The issue of eliminating the penny from circulation has come up again, thanks to CanWest getting some Access to Information documents from the Royal Canadian Mint. The documents show the results of a study into the elimination of the penny.
The arguments (summarized in this Wikipedia article about the now-similarly-valued U.S. penny) are as follows:
Keeping the penny (also summarized in this page from Americans for Common Cents):
- Public support. A majority in the U.S. still support keeping the penny, while Canadians are mostly unsure. I would argue that this is more about resistance to change and emotional attachment to the penny (how will we buy people’s thoughts? Will we have to put our five cents in?) than it is about any economic or practical reason. (The fact that the penny celebrates its 100th birthday next year may also have something to do with it)
- Ever-so-slightly higher prices. Though this is technically true, it only works if you end up using the pennies you get at the register, either by rolling them up and bringing them to the bank or by giving them to cashiers as much as you get them.
- Charities take pennies. But even they’re finding pennies tedious. UNICEF stopped distributing those boxes for kids at Halloween because the cost of transporting and counting them took away too much from their face value.
- Profit for mints. This one is debatable. Both mints in Canada and the U.S. say they make money off pennies, producing them for less than their face value, and selling them at one cent each. But others argue that indirect costs (like transportation) aren’t calculated in this equation, and that they’re actually losing money.
Eliminating the penny:
- They’re not accepted in vending machines. This is a big one for me, even though I don’t use them much. It’s how a lot of people get rid of their change. If vending machines don’t take them, then they become worthless… which brings me to my next point:
- They’re worthless. Society has already spoken in its habits on this. Nobody bends over to pick up a penny. Stores have “take a penny leave a penny” trays where people recycle them. Pennies are hoarded with no second thought.
- They’re a pain. You can’t use them in bulk to make purchases, you can’t use them in vending machines, so the only way to get rid of them is to use up to four at a time when paying cash or roll them up and bring them to the bank (waiting half an hour in line between 10am and 3pm when they’re open). Another increasingly popular method is these new coin-counting machines they’ve installed in grocery stores (the Metro on Queen Mary has one). They automatically sort your change and give you higher denomination currency in exchange for 10% of its worth. (I don’t know about you, but I’m not crazy about giving a machine 10% of my money just to count it)
- I say so. Dammit.
I won’t get into these multimillion-dollar out-of-their-asses projections by economists on “lost productivity” because of the time it takes to count pennies and such, because they’re absolutely meaningless. The practical reasons above speak for themselves.
But while I’m in favour of eliminating the penny, I’m not crazy about the proposed solution at the cash register: Swedish rounding. It means prices (when paid in cash) will be rounded to the nearest 5-cent value. So $10.01 would be $10, and $10.07 would be $10.10.
My problem is two-fold:
- This rounding method presents problems at the midpoint. It’s not an issue with five-cent intervals, but if you have to round to the nearest dime, what do you do with $1.05? The method suggests flipping a coin to decide, which is silly. Others arbitrarily round up, or arbitrarily round down.
- Put simply, anything that costs $0.02 is now free. Perhaps it’s just an academic issue since you can’t buy anything for just a penny anymore, but it just kind of bothers me. What if someone just decided to buy a penny of gas at a time? They could go on forever and never have to pay anything. (I’m sure there are laws about this, but it’s just tinkering with a broken system.)
We already round values up to the next penny, when we apply taxes. $0.80 plus tax in Quebec is $0.9116, which is rounded up to $0.92 instead of down. Why not just apply this up to the next level? Yes, you pay more, but it eliminates the problem of being able to pay someone less than what your purchase is worth.
We may be sentimental about the penny, but what happened when tuppence, farthings, groats, shillings, and shinplasters kicked the dust? Oh, right — we survived. But I’ve never had a surfeit of pennies…they’re useful for buying morning coffee and sweets. As they say, penny wise; pound foolish…
I’ll guess that the push to eliminate the one cent coin comes from retaillers. It does cost money to handle coins and if they can round up to the next five cents they make money both by the slightly higher price they charge and by eliminating the need to handle bulky, low-value, coins.
As to the “penny” celebrating its 100th. birthday in 2008 this isn’t quite true. The present size was adopted in 1908 however before that there was a larger one-cent piece which was issued by the Dominion of Canada and before that by the Province of Canada starting in 1858.
The penny itself has had a long and honourable history in Britain finally being replaced by the New Penny in 1972 when Britain went metric. As to the question of what happened when the farthing, tuppence, thrupence and groat were withdrawn this is relatively straight forward. As far back as medeival times the penny was a comparatively large sum of money and thus was divided in for so that four farthings equalled one penny. After several hundred years the value of money changed and the farthing waned as the number of cases where amounts involving less than a penny was charged became quite small and, as a result, the number of farthings being introduced into circulation was also small. Since the penny was already 1/240 of a pound (12 pence = 1 shilling and 20 shillings = 1 pound) eliminating the farthing was fairly easy. The sixpence was likely a more useful coin and the two- three- and four- penny coincs could always be replaced by the requisite number of pennies. Those coins came into existance because of the need for a coin larger than a penny but smaller than a sexpence or shilling as it still represented a large amount for many persons over a several hundred year period.
If the one-cent coin is eliminated then prices will go up as merchants are more likely simply to raise prices rather than do rounding on the total of a bill which would entail additional expense as cash registers would have to be reprogrammed.
If we all just rolled them up and took them to the bank, as I do, it can be a very worthwhile, and painless, savings plan.
Who can I complain to or voice my opinion about the Penny being taken away but things still cost $1.43 or $ 25.96.. The government is taking money from us that doesn’t belong to them. This is amajor concern of mine. I would like some direction. Sheri mthchell
It’s not. Unless you’re filing your tax return with cash, the government isn’t seeing extra money from this.