So many pennies

At long last, I made it to the bank and obtained $20 in pennies. That’s 2000. Naturally, there wasn’t a seat on the bus I took home, so I had to stand with the pennies weighing down me and my backpack. My journey home was made extra long, when our bus happened upon an accident at a crucial intersection, which caused a long detour. Finally, I made it home.

Soon enough I was at my desk, sorting roll after roll. Of course, my goal was to find copper pennies, but I wouldn’t have objected to keeping bi-centennial 2009 pennies or steel pennies, though I knew finding either was a long shot.

After looking at all 2000 dates, I found 4 wheaties, 8 Canadian, 9 bicentennials, 50 shiny new 2010s and a grand total of 713 pennies dated 1959-1982. I imagine it will be quite easy to determine which 1982 examples are zinc and which are copper- the newer zinc coins weighed less than the copper.

155 pennies composed of 95% copper make up a full pound of copper. At current market value (as of 13 Jan 2011) the price for a pound of copper is $4.41, which is a 285% rise over the value of the metal that 155 copper pennies are composed of. My plan is to divide the pennies into 1 pound sacks and put them on eBay. Perhaps I’ll start the price at $2.

Since it took less than 3 hours to sort through all 2000 pennies, it would be no trouble to go through even 5000, if the pound sacks start selling.

The end of bronze coinage

Over the last 20-25 years, bronze coins in countries all over the world have gradually suffered the same fate as silver coinage did 50 years ago. While the end of silver coinage was relatively quick in some parts of the world, the replacement of copper coinage is happening at a much slower pace. Nonetheless, it is happening.

One of the first major world economies to replace copper in small denominated coins was the US and it was the one cent coin which lost its copper content- at least the majority of it in 1982. With copper prices a bit higher than historically normal prices at about $4.35 per pound, and taking into account the weight of the US one cent coin, only 136, or $1.36, contain enough copper to equal a pound and thus $4.35. The higher copper price is resulting in a manifestation of Gresham’s Law, which in part states that ‘good money is driven out by bad money’. In other words, people will keep the good money and circulate the bad money. This happened in the mid-sixties in the US, when the 90% silver dimes and quarters were replaced with a cupro-nickel composite.

In 1992, the UK and Ireland replaced their 1p and 2p coins, which were composed of 97% copper, with copper clad steel. The copper content dropped to just under 8%. In 1997, Canada replaced the majority of copper in their pennies with zinc and then steel in 2000. Russia replaced the copper content in their kopeck denominations with steel in 2006. Copper disappeared altogether from Mexican centavo coins in 1986. From then until the New Peso was introduced in 1993, there was no copper in any Mexican coins. Presently, the only copper can be found in the bi-metallic 1, 2, and 5 peso coins- and only in the center. The rings are steel. Most Central and South American countries have coinage that is composed of steel.

Along with the removal of copper and bronze coinage, there is a shift toward steel or clad zinc and nickel from cupro-nickel coins. The amount of copper in some of the higher-denominated coins around the world, especially the Euro coins and US coins, however, is secure since a startling jump in copper prices would need to occur before scrutiny is brought to their composition. It would take almost 100 US quarters, for example, to equal a pound of copper. This would be an intrinsic value of $4.35 vs. a face value of $25.00.

Copper composed circulation coinage has a long history in many parts of the world and holds a small part in the history of a number of countries and even cultures. The removal of copper from the worlds coins only serves to reduce the over all value of the coinage. There is no value in steel. Old silver coins were backed by their very intrinsic value. The same can be said of copper or copper alloy coins as well. The value of a 1979 one cent piece from the US is higher than a present day one cent piece. The copper content may in fact be worth more than $0.01, but at least there is value to the coin.

Present day coinage holds little value. Because of the increased population of the planet, more government are being forced to produce more coins. Higher mintage figures coupled with the reduction of precious metals in the coins of today is reducing the value of the coins to collectors. Worse still, it is greatly reducing the overall value of the currency itself.

