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THE Bank of Canada had a rough start to 2013 when it was revealed that it had used an image of a foreign maple leaf on its new C$20 ($20) notes. In contrast, the Royal Canadian Mint seems to have found the way to the people’s hearts—by removing currency from circulation rather than introducing it. On February 4th Canada stopped distributing the copper-plated one-cent pieces commonly referred to as pennies, beginning a six-year phase-out of the coins, which were first minted in 1858 and featured Queen Victoria.In March 2012 Jim Flaherty, the finance minister, announced to widespread acclaim that the penny would soon meet its end. They took up too much room on people’s dressers, he said, referring to the increasing tendency of Canadians to discard the coins because their negligible purchasing power made them a hassle to carry and use. They took up too much time for small businesses to count, he continued. And they cost the government more than the coins were worth to mint.
The decision will certainly save the government money, although not as much as previously indicated. The extra 0.6 cents over face value it cost to produce a penny added up to C$11m a year. But in the first year Canada will have to spend an estimated C$7.3m to redeem about six billion coins. Charities that volunteer to take in unwanted coins will benefit. Free the Children, an international group based in Toronto, has already begun a penny drive, and others will doubtless follow.
The Royal Canadian Mint, a for-profit state-owned company, isn’t among the mourners either. It will now have extra capacity to pursue its goal of increasing its share of foreign circulation coinage from the current 10% to 15% (among its recent issues were 40m one-balboa ($1) coins for Panama in 2011). Besides, the mint’s revenues of C$137m in 2011 from Canadian coinage were tiny in comparison with the C$2.9 billion it pulled in from its largest business: marketing gold, silver, palladium and platinum bullion and selling exchange-traded receipts for gold. With its eye for new products, it could even steal a leaf from the Australian Mint, which deftly turned pennies into dollars when it took the coins that were withdrawn from circulation in 1964 and embedded them in new one-dollar pieces in 2004. The company has already decided to celebrate the demise of the penny by flogging 20,000 “special rolls” of the last million pennies produced as a “unique collectible”. With 50 pennies to a roll and a retail price of $9.95, it will be a profitable ploy.
The penny is still waiting for its defenders to speak out. Some shoppers paying cash in a penny-less world may complain when bills ending in three, four, eight or nine cents are rounded up to the nearest nickel. However, they will benefit when those ending in one, two, six or seven cents are rounded down. And those paying with credit or debit cards will pay the exact amount no matter what it is. One national newspaper suggested shoppers may deploy complicated schemes to game the system, but that would require them to value the time it takes them to devise such strategies at, well, pennies.
The demise of the penny could conceivably cause future generations to struggle with the meaning of phrases like “a penny for your thoughts”, “cost a pretty penny”, or “the penny dropped”. Then again the erosion of the coin’s buying power, not to mention the disappearance of penny-in-the-slot machines to which the last phrase alludes, means the current generation doesn’t really understand them either.
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