Why Do This?

Many of those were created as good luck tokens or promotional advertizements for various companies. I think banks were the most common.

EDIT - Here is one I have. They are generally referred to as Encased Coins.

@silverstackerkid this one was my papa's and it was actually a key chain, the little beaded clasp like. I don't think the outer ring is silver, it is way to light, I think more like aluminum. the penny is a little wavy like it might have been pressed when placed in this casing but what gets me is that it looks like the S in trust is double so it reads trusst. but it is a little dirty in that area and I can't do anything about it. not happy about that

The pennies chosen for inserting into these " Encased Coins" were usually picked at random out of circulation at the time - they aren't intended to be rare, or special, or particularly meaningful in terms of date or mintmark. It's just supposed to be a "lucky penny".

Whatever you do, and however tempting it might be, never try to remove a "lucky penny" from its encasement. In order to make sure the penny did not fall out, the machine that makes these pieces actually damages the penny by compressing the rim all the way around. So even if you find one of these Encased Coins with a scarce date/variety inside, the coin will have been ruined from a collector standpoint. See some examples of formerly-encased now-unlucky pennies posted on the forum here and here.

So keep it intact; these Encased Coins are historic objects in their own right, and usually worth much more to exonumia collectors intact than the penny would be even if it had never been encased.

@sap thank you very much, that was helpful. I can see what you mean about damaging the coin as it appears rippled or wavy due to compression. I never intend to remove it, ever, just wanted to know the reason behind it. Now I do and thank you.

Advertising. A cent inside the aluminum ring was a very cheap form of advertising, similar to how people today will hand out business cards, pens, keychain LED flashlights etc.

Now typically these cheap dodads tend to get discarded fairly soon after they are acquired, but people are very reluctant to throw away money, even if it is in a form in which they can't actually use it. So by giving them a "lucky penny" in an encasement with their advertising on it it greatly encouraged them to hang onto it. Typically on their keychains. (Typically the encasement used an uncirculated cent of the current year it was made. Every time they pulled out their keys, there was the advertisement again and again and again.

They are called Encased Coins and are used for advertising or as a token of some sort.

Usually used as an advertising gimmick Pre-1970. Pennies are usually considered as Good Luck, so companies would hand these out to customers. I personally own some Jewelry store one with a 47 D cent in it, and another one with a '27 cent in VF in it.

It's quite funny because one of the places had an address that's in downtown cleveland, relatively close. Thing is, it's in East Cleveland, and it's in a pretty rough ghetto area. Old car dealership from the 50's.