Once more into the breach with Nelson of Financial Uproar.
Let’s talk about Canada for a second, eh? We could talk about poutine, maple syrup, round bacon, hockey, or even how it’s May and there’s snow expected this week. But let’s not, since one of those things is a little depressing. Instead, let’s talk about a recent change made in their currency.
To the untrained eye, there’s very little difference between Canadian and American coins. Both countries have the same change, with the exception of Canada moving to $1 and $2 coins in the late 1980s and 1990s respectively. We Canadians do tend to love our dollar coins, even though it makes going to the strip bar slightly more awkward.
In early 2013, Canada made another change to our change, and my goodness, this was the positive change of all positive changes. Are you sick of the word change yet? Too bad, I’m not gonna change.
Canada got rid of the penny.
The same economics applied to Canadian pennies as currently apply to American ones. When the Canadian government crunched the numbers, they figured out it costs the Mint 1.6 cents to produce a penny. Just by no longer producing the coin, the government is saving $11 million per year. That’s a lot of pennies, and that’s some serious savings.
The United States has an economy that’s approximately ten times bigger than their northern cousins. If I do the math right, that’s… carry the one… a savings of at least $100 million per year. Forever.
How do people buy stuff without the penny? It’s really simple. Cash transactions get rounded to the nearest nickel, while plastic transactions end up continuing to be down to the exact penny. So if you’re getting a meal at McDonald’s and it comes to $7.73, then you’re shelling out $7.75. If you manage to sweet talk the kid behind the counter to $7.72, then you’re down to $7.70. Unless you pay with a credit card, of course.
Yes, there was an adjustment. Most stores had to reprogram cash registers to automatically round up or down the change back to the customer, and that took a little time. Other stores with older systems are just putting it all on the shoulders of their staff to figure out, and I don’t think I’ve been ripped off once in the three months since the change was made. People in general aren’t very good at math, but I’m pretty sure a stuffed rabbit could figure this one out.
There are other benefits too. Businesses don’t have to count pennies, saving all sorts of man-hours during the course of a year. They also don’t have to buy pennies from the bank anymore, making that part of the business a little bit easier too.
People are still allowed to use pennies, but they were essentially gone a month after the Mint started taking them back. You don’t have anyone using their pennies to pay for something at the local 7-11, nor are you ever stuck behind some old lady named Agnes who’s just making sure she gets rid of her pennies. Don’t yell, if you’re nice to her, maybe she’ll bake you cookies.
Oh, there’s more. You know how the government was losing money with each penny produced? If they start buying back 1.6 cents worth of metal for 1 cent, that’s a pretty good return. Maybe I should start a little sideline business paying face value for people’s jars of pennies? I’m not sure about the legality of melting down pennies for profit. Plus I don’t really have the facilities to do so.
Rats. That was the greatest sideline business idea I’ve ever had.
Getting rid of the penny has made cash transactions more efficient, it’s saved the government millions of dollars, and most pennies just sit in fountains or jars anyway. It only made sense to get rid of it, and it’s time for the U.S. Mint to follow suit. The only downside? Picking up a nickel for good luck just doesn’t have the same ring to it.
Standard 101C fare will resume next week. Perhaps even a post from the road if I’m feeling adventurous. Tune in to read all about Amsterdam hotels, taxis, hotels and meeting rooms, which is all about we get to see on quickie trips like this. Thanks to Nelson for helpfully dropping in like this on short notice (like my in-laws).
Questions for U.S. readers: getting rid of of the penny: good idea, or bad idea? A nickel for your thoughts.
* Wilkie chose to depict a type of marriage ceremony, common in Scotland, where the guests each paid a penny towards the expenses and anything left over went towards the couple’s new home.** The subject was already known, having been treated by David Allen (1744-96) in a painting in Beaverbrook Art Gallery, Fredericton, New Brunswick. The idea of the subject would seem to be that no richer couple could be happier, more loving, gracious and handsome, and no father of the bride could offer hospitality more generous and convivial than this, laid on by the community as a whole. Money certainly couldn’t buy a better fiddler than Niel Gow (1727-1807), clearly recognisable here; Robert Burns’s description of his ‘kind open-heartedness, mixed with trusting simplicity’ would probably sum up Wilkie’s intention in the scene as a whole.
** back when homes cost something like say, ten shillings, two chickens and a sack of buttons.