Once again, the Canadians are ahead of Americans on the cutting-edge.........
DBSTrader2
Posts: 3,487 ✭✭✭✭
From a not-too-old issue of Canadian Coin News........................ Maybe the U.S. should consider giving Lincoln the same "noble funeral" after we celebrate his bicentennial with multiple coins in '09? Say goodbye to copper price concerns, open additional Mint capacity, save the country excessive losses in production costs over value, etc? And imagine the collecting boom that might follow, as people raced to complete sets before coins could be turned-in to the Mint or melted..........
What does everyone else think?
Article:
History might be made on January 1, 2009, if a private member's bill being put forth passes through the House of Commons.
Pat Martin, New Democratic Party (NDP) MP for Winnipeg Centre, introduced a bill into the House on April 2, that would see the elimination of the 1-cent coin (penny). If the bill passes, it would mark the first time in Canadian history that a local currency would be demonetized.
"As of January 1, 2009, the Royal Canadian Mint would cease to produce the penny," said Martin. "In turn, a rounding formula would be introduced, and the penny would cease to be legal tender."
Martin suggests that a five-year grace period would then be instilled, where anyone with pennies, would be able to return them for face value. However, after the grace period is completed, the penny would have no cash value apart from being a collector's item.
In terms of current value, the penny has next to no buying power. Gone are the days when you could go to the corner store and buy penny candy. Today, to many including Martin, it is simply a nuisance that should be eliminated.
"In 1908, the average salary for an individual in Canada was $400. It is now $37,000 and the penny is still around," said Martin.
He points out that the bill originated with him viewing the coin as a nuisance until he read a report on the penny a couple of years ago. At this point, he sought the help of the Library of Parliament to draft up the bill and do research.
"Surveys of retailers, small and medium-sized businesses and the public, found that 63 per cent of businesses and 40 per cent of the general public agree that the penny should be eliminated," said Martin.
Additionally, upon hearing of the bill, Ontario Premier Dalton McGuinty agreed with Martin and said that he also believes that the penny should go.
If the bill does pass through the House, the system that would be implemented in Canada, would be similar to ones used in New Zealand and Australia. Both countries eliminated their 1- and 2-cent coins in the early 1990s. New Zealand took it a step further and eliminated their 5-cent coin in 2006.
The system would work something like this. When making your purchase, the prices of all items would be the same as they are now, the only price affected would be the total purchase price at the checkout. Here, if your total ends in 1, 2, 6, or 7 cents, it would be rounded down to the nearest five or 10-cent mark, while totals ending in 3, 4, 8, or 9 would be rounded up. Debit and credit card transactions would not be affected.
"In the end you will only see a difference in price of two cents up or down," said Martin. "In studies of the system used in New Zealand and Australia the revenue is neutral."
In 2006, the Royal Canadian Mint produced almost 1.2 billion pennies. To put this into perspective, if you were to add up all other Canadian circulation coins together, they would total just under 1.05 billion coins. Therefore if the penny was to be eliminated, room would be freed up for the RCM to mint coins from countries all over the world.
"The Mint should market itself more to other countries around the world," said Martin.
In the end, Martin believes that most people understand the new system without the 1-cent coin, and in turn would like to see it go.
Interestingly, Martin may not be finished. He mentioned that over time the 5-cent coin should also be eliminated.
"New Zealand can teach us something," he said. "I spoke with people in both Australia and New Zealand and they like their system and life did not end after the demise of the penny."
Coincidently, this year is the 100th anniversary of the penny being produced in Ottawa, and Martin believes it would be a great time to give the penny a noble funeral.
Follow-up article:
This year marks the 150th anniversary of the first Canadian one-cent piece (the very collectible 1858 large cent) and the 100th anniversary of the first coin minted in Canada, but it may also mark the end of the so-called penny's production.
As reported in the last issue of CCN, on April 2 New Democrat MP Pat Martin (Winnipeg Centre) formally introduced a private member's bill in parliament that would eliminate the copper-coloured coin from circulation.
Under his proposal, commerce would still be conducted in one-cent intervals, but the final amount owing in any transaction would be rounded to the nearest nickel. Something which has already been done in Australia and New Zealand, both of whom eliminated their penny. In the case of New Zealand, they eliminated everything below 10 cents.
"To put it simply, the penny has virtually no commercial value, it barely circulates, and it costs more to produce than it's worth," Martin said.
The idea isn't really new, in 1993 and 1996 bills to eliminate the penny were introduced in the Canadian Parliament, while the United States Congress has voted on the issue six times. However, Martin says, "The business case for abolishing the penny is overwhelming now."
After 150 years of circulation, the penny and its low face value might not be worth the trouble. For starters, the penny now costs more to produce, distribute, and store, than it is worth (numismatists will note this is known as negative seigniorage). In 2003, two economists from Wilfred Laurier University calculated that, based on the Royal Canadian Mint's (RCM) own figures, it costs around four cents to produce, store and transport a single penny.
