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Why Are Coupons Worth 1/100th of a Cent?

The next time a coupon shows up in your mail, take a look at the fine print. There’s a pretty good chance it will read something to the effect of “Cash Value 1/100th of a cent.” Why in the world is that writing on there? And are 10,000 copies of this coupon really worth a whole dollar? Let’s take a look at this coupon quirk.

Putting a Stamp on Customer Loyalty

Before we can answer the coupon-value question, we need to take a peek into a seemingly unrelated footnote in the history of commerce. Let’s talk about the mostly forgotten practice of businesses handing out trading stamps with purchases.

Trading stamps first found their way into merchants’ registers in the 1890s. When customers made a purchase, stores would given them stamps that reflected how much they had spent; a common exchange rate was one stamp for every dime spent on merchandise. Once a customer had saved up enough stamps – often over a thousand – they could swap them for something from the stamp company’s catalog, like a toaster or a clock.

The trading stamps were a runaway success. Supermarkets, gas stations, and department stores would advertise that they gave away a certain brand of stamps to help lure customers in, and the customers could then lick and paste their saved stamps to get “free” merchandise. Everyone was happy, and the system flourished. At one point in the 1960s, S&H Green Stamps printed more stamps each year than the Postal Service did. The circulation of the company’s catalog topped 30 million. The big stamp makers like S&H even built brick-and-mortar “redemption center” stores around the country.

As any economist worth his cost function can tell you, though, the toasters and vacuum cleaners that customers got weren’t free at all. Merchants had to pay for the stamps they gave away, and the cost of the stamp obviously got passed along to the customer in the form of higher prices.

Even in the early days, it didn’t take long for customers to figure out that the system wasn’t quite as rosy as merchants made it out to be. By 1904 New York had enacted laws that forced stamp makers to put a cash face value on each stamp that would enable consumers to bypass catalog redemptions and get money back for their stamps. Other states followed suit.

As one might guess, the individual stamps didn’t get princely face values. A 1904 New York Times piece noted that most stamp makers were given the value of “one mill,” or 1/10th of a cent. That valuation meant that a customer with a full book of 1,000 stamps could redeem it for a dollar. The same piece noted, though, that a customer who used the stamp makers’ catalogs could probably get an item worth three or four dollars for the same number of stamps, so the cash-redemption idea never really took off with most shoppers.

What happened to trading stamps? Their popularity peaked in the 1960s when nearly 80 percent of American households saved stamps, but within a decade the craze had died. Manufacturer coupons that shaved money off of items’ prices became more popular as inducements to get shoppers into stores, and the fuel crisis of the early 1970s sapped away the stamps’ large market at gas stations.

So What Does All This Have to Do With Coupons?

At first glance, coupons and trade stamps wouldn’t seem to have all that much in common. After all, coupons lower the price of an item, while the beef with trade stamps was that they passed a hidden (and often unwanted) cost along to consumers. But some states legally lump trade stamps and coupons in together, so coupons distributed in these states have to bear some printed cash redemption value.

According to the Association of Coupon Professions, only three states require this declaration of redemption value: Indiana, Utah, and Washington. Since many coupons are designed for national distribution, though, the redemption value ends up printed on all of them. As with the old trade stamps, it doesn’t really matter how infinitesimal the stated value is as long as it’s not zero. Thus, you see coupons that are worth 1/10th, 1/20th, or 1/100th of a cent.

So Can I Round Up 20 Coupons and Get a Penny?

In theory, yes. It’s hard to find reliable, concrete examples of someone schlepping in a hundred coupons to swap them out for a penny, but the web is full of anecdotes in which people “test the fine print” by trading in a giant stack of coupons for their face value at the supermarket. In all likelihood, though, you’d need to mail the coupons to the issuing company, which is a pretty lousy financial proposition given the price of stamps.

If you’re sitting on a big pile of Shake N Bake coupons, you might as well give it a try; your supermarket will probably gladly surrender a penny to ensure you don’t make a scene.

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Big Questions
Where Does the Phrase '… And the Horse You Rode In On' Come From?
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Horses may no longer be the dominant form of transportation in the U.S., but the legacy of our horseback-riding history lives on in language. When telling people off, we still use the phrase “... and the horse you rode in on.” These days, it’s rare for anyone you're telling to go screw themselves to actually be an equestrian, so where did “and the horse you rode in on” come from, anyway?

