President Donald Trump directed the Treasury Department to cease minting pennies. The penny has been circulating for 233 years, first established in 1792. Trump has been against the creation of a CBDC, but this move is clearly one massive step toward a cashless society.
The first pennies, known as “large cents,” featured the Flowing Hair design (1793) with a chain reverse, later replaced by a wreath reverse for better strikes. In mid-1793, Joseph Wright’s Liberty Cap design introduced a more consistent look and remained until 1796. In 1796, the Draped Bust design, based on Gilbert Stuart’s artwork, replaced Liberty Cap cents and lasted until 1807. From 1808 to 1814, the Classic Head design by John Reich depicted Liberty with a headband. Poor-quality coins struck in 1812 improved after the War of 1812.
From 1816 to 1839, the Matron Head (Coronet Head) design by Christian Gobrecht made Liberty appear more conservative. In 1839, the Braided Hair design gave Liberty braided hair and a larger wreath reverse. Large cents were unpopular and costly to produce, leading to their replacement by smaller, copper-nickel cents in 1857.
The Flying Eagle cent (1857–1858), designed by James Longacre, featured an eagle in flight but was discontinued due to striking issues. It was replaced by the Indian Head cent (1859–1909), which depicted Liberty in an Indian headdress. The 1859 reverse had a simple wreath, but in 1860, a Union shield was added, symbolizing national unity. Due to wartime hoarding, the coin’s composition changed from copper-nickel to bronze in 1864.
“Lincoln Cents” (1909) marked the last major shift in the penny. Commissioned for Lincoln’s 100th birthday, the Lincoln Cent, designed by Victor David Brenner, debuted in 1909 with a wheat reverse. In 1959, Frank Gasparro’s Lincoln Memorial reverse replaced the original design. In 2009, four special cents honored Lincoln’s 200th birthday, depicting key stages of his life. In 2010, the Union Shield reverse, designed by Lyndall Bass, symbolized Lincoln’s legacy of preserving the nation. The Lincoln cent remains the longest continuously minted U.S. coin and a favorite among collectors.
The coin’s composition changed over time: bronze (1909–1942), zinc-coated steel (1943, due to WWII copper shortages), then back to bronze (1944–1982). In 1982, it switched to copper-coated zinc, still in use today despite rising production costs. Pennies have been more expensive to produce than face value since 2006. The US Treasury stated that the penny cost 2.72 cents to produce as of 2023, but DOGE reported last month that costs rose above 3 cents. The mint spent $179 million to produce 4.5 billion pennies in FY2023, which would be above the 3 cent mark. For FY24, the US Minth said it cost 3.7 cents to produce and distribute a penny, a 20% YoY increase.
“For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful!” Trump wrote over the weekend. “I have instructed my Secretary of the US Treasury to stop producing new pennies.” Later, adding, “Let’s rip the waste out of our great nation’s budget, even if it’s a penny at a time.”
Instead of altering the metal content, the decision is to eliminate the penny. Existing pennies will continue circulating, but we can expect people to begin hoarding. They eliminated the penny in Canada years ago and consumers simply round to the nearest 5 cents. Speaking of 5 cents, the nickel is also far more costly to produce than its face value, so there’s reason to believe this administration may consider the costs of minting coins in general. The government would not shock public confidence by discontinuing all US coinage at once. The penny, the lowest denomination of our physical currency, is the most digestible way to ease into the concept of no longer minting coins. Pennies will still be regarded as legal tender and can be used in transactions the same way that the $2 bill can be exchanged. But the ultimate goal is to push us into a cashless society.
Trump signed an executive order titled “Strengthening American Leadership in Digital Financial Technology,” prohibiting the central bank from creating a CBDC. The executive order also offers a framework for the US government to begin regulating crypto, with David Sacks appointed as the AI and Crypto Czar. Trump plans to boost US holdings of bitcoin and would also like to boost the production of “Made in America” bitcoins. Again, the government has always had backdoor access to blockchain.
I have stated for some time that the Federal Reserve will not create a CBDC as that would violate the 4th Amendment. Instead, individual banks will be encouraged to create their own currencies, which can then be tracked, traced, and reported to the government.