There have been other estimates and the RCM has worked to reduce costs but last year a report by the Desjardins Group, a major Canadian credit union, determined that the cost was not likely to be less than a cent and a half.
More importantly, economists say that the penny has external costs forced on business and individuals because we are forced to carry them around, count them, roll them and because there is an economic cost of all the pennies that fall between couch cushions, never to be seen again. That cost is estimated at $150 million.
Figures released in May 2007 show that we produced 2.2 billion of the copper-toned coins in 2006, accounting for more than half of the RCM's domestic production. Experts say there is an 'artificial demand' for pennies because so many are removed from circulation to sit on sidewalks or in tin cans along with the odd button.
"The support for this idea is growing too," Martin said. "A study prepared for the Royal Canadian Mint in September 2007 indicated that small retailers, big retailers and public opinion all agree with this initiative."
The study in question revealed that:
63 per cent of small retailers supported removing the penny, while only 19 were opposed.
Consumers were split more evenly with 42 per cent in favour and 33 per cent opposed but almost a quarter of those surveyed were "neutral."
93 per cent of businesses claimed they will allow a purchase even if a customer is "one or two pennies short" and 69 per cent said there would be nothing different to the way they run the business if pennies were eliminated.
64 per cent of people surveyed said they "wouldn't go down the back of the sofa if [they] dropped a penny while watching TV."
While many people may be prepared to accept the elimination of the penny, the Desjardins Group 'upped the ante,' in April, by releasing a revised version of their 2007 study.
The new report still calls for the elimination of the penny, but it also says we should follow that action a few years later by discontinuing the 5-cent piece as well. We need to adopt a 20-cent coin to replace the 25-cent piece, re-popularize the use of half dollars and create a $5 coin.
This would take place over the next 20 years and the end result would be very similar to the process currently in place in New Zealand with 10-, 20- and 50-cent coins as well as our homegrown $1 and $2 coins with the new $5 coin.
The report adeptly notes that for these coins to be effective in circulation, they would have to be redesigned to be smaller and lighter. After all, today's heavy and oversized 50-cent piece is essentially a coin for collectors, rarely circulated in part because of its size and weight.
At this point it is doubtful that the Desjardins Group's recommendations will be acted on, but the penny's fate may be sealed.
The parliamentary finance committee recently decided to study Martin's bill and the issue of eliminating the penny, meaning any collector who has been assembling a complete one-cent set could be finished with the addition of this year's cent.
What does everyone else think?
Article:
History might be made on January 1, 2009, if a private member's bill being put forth passes through the House of Commons.
Pat Martin, New Democratic Party (NDP) MP for Winnipeg Centre, introduced a bill into the House on April 2, that would see the elimination of the 1-cent coin (penny). If the bill passes, it would mark the first time in Canadian history that a local currency would be demonetized.
"As of January 1, 2009, the Royal Canadian Mint would cease to produce the penny," said Martin. "In turn, a rounding formula would be introduced, and the penny would cease to be legal tender."
Martin suggests that a five-year grace period would then be instilled, where anyone with pennies, would be able to return them for face value. However, after the grace period is completed, the penny would have no cash value apart from being a collector's item.
In terms of current value, the penny has next to no buying power. Gone are the days when you could go to the corner store and buy penny candy. Today, to many including Martin, it is simply a nuisance that should be eliminated.
"In 1908, the average salary for an individual in Canada was $400. It is now $37,000 and the penny is still around," said Martin.
He points out that the bill originated with him viewing the coin as a nuisance until he read a report on the penny a couple of years ago. At this point, he sought the help of the Library of Parliament to draft up the bill and do research.
"Surveys of retailers, small and medium-sized businesses and the public, found that 63 per cent of businesses and 40 per cent of the general public agree that the penny should be eliminated," said Martin.
Additionally, upon hearing of the bill, Ontario Premier Dalton McGuinty agreed with Martin and said that he also believes that the penny should go.
If the bill does pass through the House, the system that would be implemented in Canada, would be similar to ones used in New Zealand and Australia. Both countries eliminated their 1- and 2-cent coins in the early 1990s. New Zealand took it a step further and eliminated their 5-cent coin in 2006.
The system would work something like this. When making your purchase, the prices of all items would be the same as they are now, the only price affected would be the total purchase price at the checkout. Here, if your total ends in 1, 2, 6, or 7 cents, it would be rounded down to the nearest five or 10-cent mark, while totals ending in 3, 4, 8, or 9 would be rounded up. Debit and credit card transactions would not be affected.
"In the end you will only see a difference in price of two cents up or down," said Martin. "In studies of the system used in New Zealand and Australia the revenue is neutral."
In 2006, the Royal Canadian Mint produced almost 1.2 billion pennies. To put this into perspective, if you were to add up all other Canadian circulation coins together, they would total just under 1.05 billion coins. Therefore if the penny was to be eliminated, room would be freed up for the RCM to mint coins from countries all over the world.
"The Mint should market itself more to other countries around the world," said Martin.