Changing face of Brazilian currency

When sorting coins from Brazil, I became acutely aware that there are several coin designs that span a number of currencies. For example, in the 10 years between 1985 and 1995, the Brazilian currency went from the New Cruzeiro, both Cruzados, a third Cruzeiro, Cruzeiro Real and finally ended up with the present currency of Real. Ironically, the Real was the first currency used in Brazil until 1947, when the first Cruzeiro was introduced.

In an effort to accurately correlate my coins with the appropriate currency, I set out on a quest to obtain this information. What is here is what I have found.

First Currency: Real 1620-1947

As a Portuguese colony from 1620-1822, much of the Brazilian economy revolved around its sugar industry and a brief gold rush. The currency used was the Real (Réis) with no subdivision. Copper coins were produced with denominations of 5, 10, 20 and 40 Réis, silver was used for the 75, 150, 300 and 600 Réis coins and gold for 1000, 2000, 4000 and 6400 Réis. The 1778 silver coinage reformation produced denominations of 80, 160, 320 and 640 Réis, with gold 800, 1600 and 3200 Réis coins produced between 1780 and 1782. In 1809, existing copper and silver coins were over punched with the Portuguese arms, and the denomination doubled for 5, 10, 20 and 40 Réis coins. The values of the 75, 150, 300 and 600 Réis coins were increased in value to 80, 160, 320 and 640 Réis, respectively. To completely resolve the older Spanish coinage in circulation, these were over punched to produce 960 Réis coins in 1810. An 80 Réis coin was introduced in 1811.

Another coinage reformation took place between 1833 and 1835 which resulted in a copper coinage standard for the entire country and an over punch for all existing copper coins produced 10, 20 and 40 Réis coins. Silver 100, 200, 400, 800 and 1200 Réis coins and a 10000 gold Réis coin were introduced in this reformation as well. By the late 1840s and extending into the mid 1850s, the currency was reformed further by reducing the silver and gold content in the coinage. A new series of silver and gold coins were produced in denominations of 200, 500, 1000 and 200 silver Réis, and 5000, 10000, 20000 gold Réis. Between 1868 and 1873, bronze 10, 20 and 40 Réis coins were produced. Copper-nickel 50, 100 and 200 Réis coins were introduced in 1871.

400 and 20 Réis copper-nickel coins were introduced in 1901 and 1918 respectively. 1922 saw aluminum-bronze 500 and 100 Réis coins. In 1936, copper-nickel 200 Réis, aluminum-bronze 2000 Réis and silver 5000 Réis coins were introduced.

Second Currency: Cruzeiro 1947-1967

In 1947, Brazil began using the Cruzeiro (Cr / ₢), named for the Southern Cross constellation, as its currency, which replaced the Réis at a rate of 1000 Réis to 1 Cruzeiro. The new Cruzeiro was divided into 100 centavos.

Coins of the first Cruzeiro 1947-1956

Initially, the coins were composed of copper-nickel for the sub-division denominations and aluminum-bronze for the currency denominations. Starting in 1956, the design of all coins changed, as did the composition- they were now made of aluminum. The 2 and 5 Cruzeiro were discontinued.

By 1961, the currency was devalued to the point where coin production stopped completely. When it resumed in 1965, the only coins produced were Cruzeiros made of aluminum for the 10 and 20 and copper-nickel for the 50. Centavo coins were withdrawn from circulation. By the end of 1968, all coins were withdrawn from circulation.

Third Currency: Cruzeiro Novo 1967-1986

By 1967, the Cruzeiro was beyond salvage from rampant inflation, a state which a multitude of Brazilian currencies would exist for another thirty years. The first solution was to introduce a new currency, called Cruzeiro Novo (also divided into 100 centavos), which was valued at 1000 Cruzeiros.

The first coins produced for the new currency were denominated in 1, 2, 5, 10, 20 and 50 centavos and 1 Cruzeiro.

The three lowest denominations were stainless steel, while the others were composed of copper-nickel. The copper-nickel coins were eventually replaced by stainless steel and a modified design.

