borough consulted a lawyer after finding out the regulation may no longer be in effect and confirmed that it wasn't. Cohen says the borough is planning to purchase a change counting machine to accept coins as payment. Based on the guidance from the Treasury Department, they may not have to. 

As for Greene, who told the local paper he wanted to find another way to inconvenience the borough when making his payment, Cohen says he came in and paid his $25 ticket in cash on Wednesday.

It costs two cents, by the way, to produce a penny, and one of the biggest impediments, politically, to phasing it out could be the job losses that would follow at the U.S. Mint, where the penny makes up 60 percent of coin production.

NEXT: The End is Nigh

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  1. Cohen says the borough is plainning to purchase a change counting machine to accept coins as payment.

    Way to bury the lede. I bet if you look deeper into Greene you will find that he’s firmly in the pocket of Big Coin Counter.

    1. Why’s he plainning the purchase though? Does he need to smooth out the rough edges first?

      1. Krayewski is firmly in the pocket of Big I.

  2. OT: Vox valued at $1 billion…

    http://www.denverpost.com/busi…..cuniversal

    1. Yep, just like 100 plastic pennies are valued at 3.49X the normal kind.

    2. I don’t have a problem with NBCUniversal burning investor money.

  3. Not to go all A is A here, but it seems pretty clear – either coins are legal tender and can be used to settle all debts private and public in the U.S. or they are not. Period.

    1. Exactly. I don’t see how government entities especially can refuse to accept coins if they are legal tender.

    2. Just because is printed on a piece of cotton toilet paper doesn’t make it binding. Do you trust in God, too?

      1. But I can feel God, Hugh. You can’t even touch a penny.

        1. That’s not God, SugarFree, that’s just a waffle that Epi tossed up there.

          1. Dammit! My feelz! He’s always messin’ with my feelz!

    3. Actually gold and silver coins are the ONLY legal tender.

      1. Where does the US Constitution say that coins can’t be minted in copper or, really, any other metal? For that matter, what’s stopping the government from issuing currency in the form of stone or shells?

        1. Article 1, section 8

          To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

          Article 1, section 10

          No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts;

          1. No State. It says nothing limiting Congress to gold or silver.

            1. Why would Congress mint money that can’t be used in any state?

              1. I’m not convinced that clause forbids states to receive payment in forms other than gold or silver. In context, it seems to forbids states from retroactively abrogating contract rights by mandating that debts be paid in something other than gold or silver.

                In any case, federal law supersedes state law, so if the federal government mandates that something is legal tender, the states are probably going to have a difficult time declaring it nonlegal.

                1. Nothing supersedes the Constitution.

              2. Why would Congress mint money that can’t be used in any state?

                Reading comprehension.

                It says “No State shall . . . make any thing but gold and silver coin a tender (read: currency) in payment of debts”

                It does NOT say “No state shall tender any thing but gold and silver coin in payment of debts.”

                1. Huh? You’re using tender as a noun and a verb.

          2. That just means the states can’t issue their own scrip; it doesn’t limit the Feds to just gold and silver coinage.

            1. States can’t mint coins either. The only place non gold and silver coins minted by the federal government could be used is in another country.

              1. *hands IceTrey a new roll of tin foil, since his is apparently shagged*

            2. Ron Paul makes this same retarded claim about that clause in the Constitution. I don’t understand how smart people can be so doggedly stupid sometimes.

    4. Not to go all A is A here, but it seems pretty clear – either coins are legal tender and can be used to settle all debts private and public in the U.S. or they are not. Period.

      If the government doesn’t have faith in its own fiat currency, then why should *we*?

      When I’m dicta . . .President, I will mandate that the government is *only* paid in coinage.

      I’ll also mint up some one and five dollar coins, retiring the bills – because what;s the point of being a dicta . . .President if you can’t be a huge dick every once in a while?

  4. The fight to kill the penny has been going on for at least 25 years. Politicians from states involved in copper mining want to kill the penny (because the nickel is mostly copper). Politicians from states involved in zinc mining want to save the penny (because the penny is mostly zinc).

    So political parties are not the driving issue. It is mining concerns and associated federal mining leases that are keeping the penny alive.

