WAR ECONOMY: Nickel, Nickel

The two most common U.S. coins were due for a face-lifting last week. To save copper, nickel and tin, the Mint announced that:

>Nickels, now one part nickel and three parts copper, will be coined half of silver, half of copper. Net saving on a year’s new coinage: 434 tons of nickel, 434 tons of copper. (The Senate Judiciary Committee last week approved a bill authorizing this change.)

>Pennies, now 95% copper, 4% zinc, 1% tin, will contain no tin, use more zinc instead. Net saving: 45 tons of tin. (To change the penny’s content, no legislation is required.)

It will cost the Treasury theoretical money to make these metal savings, since the paper profit it makes through seigniorage will be less. In 1,000 of the current brand of nickels (monetary value $50), the cost to the Treasury of the copper and nickel is only $2.05, yielding a seigniorage of $47.95. In the new silver nickels—thanks largely to the Treasury’s own policy of paying 71.11¢ per ounce for newly mined U.S. silver—the metal will cost $38 per thousand, yielding only $12 seigniorage. But the silver would be bought and buried anyhow. So in real money the Government will save a little by not buying copper and nickel.