Snowfire
11-13-2007, 01:40 PM
From today's Washington Post:
http://www.washingtonpost.com/wp-dyn/content/article/2007/11/12/AR2007111201663.html
More Change for the Penny?
By Cindy Skrzycki
Tuesday, November 13, 2007; Page D03
In Washington, a city known for multibillion-dollar budget deficits, some members of Congress and the Bush administration are near a meltdown over a much more modest figure: the old copper penny.
The government fears that citizens will melt old pennies to extract the copper, which, until a recent dip, has shot up in price over the past five years. In December, the U.S. Mint banned melting pennies and nickels (nickel prices are up, too), sidetracking one Ohio metals expert's plan to cash in.
The government explained that it could cost more than $1 million a day to replace coins withdrawn from circulation to extract the metal. The increase in metal prices means it costs more to make the coins than they are worth. Walter Luhrman, of Jackson, Ohio, figured he'd net $1.5 million a year.
Luhrman, 60, president of Jackson Metals, said in an interview that he has spent his entire career in metals. Although pennies have been made of a 95 percent zinc-5 percent copper mixture since 1982, he calculates that there are 191 billion pennies in circulation -- including those in your dresser drawer -- and about one in four was minted before 1982 -- thus made of 95 percent copper (and 5 percent zinc).
"This is real money," Beth Deisher, editor of Coin World, the world's largest-circulation coin publication, said of the businessman's idea. "It's like going for gold on the ocean floor."
Deisher, who editorialized against Luhrman, said that for the past few years, "Rome has been burning, and the Treasury hasn't done anything about it."
Indeed, over the past few months, the issue has been no small change in Washington, triggering two bills, a scheduled hearing and complaints to the Treasury Department about why it has taken so long to react to rising metal prices.
It costs 1.67 cents to make a penny, up from .93 cents in 2004. This means the U.S. Mint lost $31 million in making 6.6 billion new pennies in fiscal 2007 and another $68 million for more than 1 billion nickels, according to Michael White, a spokesman for the mint. Speculators, taxpayers, suppliers and coin collectors are affected, too.
The government is "grossly overestimating the effect this would have on coinage supplies across the country," said Matt Thornton, a spokesman for Rep. Zack Space, a freshman Democrat who represents Luhrman's district. "They are assuming everyone will take coins out of circulation and melt them down."
Space has introduced a bill that would ban the mint's ban on Luhrman's pennies-from-heaven plan.
The Treasury has proposed that it be allowed to transfer from the Congress to itself the authority to measure and make changes in the composition and weight of coins, so it can head off future spikes in metal prices.
This would be a historic change. Since Congress created the mint in 1792, it has exercised constitutional authority over America's pocket change. Space's bill to help Luhrman is attached to the Treasury proposal, which is up for consideration in the House Financial Services Committee.
Rep. Spencer Bachus of Alabama, the senior Republican on the committee, opposes turning over authority to the mint as well as, according to a statement, allowing "a single company with a few employees to mine the taxpayers' pockets."
"My boss doesn't believe it is giving the powers of Congress away," said Steve Adamske, a spokesman for Rep. Barney Frank (D-Mass.), who is chairman of the committee, explaining his support for the bill.
The Treasury request also triggered a complaint from Rep. Jerry F. Costello (D-Ill.). He suggested that allowing the mint to use less-expensive materials without congressional direction would hurt a company in his district, Olin Brass, of East Alton, Ill., that counts the mint as its top customer.
Two other members introduced a separate bill to order the mint to make pennies out of copper-coated steel.
The makeup of U.S. coins has been changed before -- in 1967, with the transition from silver, and in 1974, because of an earlier worry about demand for the penny.
The country is awash in pennies, Luhrman said, and the Federal Reserve, which is in charge of distributing coins, orders new ones instead of moving around surpluses. The mint said there isn't a surplus.
Before starting his company last year, Luhrman said he checked with the mint to make sure it was not illegal to melt down pennies. He was told it wasn't, and the company operated for about five months before the government ban.
He bought pennies from banks and used special equipment to cull the copper-heavy ones minted before 1982. He estimated that he could process 5 billion coins annually, separating out 1.2 billion copper pennies.
Luhrman planned to ship the post-1982 "worthless" pennies, which are 95 percent zinc, to areas of the country with penny shortages. He estimated he could save the government $5.25 million in the first 90 days of his operation by shuttling his surplus to markets with shortages, instead of having the mint stamp new ones.
The businessman said he had hired 16 people for his operation. He signed contracts with currency-handling companies such as Brink's Co. in Richmond, and Coinstar in Bellevue, Wash., to get intelligence on the location of penny surpluses and deficits. And he hired a trucking service to ship the pennies.
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Luhrman insists he can do the government and taxpayers a service while he makes a pretty penny.
"During the time they work on figuring out the composition of a new coin, let us do what we can do to reduce the number they have to mint at this price," he said. "Every penny being made is wasting money -- a lot of money."