    1. So, in other words, political parties then.

  5. I approve of chickenshit payment methods for chickenshit fines.

  6. Coins are buggy whips. There’s no reason we should mint coins at all. But it is especially stupid to continue to mint coins with face value less than the cost of production.

    1. Except that gold and silver coins are the only constitutional form of legal tender.

      1. Support this contention with anything resembling a citation. All Article 1, Section 8 says about coining money is that

        The Congress shall have power . . .

        To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;

        To provide for the punishment of counterfeiting the securities and current coin of the United States . . .

        I see no mandate that coins be struck in any particular metal, or even that they be metal at all.

        1. Article 1, section 10

          No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts;

          1. A coin by defintion is a piece of stamped metal.

            1. Not true. Most coins are metal, because the properties of metal lend themselves well to coining, but coins have historically been issued in other materials too, stone and shell being the most common.

              1. They may be money but coins they are not. A coin, BY DEFINITION, is a piece of stamped metal.

                1. Except that that is patently untrue. Every definition of the word “coin” I have looked up says that coins are “usually” metallic and in the shape of a disc. Coins are by definition made of hard material, but they needn’t be metal to function as coins.

                  1. Every definition I see says a piece of stamped metal used as money. Are you using Bing or Yahoo?

          2. No State shall

            Unless you think the US government is both expressly granted the power to, and also forbidden from, coining money.

            1. Yeah I’m not sure how someone who is probably a states-rightser doesn’t know what a state is.
              Either way, Reading Is Fundamental.

    2. Actually, $1 bills (and possibly fives) should be turned into coins because they’re more durable and would save printing costs. However, I’m all for eliminating all coins below a quarter as well.

      1. FUUUUUUCCCCKKKKKKYYYYYYOOOUUUU!!!!!!!

        Do you have any idea what its like to carry around a pocket full of change all the time? I lived in Europe when the Euro was introduced.

        No one and two euro bills, only coins. So every day you end up with a ten pound weight in your pocket from change from purchases.

        1. In any case, you’d have to extend that to the $10 bill also because the 1/5/10 all have approximately a 5 year lifespan.

          Doing some quick, back of the envelope calculations.

          Say it costs *me* (in aggravation – and I’d say it was higher) a dollar a month ($12/yr) to carry around 1/5 dollar coins.

          That’s $18.6 billion dollars every year that coining would have to save over bills *just to break even*.

          ——————————

          A one dollar bill costs 5 cents to produce (1 cent/yr)

          A five cost 11 cents. (2.2 cents/yr)

          Nine cents to make a quarter. Say a 20 year average lifespan [based on a sampling of the quarters I have in my coin jar at the moment) (.45 cent/year).

          Now, if I wasn’t lazy and losing interest – I’d figure out how many 1/5 bills are produced each year and then see what the production difference might be.

          But, overall, it looks like you might be able to reduce production costs by 2/3 (taking into account tooling up costs).

          Yet – and I want to stress this – the people who push this are like the people who push the ‘benefits’ of recycling. They completely ignore the cost to the *user* for using a coin instead of a bill in their calculations.

        2. Only if you’re a dope.

          Why the fuck would you have more than 2 $1 coins and 1 $2 coin in your pocket ever? Because you were too lazy to use one in your next purchase?

        3. The $1 bill today has the same value as a quarter did in 1970. Were people’s pants falling down from the weight of quarters in 1970? (and that was when people actually used cash a lot more)

    3. But it is especially stupid to continue to mint coins with face value less than the cost of production.

      Presuming the coins are circulated, then the cost of production is largely irrelevant. The same coin could change hands a hundred times; by comparison, its production was a fleeting event. The utility of a coin over its lifetime is distinct from its constituent elements and its production.

      A better case to be made is that the face value of the penny is becoming infinitesimal and thus its utility is diminishing. However, the ratio of production cost to face value is not the appropriate measure; one should instead compare the production cost to the “expected value” (expected circulation times face value).

      I think as a practical matter that we ought to insist they tie the elimination of small coins with the reinstatement of large bills. If a penny or even a dime can be marginalized as just rounding error, then surely $500 (and larger) bills are needed again?