In the end, Martin believes that most people understand the new system without the 1-cent coin, and in turn would like to see it go.
Interestingly, Martin may not be finished. He mentioned that over time the 5-cent coin should also be eliminated.
"New Zealand can teach us something," he said. "I spoke with people in both Australia and New Zealand and they like their system and life did not end after the demise of the penny."
Coincidently, this year is the 100th anniversary of the penny being produced in Ottawa, and Martin believes it would be a great time to give the penny a noble funeral.
Follow-up article:
This year marks the 150th anniversary of the first Canadian one-cent piece (the very collectible 1858 large cent) and the 100th anniversary of the first coin minted in Canada, but it may also mark the end of the so-called penny's production.
As reported in the last issue of CCN, on April 2 New Democrat MP Pat Martin (Winnipeg Centre) formally introduced a private member's bill in parliament that would eliminate the copper-coloured coin from circulation.
Under his proposal, commerce would still be conducted in one-cent intervals, but the final amount owing in any transaction would be rounded to the nearest nickel. Something which has already been done in Australia and New Zealand, both of whom eliminated their penny. In the case of New Zealand, they eliminated everything below 10 cents.
"To put it simply, the penny has virtually no commercial value, it barely circulates, and it costs more to produce than it's worth," Martin said.
The idea isn't really new, in 1993 and 1996 bills to eliminate the penny were introduced in the Canadian Parliament, while the United States Congress has voted on the issue six times. However, Martin says, "The business case for abolishing the penny is overwhelming now."
After 150 years of circulation, the penny and its low face value might not be worth the trouble. For starters, the penny now costs more to produce, distribute, and store, than it is worth (numismatists will note this is known as negative seigniorage). In 2003, two economists from Wilfred Laurier University calculated that, based on the Royal Canadian Mint's (RCM) own figures, it costs around four cents to produce, store and transport a single penny.
There have been other estimates and the RCM has worked to reduce costs but last year a report by the Desjardins Group, a major Canadian credit union, determined that the cost was not likely to be less than a cent and a half.
More importantly, economists say that the penny has external costs forced on business and individuals because we are forced to carry them around, count them, roll them and because there is an economic cost of all the pennies that fall between couch cushions, never to be seen again. That cost is estimated at $150 million.
Figures released in May 2007 show that we produced 2.2 billion of the copper-toned coins in 2006, accounting for more than half of the RCM's domestic production. Experts say there is an 'artificial demand' for pennies because so many are removed from circulation to sit on sidewalks or in tin cans along with the odd button.
"The support for this idea is growing too," Martin said. "A study prepared for the Royal Canadian Mint in September 2007 indicated that small retailers, big retailers and public opinion all agree with this initiative."
The study in question revealed that:
63 per cent of small retailers supported removing the penny, while only 19 were opposed.
Consumers were split more evenly with 42 per cent in favour and 33 per cent opposed but almost a quarter of those surveyed were "neutral."
93 per cent of businesses claimed they will allow a purchase even if a customer is "one or two pennies short" and 69 per cent said there would be nothing different to the way they run the business if pennies were eliminated.
64 per cent of people surveyed said they "wouldn't go down the back of the sofa if [they] dropped a penny while watching TV."
While many people may be prepared to accept the elimination of the penny, the Desjardins Group 'upped the ante,' in April, by releasing a revised version of their 2007 study.
The new report still calls for the elimination of the penny, but it also says we should follow that action a few years later by discontinuing the 5-cent piece as well. We need to adopt a 20-cent coin to replace the 25-cent piece, re-popularize the use of half dollars and create a $5 coin.
This would take place over the next 20 years and the end result would be very similar to the process currently in place in New Zealand with 10-, 20- and 50-cent coins as well as our homegrown $1 and $2 coins with the new $5 coin.
The report adeptly notes that for these coins to be effective in circulation, they would have to be redesigned to be smaller and lighter. After all, today's heavy and oversized 50-cent piece is essentially a coin for collectors, rarely circulated in part because of its size and weight.
At this point it is doubtful that the Desjardins Group's recommendations will be acted on, but the penny's fate may be sealed.
The parliamentary finance committee recently decided to study Martin's bill and the issue of eliminating the penny, meaning any collector who has been assembling a complete one-cent set could be finished with the addition of this year's cent.
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Comments
Or they could continue it in mint and proof sets.
Or they could go aluminum, but that hardly seems worth the trouble.
Or they could make private cent tokens legal tender up to one cent value. That particular idea, when I first read about it on the forums, sounded absurd to me at first, but then, when one thinks about it in the historical context, vis-a-vis Hard Times tokens and Civil War tokens when it was done before (and when the cent had much more buying power), it doesn't seem so nutty. And it would have some very interesting numismatic/exonumic implications. The gov't could mandate a size, weight, and composition, and let private industry take it from there. Could be fun.
Sumnom: Without all the extra reverses, what would we fill all the extra holes in the Whitman folders & albums with?
- - Dave
- - Dave