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The End of the Cent (in Canada)

This article was written by in Economy. 5 comments.

In 2011, the United States government lost over $60 million through the minting of pennies. One-cent pieces now cost the government 2.41 cents, each, to produce. When the American cent was introduced in 1793, a typical annual salary for a teacher may have been about $60, so a cent would represent 0.016 percent of this person’s salary. That may seem insignificant at first, but a cent today represents 0.000025 percent of a teacher’s salary of $40,000 today.

In 1793, you might have expected a loaf of bread to cost about 4 cents. Today, a loaf of bread from my supermarket’s bakery is being sold for $2.69. The cent played a much more significant role in life when it was introduced in this country alongside the other coins and currency.

CentsA few years ago, the Federal Reserve Bank of Chicago proposed an odd solution to the problem caused by the rising costs of producing the cent. The Chicago Fed suggested revaluing the cent to be worth five cents, like the nickel. Canada has offered what is probably the best solution for this particular dilemma: halting production of one-cent pieces entirely.

This fall, Canada will no longer produce the cent. Retailers will need to adjust prices for cash transactions, rounding to the nearest five cents. Electronic transactions will continue to be processed in one-cent increments, so no rounding will be necessary for debit or credit card transactions in Canada. All cents in Canada will eventually be pulled from circulation.

One concern is that the lack of cash prices in one-cent increments and the necessity of rounding will cause prices to increase overall, but Canada’s Ministry of Finance points to other countries that have eliminated the cent and have not experienced rising prices.

This is clearly the path the United States should take. The cent is a nuisance, and is expensive for the government (and public) to produce, and should be eliminated. A price difference of one cent is meaningless in today’s economy.

Photo: Robert Couse-Baker

Updated January 16, 2018 and originally published April 4, 2012.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 5 comments… read them below or add one }

avatar 1 Ceecee

It seems that soon we will have all electronic transactions anyway. But, being old enough to remember penny candy, a piece of me would be sad to see the penny go away.

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avatar 2 tbork84

It would be a bit sad to see the penny go away, but things like penny candy are long gone. There is next to nothing in this world that you can get for a few cents.

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avatar 3 shellye

I remember penny candy too, but if we’re losing $60 billion in penny-minting, it’s just not good for us financially to keep making them. There are a lot of other things we can do with $60 million.

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avatar 4 Anonymous

I completely agree. The penny has long ago lost it’s luster. It’s time to retire it. I like to think of it as producing an item for 2X what you’re selling it for. No sensible person would do that, why should the Fed?

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avatar 5 qixx

“Find a penny. Pick it up. All day long you’ll have good luck.” One the penny is no longer minted this saying will be even more true. With fewer pennies the day will likely be even more lucky even if you have fewer of them.

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