New York — Call it "The Great Penny Shortage" -- with a bright spot. The US Bureau of the Mint in Washington, D.C., reports that "spot shortages" of one-cent coins are cropping up around the country. The nation's capital had one several months ago, and now the crunch is in New York.
But the Bankers Trust Company, the nation's ninth largest bank, has its own answer to the shortfall. It has begun paying $1.15 for a dollar's worth of coppers. The bank has a $50 limit on the amount of pennies a customer can cash in (for $57.50).
While the offer is good to regular customers only and the response cannot be called overwhelming, bank spokesmen say they are confident penny-sellers will eventually go a long way toward making up for the 75 percent cut in their allocations from Federal Reserve System early this month.
Frank DeLeo, a spokesman for the US Bureau of the Mint, offers two reasons for the shortage of the coins here and around the country, and they both have to do with "penny hoarding." First, there are the copper speculators who are holding the coins until the price of copper climbs. Pennies are about 95 percent pure copper. Second, there are inadvertent hoarders -- the people who put their pennies in piggy banks, the back of the bureau or even in socks to save up for something or to just get them out of their pockets.
Overall, according to US Mint figures, there have been 120 billion pennies issued since 1959, and only about 40 billion pennies are actually in circulation -- that is, continually going from one person or business to another. Thus, about 80 billion are being held by hoarders of various stripes, along with the genuine collector who makes up a much smaller slice of the coin problem.
To counterbalance the shortfall, the US Mint expects to issue "well over" 12 billion pennies this year, as compared with 10.2 billion last year.
But the new pennies are not rolling off the presses fast enough for Bankers Trust, which insists its action is not merely a "gimmick" to lure more customers. However, the coins have to be wrapped in packets of 50, a requirement that draws the quip that "maybe the bank figures to save on wrapping charges!"