Canada Drops the Penny

Canada Stops Making Cents as Flaherty Lets Penny Drop

What a great title!

Canada minted its final penny today as Finance Minister Jim Flaherty said the coin was too expensive to produce and no longer needed for business.

“The real issue was that people weren’t using them, they were putting them in jars at home, and we were doing the same thing at my house,” Flaherty said. He spoke today at the Royal Canadian Mint in Winnipeg, Manitoba, before pushing a button that stamped the last one-cent coin.

The longest-serving finance minister in the Group of Seven nations promised in his March 29 budget to save C$11 million annually by eliminating the coin that he says costs 1.6 cents to mint. The price of copper, which is used in the penny’s production, has surged more than 330 percent since 2000.

Copper made sense as  metal for minting coins of small value back in the days before copper became metal in enormous demand due to it's value in electrical  and other industrial equipment.  Once that occurred it started to become too valuable waste in small coins.  The US briefly dropped copper pennies in 1943, replacing them with steel pennies ('steelies') due to the demand for copper in wartime.  I remember when they used to be in general circulation.

Getting rid of the coin will have little impact on inflation, the Bank of Canada said in a May 2010 report. Electronic transactions will still be priced in cents, while retailers will round cash transactions to the nearest five-cent interval, according to the budget documents. The coin will still be usable in payments.

“It’s a bit hard to swallow,” said Francois Gendron, the 34-year veteran press operator who helped Flaherty strike the last coin. “It’s a bit of history.”

The Canadian penny has always been a bit of an embarrassment in the US.  Because they are the same size and shape as a US penny, they tend to circulate across the border and mix in with population of pennies in the States.  In the good old days, when the Canadian dollar was worth less than the US dollar, getting a Canadian penny in change was kind of like getting getting cheated of a trivial amount of money (not enough to complain about though).  Never mind that you would just pass it on the next time you could spend a penny.  Once the Canadian dollar became more valuable than the US dollar, a Canadian penny became a bit of mockery, that our super power had become downgraded with respect to the little country that floated like scum on the top of ours. Right now, they're about dead even, with just a beaver hair favoring the Canadian dollar.