Shortly after reading a reader’s letter in this morning’s Financial Times about dropping the €500 note (did you know that 20 per cent of the notes, equivalent to €60 bn, are estimated to be in circulation in Spain?) I did a little shopping and couldn’t help but notice (and pick up!) quite a few 1 and 2 cent coins left on the ground and also note some customers waving away their small change. Of course, in Finland business and banks employ ‘Swedish rounding’ and, although they remain legal tender, the government has decided to remove 1 and 2 cent coins from circulation. Curious, this; a currency that simultaneously has denominations too big and, apparently, too small. This got me thinking about other situations I had witnessed where people were indifferent to coins on the ground. I could remember two. The first was Italy in the late 1970s. Five and ten lire coins were still theoretically in circulation but rare. The Standa supermarket chain regularly used teabags and sweets as substitutes for small change and a lady friend swears she was once given a tampon in her change in a chemists’ shop. Occasionally, I would see those tiny coins in the street where, presumably, they had been thrown, being considered practically worthless. The second was in the mid-1980s in East Berlin, at Friedrichstrasse station, where day visitors to the East would return through the checkpoint. It was illegal to take Ost marks out of the DDR. I ignored that edict, risked the wrath of the border police and now have my souvenir coins, but most people spent as much as they possibly could and then threw what remained on the ground, pfennigs and marks. It was a very strange sensation to watch people literally throwing away their money and I shall never forget the dull chink of the cheap aluminium alloy coins as they hit the tarmac.
It reminds me of a West Wing episode when Sam was asked a reason why The White House could not support a bill to abolish the penny.
“It turns out the majority of pennies don’t circulate. They go in jars and sock drawers. Two-thirds of the pennies produced in the last 30 years have dropped out of circulation.”
I was also thinking about the penny. It costs the US Mint three pennies to produce one and they still produce them. No wonder the US economy is not doing as well as it could.
If their value as scrap metal is greater than their face value then they’re bound to disappear (this I believe was the problem with lire coins in the 70’s). Keep an eye on those small cent coins – they’re made of steel and… copper!