The Coin Shortage

Apparently there is a shortage of coins in the United States. At least there is a shortage of circulating coinage. I am not even certain coins really circulate any more. It seems to me that the use of coins in everyday commerce is one way. Those consumers who still use cash receive coins in change which then get thrown into a jar, desk drawer, coffee can, automobile console, couch cushions, etc. It has been a long time since I have seen someone digging through their pocket or coin purse for change for a purchase.

The current coin shortage can be traced to two effects of the corona virus pandemic. First, social distancing rules slowed down production of coins at the U.S. Mint. Secondly, the number of people turning their change jars into banks has dramatically decreased also.

Coin shortages have happened before but most of those events were limited to shortages of a single type of coin – the cent. This time, the shortage affects all denominations of coins.

During WWI, Congress instituted a number of small taxes on goods. For example, there was a four cent tax on the wholesale price of a case of chewing gum. These taxes resulted in purchases that were no longer in increments of five cents and required more one cent coins to be paid out by merchants to customers. Communities and merchants around the country produced their own one cent scrip pieces to combat the shortages.

There was only one reported cent shortage during WWII. That was in Boise, Idaho. The shortage was so acute that the Boise Retail Merchant’s Bureau had cardboard one cent pieces printed. They went so far as to obtain the opinion of the local United States Attorney as to the legality of the scrip.

The last cent shortage occurred in 1974. Rising copper prices led speculators to hoard one cent coins who were banking on the value of the copper in a one cent coin exceeding it face value. The situation was serious enough that the US Mint experimented with alternate metal composition for the one cent coin. It would eventually change in 1982. Once again, merchants issued one cent scrip pieces to alleviate the cent shortage.

Will the current shortage result in similar scrip or tokens? It seems unlikely. The shortage appears to be affecting only banks and the retailers who routinely order large amounts of coins. While the shortage should seemingly trickle down to the consumer, electronic payment options that were not available during any of the previous coin shortages should allow most consumers to avoid the problem. Despite this, Tenino, WA, a small community with a rich tradition of issuing wooden scrip has already issued tokens in 2020.