These are stories Report on Business is following Monday, Feb. 4, 2013.
A nickel for your thoughts?
The vending machine in my office infuriates me at times, which makes me think we should consider getting rid of the nickel, too, after the official death of the penny today.
The Royal Canadian Mint describes the 5-cent coin as "industrious, enduring" on its website, and talks about the equally enduring nature of the beaver, which first graced the coin in 1937 with a design by artist G.E. Kruger Gray. The beaver has been honoured on everything from stamps to emblems.
Okay, I get it. But all I'm reminded of is how the vending machine gave me change in nickels for $1.50 worth of peanuts last week. And those 10 nickels now sit with all the pennies gathering dust on my dresser.
Of course, the nickel is going to be in greater demand now because, on the penny's death, cash transactions will be rounded up or down to the nearest 5 cents. And, I'm betting, no one really wants to get rid of the beaver, although, hey, the penny boasted the maple leaf.
And I'm not the only one thinking about the fate of the 5-cent coin, which is, of course, bigger than a dime and weighs more in your pocket.
"With the penny set to be eliminated, the time has probably come to assess the pertinence of eliminating the nickel in the next few years now that it is also becoming increasingly obsolete," said Desjardins economists François Dupuis and Hendrix Vachon.
"Doing so would, this time, mean having to round prices up or down to the nearest dime!"
The dumb things aren’t even nickel. They used to be 99 per cent nickel from 1922 to 1942, and then 99.9 per cent, from 1946 to 1951, and again from 1955 to 1981. But now they're 94.5 per cent steel, 3.5 per cent copper and 2 per cent nickel plating.
They’re heavier than pennies and dimes – the latest versions are 3.95 grams compared to 2.35 and 1.75, respectively, while most of the older versions are 4.54 or 4.6 grams.
They’re thicker than dimes, too, at 1.76 millimeters to the dime’s 1.22. For that matter, they’re thicker than quarters, which are 1.58.
The little buggers multiply like rabbits, too: 5,543,005,243 between 1908 and 2011.
In days of yore, the nickel was actually worth something. Indeed, there was a page in the 1917-1918 fall-winter catalogue of the old Eaton's department store chain that screamed "Great 5¢ Value." A nickel in those days could get you a tea bell, a nutcracker, a scrub brush, a medicine dropper, and even "babies' feeder teats," war tax included.
Even when I was a kid, it got you a bag of chips.
But now, it buys you all of one minute in a Toronto parking meter.
But, sigh, as The Globe and Mail's Tavia Grant reports, the Mint doesn't appear to be ready to take my advice. While a penny costs 1.6¢ to make - I wonder who came up with that one? - the other coins cost less than their face value.
Today, Canada stops giving out pennies to the banks. People are supposed to take their pennies to the bank, and eventually they'll be melted and made into other stuff.
The cent still exists as a concept where credit and debit are concerned. It's only in cash deals where amounts are now to be rounded up or down. And, of course, it still exists where the government's concerned because the GST and HST will be calculated to the penny and added to the price. So only the overall total is rounded. Finance Minister Jim Flaherty may have killed off the penny in his last budget, but he still wants every cent due him.
All is supposed to go swimmingly today, though, The Globe and Mail's Marina Strauss reports, many smaller businesses aren't ready.
"In eliminating the coin with the lowest face value, Canada is following the example of many other countries that have done so successfully, e.g. Australia, Norway, Switzerland and New Zealand," the Desjardins economists said.
"The operation went smoothly in these countries and eliminating the one-cent coin, or the smallest coin, had no impact on the inflation rate, as prices were rounded symmetrically. In some cases, countries even saw certain retail prices drop slightly in the short term due to marketing operations. In fact, retailers preferred rounding final prices in the client’s favour to give them an edge over their competitors."
But for the fact that my corner store has no competitors nearby. Same for the McDonald's. There are four manicure-pedicure places, and I guess I should check them out to see.
- Retailers, banks and shoppers adjust to life without the penny
- Royal Canadian Mint sees gold in the penny's demise
- Globe Editorial: That's it for the penny. Now, about those nickels ...
- Gallery: From 1858 to 2012, the penny's changing face
- Video: Throughout her long life, penny was more than spare change
- Video: Flaherty strikes the last penny
CP grabs executive from rival
The new chief at Canadian Pacific Railway Ltd. has snatched a key senior executive from his rival railway, and promised not to raid its competitor again for several years, at least.
Hunter Harrison announced the appointment of Keith Creel as president and chief operating officer today, The Globe and Mail’s Bertrand Marotte reports.
Mr. Creel had been chief operating officer at rival Canadian National Railway.
Mr. Harrison, the former chief at CN, came out of retirement to be CPR’s chief executive officer amid a shakeup prompted by Bill Ackman’s Pershing Square Capital Management.
And in an interesting twist, CN announced that, with Mr. Creel’s departure, it has now settled its “differences” with both CP and Mr. Harrison.
“The settlement ends the outstanding litigation between CN and CP before the Federal Court in Chicago, Illinois,” CN said.
“As part of the settlement, CP has undertaken not to hire certain CN employees until December 31, 2016. Other terms of the settlement remain confidential.”
Britain gives Carney 'super cop' powers
Britain’s finance minister today outlined an overhaul of the banking system, including giving the Bank of England the designation of “super cop” as Mark Carney takes the helm.
George Osborne, the Chancellor of the Exchequer, said in a speech that regulators will be given the power to break up banks as the financial system changes.
“My message to the banks is clear: If a bank flouts the rules, the regulator and the Treasury will have the power to break it up altogether - full separation, not just a ring fence,” Mr. Osborne said.
In April, the Bank of England gets sweeping new powers. As Mr. Osborne put it today, it will be a “powerful new watchdog with real teeth,” and the “super cop of our financial system.”
Mr. Osborne’s warnings sent a shiver through British banks as Mr. Carney, the Bank of Canada governor, prepares to jump to the Bank of England in the summer.
“In London the banking sector is weighing on investor sentiment, as traders are afraid Chancellor George Osborne will break up the banks,” said market analyst David Madden of IG in London.
“In recent years the banks haven’t done much to win the affection of the great British public,” Mr. Madden said in a research note.
“First there were reckless lending policies that fuelled the property bubble, and once this burst the country was dragged into what could be a triple-dip recession. Then we had the mis-selling of payment protection insurance to the unsuspecting public; lastly there was the LIBOR-rigging scandal. All of this has infuriated people across the UK, and now the chancellor must be seen to be doing something about it.”
Scandals bite euro zone
Political scandals in Spain and Italy are shaking the confidence of voters in their governments just as those governments try to implement deep austerity measures designed to put their economies on sustainable financial footings, our European correspondent Eric Reguly writes today.
The scandals have translated into suddenly higher bond yields in Spain and Italy, reversing a downward trend that began last August, when the European Central Bank agreed to backstop any euro zone country that is in danger of getting shut out of the sovereign debt markets.
How we’re saving
Canadians who plan to save this year are aiming to sock away an average of $9,859, but 66 per cent say the money is intended for vacations, luxury items, entertainment and hobbies, The Globe and Mail’s Bertrand Marotte reports.
The fact that the Canadians surveyed in the BMO Household Savings Report say they intend to save about $600 more this year than last is encouraging, but they must also act responsibly, says Ernie Johannson, senior vice-president of personal banking at Bank of Montreal
Streetwise (for subscribers)
- Scandals in Spain, Italy has euro crisis bubbling again
- Carney set for first taste of Bank of England job
ROB Insight (for subscribers)Report Typo/Error