Well, let’s start with the basics. The phrase is, essentially, an intensifier, one typically appended to the phrase “F*** you.” As the public radio show "A Way With Words" puts it, it’s usually aimed at “someone who’s full of himself and unwelcome to boot.” As co-host and lexicographer Grant Barrett explains, “instead of just insulting you, they want to insult your whole circumstance.”

The phrase can be traced back to at least the 1950s, but it may be even older than that, since, as Barrett notes, plenty of crude language didn’t make it into print in the early 20th century. He suggests that it could have been in wide use even prior to World War II.

In 1998, William Safire of The New York Times tracked down several novels that employed the term, including The Friends of Eddie Coyle (1972) and No Bugles, No Drums (1976). The literary editor of the latter book, Michael Seidman, told Safire that he heard the term growing up in the Bronx just after the Korean War, leading the journalist to peg the origin of the phrase to at least the late 1950s.

The phrase has had some pretty die-hard fans over the years, too. Donald Regan, who was Secretary of the Treasury under Ronald Reagan from 1981 through 1984, worked it into his official Treasury Department portrait. You can see a title along the spine of a book in the background of the painting. It reads: “And the Horse You Rode In On,” apparently one of Regan’s favorite sayings. (The book in the painting didn't refer to a real book, but there have since been a few published that bear similar names, like Clinton strategist James Carville’s book …and the Horse He Rode In On: The People V. Kenneth Starr and Dakota McFadzean’s 2013 book of comics Other Stories And the Horse You Rode In On.)

It seems that even in a world where almost no one rides in on a horse, insulting a man’s steed is a timeless burn.

Have you got a Big Question you'd like us to answer? If so, let us know by emailing us at bigquestions@mentalfloss.com.

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Big Questions
What Could the Repeal of Net Neutrality Mean for Internet Users?
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What could the repeal of net neutrality mean for the average American internet user?

Zouhair Belkoura:

The imminent repeal of net neutrality could have implications for Americans beyond the Internet’s stratification, increased costs to consumers, and hindered access to content for all. Net neutrality’s repeal is a threat to the Internet’s democracy—the greatest information equalizer of our time.

With net neutrality’s repeal, ISPs could be selective about the content and pricing packages they make available. Portugal is a good example of what a country looks like without net neutrality

What people may not realize is that a repeal of net neutrality would also give ISPs the ability to throttle people’s Internet traffic. Customers won’t likely have visibility into what traffic is being throttled, and it could substantially slow down people’s Internet connections.

What happens when this type of friction is introduced to the system? The Internet—the greatest collective trove of information in the world—could gradually be starved. People who experience slower Internet speeds may get frustrated and stop seeking out their favorite sites. People may also lose the ability to make choices about the content they want to see and the knowledge they seek.

Inflated pricing, less access to knowledge, and slower connections aren’t the only impact a net neutrality repeal might have. People’s personal privacy and corporations’ security may suffer, too. Many people use virtual private networks to protect their privacy. VPNs keep people’s Internet browsing activities invisible to their ISPs and others who may track them. They also help them obscure their location and encrypt online transactions to keep personal data secure. When people have the privacy that VPNs afford, they can access information freely without worrying about being watched, judged, or having their browsing activity bought and sold by third-party advertisers.

Virtual private networks are also a vital tool for businesses that want to keep their company data private and secure. Employees are often required by their employers to connect to a VPN whenever they are offsite and working remotely.

Even the best VPNs can slow down individuals' Internet connections, because they create an encrypted tunnel to protect and secure personal data. If people want to protect their personal privacy or company’s security with a VPN [they] also must contend with ISP throttling; it’s conceivable that net neutrality’s repeal could undermine people’s freedom to protect their online safety. It could also render the protection a VPN offers to individuals and companies obsolete.

Speed has always been a defining characteristic of the Internet’s accessibility and its power. Net neutrality’s repeal promises to subvert this trait. It would compromise both people's and companies’ ability to secure their personal data and keep their browsing and purchasing activities private. When people don’t have privacy, they can’t feel safe. When they don’t feel safe, they can’t live freely. That’s not a world anyone, let alone Americans, want to live in.

This post originally appeared on Quora. Click here to view.

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