Pity the penny: In the past 15 years it’s lost its copper, its usage and its cost-effectiveness – the butt of jokes and bane of neat freaks well before its end became official in Thursday’s federal budget.
Despite its lowly monetary status, the penny is a high-maintenance bit of metal. It is by far the most expensive Canadian coin to produce, relative to its value. At a cost of a little over 1.6 cents per penny, it’s the only piece of currency in the country that now costs more than its value to make.
While the news of the penny’s phase-out came as a surprise even to the Royal Canadian Mint, the analysts and coin-crafters in charge of Canada’s money say they’ve known for years its days were numbered.
The pennies immortalized in overused sayings were primarily of the copper variety. But Canada’s modern one-cent piece bears little resemblance to that traditional composition.
Originally 95.5-per-cent copper in 1908, the penny went from 98-per-cent copper in 1996 to 98.4-per-cent zinc and 1.6-per-cent copper plating in 1997. It’s now 94-per-cent steel, 1.5-per-cent nickel and 4.5-per-cent copper plating or copper-plated zinc. With the price of copper rising, it just doesn’t make financial sense to use the metal on such small-fry currency.
Apart from drastic changes in its makeup, however, the penny’s surface design on the tails side has barely changed since 1937, when G.E. Kruger-Gray made the twig-and-maple-leaf that’s on today’s coins (if you’re really bored, take a close look at those leaves: His initials are in teensy font on the right).
A familiar face
Susanna Blunt remembers seeing the first penny she designed, in a fistful of change while grocery shopping in the fall of 2003.
“I just nearly died.… They handed me my Queen and I just couldn’t believe it,” she said. “It still doesn’t change. Every time I open my wallet … I look at it, I think, ‘It can’t possibly be mine.’”
Ms. Blunt, a West-Vancouver-based artist, is the largely unsung creator of the most common portrait in the country – the most recent image of the Queen that’s seen on all coins produced today.
Her design, chosen from among several artists’ renderings across the country, came out on all denominations. But the penny was the first.
Ms. Blunt admits the joy was bittersweet: There were some changes to her painstaking pencil drawing that still rankle.
“They took out an eye,” she recalled. “My portrait on the coins no longer resembles the drawing I sent them. So that was a terrible disappointment.”
Before you consider a career change, note that coin designers don’t get royalties (“I wish,” Ms. Blunt said). She received $1,000 for submitting her design and another, slightly larger, amount when it was chosen. Mint spokeswoman Christine Aquino wouldn’t say exactly how much artists get paid, because of “confidentiality provisions,” but said it definitely isn’t in the tens of thousands.
More trouble than it’s worth
One of the annoying things about the penny, from a budget-balancing perspective, is that the less useful it is, the more expensive it becomes.
Half of the 35 billion pennies the Mint has cranked out since 1908 have been produced in the past 20 years. The rising demand isn’t because people are using pennies, but precisely because they’re not: The coins get stuck between sofa cushions or grow dusty on dresser tops because no one bothers using them; if they’re out of circulation, more need to be made.
The Mint has analysts across the country tasked with monitoring the levels of currency in circulation, and what denominations are running low. If there’s a big event somewhere – the Vancouver Olympics, for example – they’ll make sure enough cash is floating around to meet demand.
The Mint makes coins based on annual need. It produced 486 million new pennies in 2010, compared with 24 million loonies and 62 million quarters. It costs $11-million to manufacture and distribute about $6.9-million worth of pennies – hardly good bang for the buck, in Finance Minister Jim Flaherty’s view.
Slow death of a coin
The Mint will stop distributing pennies to financial institutions this fall. But don’t panic: Your one-cent coins are still legal tender to be spent or donated, but businesses will be asked to give them to a bank so the metal can be recycled and melted.
The phase-out, Ms. Aquino said, won’t result in job losses at the Mint – anyone on penny duty will be transferred, likely to work the Mint does making other countries’ coins.
For Canadian coin collector Sid Belzberg, the penny’s demise is a bad omen. He casts back to the Roman Empire’s shrinking currencies and sees a disturbing trend in coinage phase-out.
“As a civilization deteriorates, the intrinsic value of what they have decreases,” he argued. “The coinage gets debased and then eliminated.”
For Ms. Blunt, however, the sadness is more sentimental.
“I knew that they were going to do that eventually, so it’s not a surprise. But … the penny has almost a mythical quality,” she said. “There have been nursery rhymes about the penny, it’s the good luck penny. How can you not have pennies any more?”