By 1979, inflation gripped the new Cruzeiro and the centavo coins were removed from circulation since they were worthless. Over the following three years, a new design appeared on a smaller 1 Cruzeiro coin and the 5, 10, 20 and 50 Cruzeiro coins were introduced. In 1985, smaller 100, 200 and 500 Cruzeiro coins were being produced. These were all composed of stainless steel.

Fourth Currency: Cruzado 1986-1989

The Novo Cruzeiro had a long death, but was replaced in the end with the Cruzado (Cz$), divided into 100 centavos, at a rate of 1000 Novo Cruzeiro = 1 Cruzado.

The first Cruzado coins issued were composed of stainless steel in denominations of 5, 10, 20 and 50 centavos and 1, 5 and 10 Cruzado coins. Just two years after these coins were minted, production ceased. Again, the currency fell victim to rampant inflation.

Fifth Currency: Cruzado Novo 1989-1990

In January, 1989, the Cruzado Novo (NCz$) was established at a rate of 1000 Cruzados = 1 Cruzado Novo. The currency was divided into 100 centavos. Coin denominations were issued in denominations of 1, 5, 10 and 50 centavos and 1 Cruzado Novo, composed of stainless steel.

Sixth Currency: Cruzeiro 1990-1993

Unlike the previous four currencies, whose introduction was the result of rampant inflation, this Cruzeiro, also known as the Third Cruzeiro, was merely the result of renaming the Cruzado Novo. It was introduced less than 14 months after the introduction of the Cruzado Novo, and replaced it at a 1:1 ratio.

Since this Cruzeiro was also divided into 100 centavos and replaced the Cruzado Novo at par, the centavo coins issued for the previous currency were kept in circulation and only the 1 Cruzado Novo coin was withdrawn from circulation. Stainless steel 1, 5, 10 and 50 Cruzeiro coins were issued in 1990.

Despite the effort to stem the ebb and flow of rampant inflation followed by the introduction of a new currency, less than two years after renaming the Cruzado Novo to the Cruzeiro, inflation again took hold of the currency and higher denominations of coins were issued. Smaller stainless steel 100, 500, 1000 and 5000 Cruzeiro coins were introduced. The coins issued previously became worthless and were taken out of circulation.

Seventh Currency: Cruzeiro Real 1993-1994

The Cruzeiro Real (CR$) was introduced at a rate of 1000 Cruzeiros = 1 Cruzeiro Real and was subdivided into 100 centavos, but the sib-divided unit was never practically represented as either coins or banknotes. The only coins issued were composed of stainless steel and denominated into 5, 10, 50 and 100 Cruzeiro Reais.

This currency was different in many ways to the previous currencies issued since the first Cruzeiro in 1946. Its purpose was to allow the population to become accustomed to a stable currency. It was pegged to the US Dollar and there was a price parity program established. After 11 months, the Cruzeiro Real was replaced.

Eighth Currency: Real 1994-Present

The Real (R$) is a result of a substantial monetary, economic and currency reform put forth to end inflation that plagued the economy since 1956. It was introduced at a rate of 2750 Cruzeiro Reais = 1 Real and was divided into 100 centavos.

Coins issued were composed of stainless steel at first in denominations of 1, 5, 10 and 50 centavos and 1 Real. The obverse was common and the reverse was considered a generic design whose elements were similar between denominations. A 25 centavo coin was produced in 1995 as a vehicle for commemorative designs, but also had a standard design different from the other denominations in the series.

After four years, the stainless steel designs were replaced with cons containing higher value metal alloys in recognition of the intrinsic value of the currency the coins represented. The coins in the first series remain legal tender, but are being withdrawn from circulation.

The 1 and 5 centavo coins are composed of copper plated steel, the 10 and 25 centavo coins are composed of brass plated steel. The 50 centavo coin was made of copper-nickel until 2002 when the composition changed to stainless steel. The 1 Real coin was bi-metallic and composed of copper nickel with a brass ring until 2002, when the center was changed to stainless steel. In 2005, the 1 centavo coin was no longer being produced, but is still legal tender.

Despite its relatively young age, the Real seems to be a solid currency and has outlasted its predecessors in terms of stability.