      1. Instead of dropping the penny out of circulation, we *could* (won’t, but could) revalue the dollar.

        Similar to how a company may reduce the number of shares in circulation by reissuing one new share for x number of old shares – with the new share having a value of x old shares.

        Like reverse inflation.

        We’ll be back to buying a soda for a nickel in no time.

        1. The confusion would be epic. Unless we hit hyperinflation, I don’t think it’s worth it (and if we do hit hyperinflation, there will be bigger problems). Furthermore, I wonder how it would be applied to monetary limits in legislation and policy. Strictly speaking, I guess they too should be converted, but I sit uneasy at the idea that e.g. $1000 (at 10:1) would now be seen as a suspicious amount of money to have in one’s possession or transfer among one’s bank accounts.

          1. Those limits would change automatically. If nothing else, courts would be obligated (hah!) to assume that if it wasn’t specified in the new currency that the legislature must have meant old Dollars. You can bet that if that were to happen then legal codes would be written with a high standard of care.

            The banking limit is 10,000 US *First Dollars* – which are legally distinct from (if monetarily equivalent to) 1,000 ‘Second’ Dollars.

            In essence, the government would be issuing a new currency – even if still called ‘dollars’ in the same way that Zimbabwe still calls the fourth iteration of their currency a ‘Zimbabwean Dollar’. Even the abbreviation for that currency changed at each redenomination – ZWN/ZWR/ZWL.

            Its funny that redenomination happens all the time to countries that are going broke – but one that is getting excessively rich is afraid to do so.

        2. And then you’ll be carrying even more coins in your pocket.

      2. Presuming the coins are circulated, then the cost of production is largely irrelevant.

        True, and it points out that the mint’s waste of money on producing pennies is far surpassed by the bureau of engraving and printing’s production of $1 bills.

        A $1 coin lasts just about forever so even if it cost $2 to mint it would be worth it long-term compared to a $1 bill that costs 8 cents but lasts only 50 weeks and thus has to be replaced 100 times. An expensive $1 coin saves one average taxpayer $5 per lifetime. I don;t know how many $1 bills are in circulation at any one time, but I’d guess it’s over $6 billion which means there are 20 singles in circulation for every person which works out to at least $100 wasted per taxpayer just for dollar bills to exist instead of $1 coins.

        Then there are socialist morons like Agammamon who want taxpayers to pay for his/her convenience fetish.

  7. Just got a great idea! I’m going to pull $100K from my IRA and convert it all to pennies, melt them down and sell the resulting copper for $200K. As long as I don’t get caught, it’s virtually legal.

    1. Modern pennies are zinc.

      I don’t remember the year they switched over.

      There are many people that go to the bank and get dozens of roles of pennies, sort through them to pull out the copper ones (currently worth 3 cents), then return the others.

      Rinse, lather, repeat.

      When pennies are pulled from circulation, the copper pennies can be melted down for copper content.

      1. Switched over around 1983

    2. Also note the production cost of a zinc penny (2 cents) is not the same as the intrinsic value of the metal in the penny.

      1. Moreover, the fact that the penny costs twice as much to produce as it is worth on its face is meaningless. The utility of a single penny can far exceed (or not) its cost of production and its face value. If the same penny has changed hands a hundred times in commerce, then has it not represented a hundred cents worth of value over its lifetime?

        1. No. It still has 1 cent of worth.

          Swapping something around doesnt add value.

          Making a 10k car for 20k is stupid, even if it gets sold for 10k to a thousand different owners.

          The car company still lost 10k on the deal.

          1. No. It still has 1 cent of worth.

            It has as much worth as someone is willing to give it. If nobody wants to accept your penny, then how much is it really worth? Face value is denomination, not worth.

            Swapping something around doesnt add value.

            Commerce doesn’t add value? Currency isn’t superior to barter? A good is never more valuable than its constituent parts or its production cost?

            The mere existence of the coin adds no value, not even its face value or its production cost. It is precisely through exchange that the coin is useful, and thus may serve as a facilitator of generating more value. If your view were correct, then the economy really would be zero-sum, as the gross value added to the economy across all time could not exceed the total nominal value of money presently in circulation.

