When Canada discontinued their penny last year, the news seemed both trivial and obvious. For years, there has been a debate in the States to do the same. While many people advocate to put the sparest of spare change out of its misery, the penny also has strong supporters demanding its survival.
When the half-cent was discontinued a hundred and fifty years ago, it had the spending power of a modern-day dime and was deemed irrelevant due to inflation. Had the penny been ended when it reached the worth of a modern-day dime, it would have been gone by 1950.
How does Canada make the transition of phasing out pennies easier? Rumor has it that they just use US Pennies for change!
For the last six years, the cost of minting a penny has been more than its actual worth, coming out to over two cents per coin in 2012. When Canada discontinued their penny, it cost them 1.6 cents to mint each one. The US Mint has been researching cheaper metal alternatives to comparatively expensive zinc, which constitutes 97.5% of every penny minted since 1982.
There is also the question of the everyday usefulness of pennies. You can’t exactly use them in vending machines, parking meters, or toll booths (except in Illinois, where support for the Lincoln-faced coin is especially strong). Counting them out to make exact change when paying in cash can be cumbersome and, according to some, wasteful of time.
Not only Canada has dropped its lowest-denominated coins. Countries that smoothly made similar transitions with their low-value coins include Australia, New Zealand, Israel, Brazil, Finland, the Netherlands, Norway, Sweden, Switzerland and Britain. In fact, in the states, military bases eliminated pennies over thirty years ago.
Whether the penny could be discontinued anytime soon remains to be seen. Two bills since 1990 have been proposed to end the penny, and both failed. Supporters of the penny, including the organization Americans for Common Cents, argue that if they are discontinued and prices are rounded to the nearest five cents, the government will actually lose money because nickel production will increase. A nickel costs eleven cents to mint — yet another coin that costs more to mint than its own worth.
Penny supporters also point out that drives for charities, which thrive on people donating their extra loose change, would be in danger of suffering. It can also be argued that elimination would not end the loss of money from minting, but actually increase it with the higher demand for nickels, as well as add to inflation as businesses would likely put a “rounding tax” on goods that have prices that don’t end in zero or five. It’s even possible the Denver Mint, the main supplier of pennies, would have to downsize and people would lose their jobs.
There are a lot of factors to be considered in this debate over the penny. Opinions, comments, and questions are welcome.
- Let’s Drop Pennies, and Nickels Too While We’re At It (realclearmarkets.com)
- Pennies from heaven? No, coins from Canada (ask.metafilter.com)
- Save the ‘Penny’ Campaign! (shootthescribe.wordpress.com)
- How the Civil War Caused the Ban on Private Coins (pertainingto.com)