***
http://www.washingtonpost.com/wp-dyn/content/article/2007/11/12/AR2007111201663.html
More Change for the Penny?
By Cindy Skrzycki
Tuesday, November 13, 2007; Page D03
In Washington, a city known for multibillion-dollar budget deficits, some members of Congress and the Bush administration are near a meltdown over a much more modest figure: the old copper penny.
The government fears that citizens will melt old pennies to extract the copper, which, until a recent dip, has shot up in price over the past five years. In December, the U.S. Mint banned melting pennies and nickels (nickel prices are up, too), sidetracking one Ohio metals expert's plan to cash in.
The government explained that it could cost more than $1 million a day to replace coins withdrawn from circulation to extract the metal. The increase in metal prices means it costs more to make the coins than they are worth. Walter Luhrman, of Jackson, Ohio, figured he'd net $1.5 million a year.
Luhrman, 60, president of Jackson Metals, said in an interview that he has spent his entire career in metals. Although pennies have been made of a 95 percent zinc-5 percent copper mixture since 1982, he calculates that there are 191 billion pennies in circulation -- including those in your dresser drawer -- and about one in four was minted before 1982 -- thus made of 95 percent copper (and 5 percent zinc).
"This is real money," Beth Deisher, editor of Coin World, the world's largest-circulation coin publication, said of the businessman's idea. "It's like going for gold on the ocean floor."
Deisher, who editorialized against Luhrman, said that for the past few years, "Rome has been burning, and the Treasury hasn't done anything about it."
Indeed, over the past few months, the issue has been no small change in Washington, triggering two bills, a scheduled hearing and complaints to the Treasury Department about why it has taken so long to react to rising metal prices.
It costs 1.67 cents to make a penny, up from .93 cents in 2004. This means the U.S. Mint lost $31 million in making 6.6 billion new pennies in fiscal 2007 and another $68 million for more than 1 billion nickels, according to Michael White, a spokesman for the mint. Speculators, taxpayers, suppliers and coin collectors are affected, too.
The government is "grossly overestimating the effect this would have on coinage supplies across the country," said Matt Thornton, a spokesman for Rep. Zack Space, a freshman Democrat who represents Luhrman's district. "They are assuming everyone will take coins out of circulation and melt them down."
Space has introduced a bill that would ban the mint's ban on Luhrman's pennies-from-heaven plan.
The Treasury has proposed that it be allowed to transfer from the Congress to itself the authority to measure and make changes in the composition and weight of coins, so it can head off future spikes in metal prices.
This would be a historic change. Since Congress created the mint in 1792, it has exercised constitutional authority over America's pocket change. Space's bill to help Luhrman is attached to the Treasury proposal, which is up for consideration in the House Financial Services Committee.
Rep. Spencer Bachus of Alabama, the senior Republican on the committee, opposes turning over authority to the mint as well as, according to a statement, allowing "a single company with a few employees to mine the taxpayers' pockets."
"My boss doesn't believe it is giving the powers of Congress away," said Steve Adamske, a spokesman for Rep. Barney Frank (D-Mass.), who is chairman of the committee, explaining his support for the bill.
The Treasury request also triggered a complaint from Rep. Jerry F. Costello (D-Ill.). He suggested that allowing the mint to use less-expensive materials without congressional direction would hurt a company in his district, Olin Brass, of East Alton, Ill., that counts the mint as its top customer.
Two other members introduced a separate bill to order the mint to make pennies out of copper-coated steel.
The makeup of U.S. coins has been changed before -- in 1967, with the transition from silver, and in 1974, because of an earlier worry about demand for the penny.
The country is awash in pennies, Luhrman said, and the Federal Reserve, which is in charge of distributing coins, orders new ones instead of moving around surpluses. The mint said there isn't a surplus.
Before starting his company last year, Luhrman said he checked with the mint to make sure it was not illegal to melt down pennies. He was told it wasn't, and the company operated for about five months before the government ban.
He bought pennies from banks and used special equipment to cull the copper-heavy ones minted before 1982. He estimated that he could process 5 billion coins annually, separating out 1.2 billion copper pennies.
Luhrman planned to ship the post-1982 "worthless" pennies, which are 95 percent zinc, to areas of the country with penny shortages. He estimated he could save the government $5.25 million in the first 90 days of his operation by shuttling his surplus to markets with shortages, instead of having the mint stamp new ones.
The businessman said he had hired 16 people for his operation. He signed contracts with currency-handling companies such as Brink's Co. in Richmond, and Coinstar in Bellevue, Wash., to get intelligence on the location of penny surpluses and deficits. And he hired a trucking service to ship the pennies.
ad_icon
Luhrman insists he can do the government and taxpayers a service while he makes a pretty penny.
"During the time they work on figuring out the composition of a new coin, let us do what we can do to reduce the number they have to mint at this price," he said. "Every penny being made is wasting money -- a lot of money."
***