            The car company still lost 10k on the deal.

            The government “loses” on every coin and bill it produces, even if those items are produced for far less than their face value. You are confusing an accounting ledger for an economical analysis.

            The car company may not make any more money on resale, but looking only at their books is myopic. The car is capital and effective exploitation of capital has nothing to do with the purchase price.

            1. Having said all of this, the penny may not, in fact, be worth keeping. I am trying to dispel fallacious arguments, not endorse the continued existence of the penny per se.

            2. The car is capital and effective exploitation of capital has nothing to do with the purchase price.

              I should say that, the effective exploitation of capital is distinct from the purchase price. You have to be able to produce more value from capital than you paid for it in order to exploit it effectively. To illustrate my point, FedEx produces far more value than what it paid for the trucks and planes in its fleet. Similarly, a coin may (or may not) produce through the enabling of commerce far more value than is printed on its face or was consumed in its production.

              To perhaps illustrate this even further, if there were private currency and private mints, they might sell their coins and bills for prices other than their face value, in order to adjust the size of the money supply or expand their own market share.

          2. No. It still has 1 cent of worth.

            It has one cent of “worth” for say 100 years. From a production cost standpoint a penny that costs two cents to produce costs taxpayers $0.0002 annually over a 100 year life span. A DOLLAR coin that costs two cents to produce costs taxpayers $0.0002 annually. A dollar coin that cost 12 cents to produce and lasts 100 years costs taxpayers $0.0012 annually.

            A dollar bill lasts 12 month and costs $0.08 annually.

            So an 8-cent/one-year dollar bill actually costs taxpayers 67x more than a 12-cent/100-year dollar coin.

        2. No. The utility of a penny is based on a comparison between the situation where it is available and a situation where it is not. If pennies weren’t available, all cash transactions would have to occur in multiples of five cents. Is that really such a bad thing? I’m not even sure the utility of all the pennies in the country is much above zero.

  8. Pennies now excepted. We will increase all of your taxes to pay the 6 figure salaries and pensions of the additional government union employees to process coins. Thank you and have a nice day.

    1. To be fair, they’re going to hire the additional union employees for no good reason anyway.

  9. one of the biggest impediments, politically, to phasing it out could be the job losses that would follow at the U.S. Mint

    Bastiat had something to say about that…

  10. Try discussing legal tender for all debts public and private with the bureaucrautomatons at Pennsylvania Driver License Centers, which simply do not accept cash at all, even the paper kind. No credit cards either, incidentally; only checks and money orders. Makes for a lot of business selling money orders at the post office a couple doors down at the one near me – of course that’s if you’re lucky enough to know ahead of time the precise amount you’re going to have to pay when you finally get through waiting at the license place.

    1. Payment prior to service is not a debt. This is an important distinction. I can demand anything prior to performing a service for you; it is up to you to choose whether or not to accept my terms. However, if I agree to accept payment at a later date, then I cannot refuse legal tender.

      1. Fair enough I suppose. I can still consider it asinine and inconvenient, but I’ll remove the legal tender part from this particular complaint. Though they’ve already performed the service by the time they demand payment – but I suppose they warn you on signs going in. I guess parking tickets are automatically a debt in a way, so it wouldn’t matter if Chambersburg gave notice ahead that tickets can’t be paid with cash.

        1. I can still consider it asinine and inconvenient

          Indeed, and I would heartily endorse a law saying that the state must accept legal tender for all payments, not just debts.

          Though they’ve already performed the service by the time they demand payment

          In my state, you pay for licensing and registration in advance. They might have already printed the license or stamped the plates, but those tokens are worthless by themselves.

        2. If I were to hazard a guess, I would suppose that physical security is the primary reason why they don’t accept cash (don’t trust their employees/don’t want to become targets for crime). Although I don’t see why they have to demand payment upfront. Licenses and plates are worthless by themselves; just send a bill, and if it doesn’t get paid, mark the license or registration as invalid.

    2. Aw man I totally forgot about that. That bit me in the ass when I first went to get my license (or maybe it was learners permit).

      Pennsylvania is so annoying in some ways.

