New democratic MP Pat Martin introduced a bill on April 2 to eliminate the penny, arguing that the one-cent coin is virtually worthless, rarely used, and costs more to produce than it’s worth. Martin is not alone in his criticism of the lowly penny, first minted in Canada in 1908. Over the years, a number of studies have highlighted the economic inefficiency of keeping the coin in circulation, while debunking the belief thaat such a move would be inflationary. A handful of countries, including Australia, New Zealand and Spain, have already eliminated their lowest-denomination coins. If the penny’s ultimate fate is to end up sitting in a Mason jar, you have to wonder if producing them is really worth it. Indeed, the life cycle of a Canadian penny — which isn’t cheap, depending on whom you believe — is a downright inglorious one. But would it be missed?
Conception: The Royal Canadian Mint commissioned British artist G. E. Kruger-Gray to create new designs for coins, which debuted in 1937. Prime Minister William Lyon Mackenzie King had previously rejected submissions from Canadian artists. The maple leaves on the penny, still in use today, are Kruger-Gray’s creation.
Birth: Kruger-Gray’s design was stamped onto 1.16 billion pennies in 2006, weighing around 2,726,000 kilograms altogether. More than 30 billion one-cent coins have been put in circulation since 1908, enough to circle the earth at least 14 times when lined up . The Mint pegs the cost to produce a penny at 0.8¢. But economists at Desjardins Group claim the true price is closer to 1.5¢, after indirect costs such as transportation and storage are added. Other economists estimate the seigniorage loss to the Mint (the difference between the value of money and the cost to produce it) will total $37 million in 2010.
Work: The purchasing power of a penny is trivial. Twelve cents could buy a pound of sausage in 1905; today, 12¢ will buy about half a breakfast link. Only 37% of Canadians regularly use the one-cent coin, according to Desjardins, while the Mint claims 58% of consumers say they “need” pennies. But just counting the one-cent coin adds approximately two seconds to each retail cash transaction, resulting in an annual time cost of $129.8 million.
Disease: A coin will pass through many pairs of hands during its 30-year life, collecting nasty bacteria such as E. coli. Coins, however, are not as germ-infested as we may think — at least compared to bills. A study by the University of Ballarat in Australia in 2006 found one or two bacteria cells per square centimetre on coins, versus 10 cells per square centimetre for bills.
Death: Penny production jumped by 51% between 2005 and 2006. The Mint says the increase is partly explained by growing retail sales and a booming Canadian economy, thereby increasing demand for coins. Desjardins suggests another reason: pennies aren’t getting back into circulation because people are simply hoarding them or throwing them away.
Afterlife: The Mint implemented a coin recycling program in Canada in 2003, allowing people to rid themselves of mountains of change at kiosks in exchange for cash. About 406 million coins were recycled in 2006. Typically, more than 60% of the recycled coins are pennies.