  11. My three-year-old son was delighted when my wife’s sister gave him a one-dollar coin last month. He came running up to me saying, “Papa, I has a pickle!” He was showing off his “pickle” to everyone who would look for the rest of the day.

    1. You should probably talk to your son about showing off his ‘pickle’ in public before you get hauled into the police station.

    2. Cool story, bro

  12. Pennsylvania has over 2,600 municipalities. Some are incredibly tiny in population. They don’t get the best and smartest employees and elected officials, needless to say.

    Even my township of 15,000 people has the same good old boys running the place since forever, with a office full of ancient female clerks who’ve mastered the art of the stink eye if you ask them a question.

    1. There are at least 6 different municipalities in PA named “Fairfield”.

  13. Reminds me of Jr. High School in Danville, Illinois circa 1963. Whenever me and Tim O’neal and Greg Wallen would walk home from school and see a policeman on the corner (they actually did that then) O’neal would yell “What’s a penny made of?” Wallen would yell louder
    “CHEAP COPPER!”
    I would run for cover.
    Years later I heard that Wallen joined the police force.

    1. I heard Wallen got a paid suspension for beating up some school kids who made a smart-arse remark about cops in his hearing.

      1. O’Neal was arrested by Wallen for making up a really stupid story with a lame punchline.
        Wallen was given a medal.

      2. This may B true though I did not hang around Damnville (as we called it) long enough to hear about it.

        1. Stupid reply system.
          Wallen may have beaten up school kids for nothing as he was a real prick.
          The story about the “CHEAP COPPER” taunt is true. The names have not been changed to protect anyone.
          Had there been cellphones in 1963 I’m sure I would have recorded it and been shot dead for my trouble.

  14. I grew up not too far from Chambersburg.

    Chambersburg is not really all that nice.

  15. I *HIGHLY* doubt that the piece of paper has been there for 50 years.
    Either way, it definitely has survived an awfully long time with the Internet (as we know it) available to contradict it.

  16. one of the biggest impediments, politically, to phasing it out could be the job losses that would follow at the U.S. Mint

    And the zinc industry. The nickel’s manufacture cost also has ranged between 6 and 9 cents during this century. I think we need to just get rid of the hundredths place entirely and only deal in tenths of a dollar.

  17. and one of the biggest impediments, politically, to phasing it out could be the job losses that would follow at the U.S. Mint

    The biggest one, of course, is that The People throw a fit about it every time it’s mentioned.

    A strong majority of Senators and Representatives don’t give a flying fig for the Mint’s jobs.

  18. The state COMPLAINS that some idiot is paying a $25 fine with $50 worth of copper. This kind of economic stupidity is expected from government.

    People here complain that pennies and nickles are actually worth more than face value. What the fuck is the matter with you people? Do you complain when you get a silver dime in change?

  19. “The spokesperson, however, pointed to a FAQ page that he said says local businesses and municipalities can choose not to accept payment in coins.”

    I went to the cited FAQ, and saw no exemption for municipalities. Instead, I read this: “United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues.”

    I would assume that parking tickets fall under the category of “public charges.” The FAQ does say that PRIVATE entities (persons, businesses, organizations) can specify the payment they will accept and need not accept cash of any kind. The example of a bus line refusing to accept pennies or dollar bills for fares is cited, which I found amusing, as private bus lines appear to be an endangered species; I presume that a public transit bus line would have to accept any U.S. legal tender, including pennies. I’m not practicing law here, just saying what I would expect from reading what the FAQ says about the law. 😉

  20. In the past, I have also promoted the idea of revaluation, as mentioned by Agammamon|8.14.15 @ 4:03PM. Although some people think that might cause confusion, and there would doubtless be some problems during a period of transition, I think that re-calibrating our currency would restore its proper human scale, and would provide an excellent opportunity for the government to re-dedicate itself to an anti-inflationary policy. If those things were to happen (or even if the shock of the change would awaken the people to hold the government accountable on the inflation issue), the net benefit of the revaluation would be substantial. After a 10-down-to-1 revaluation, the penny would again purchase useful things and the $100 bill would once more be “real money.” I would like to live in that world.

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