In a major break with tradition, Canada is doing away with the humble penny. Citing cost of production and weakened buying power due to inflation, the Canadian Government is to phase the 1 cent piece out of circulation from February 2013. 2012 is the last year the penny will be struck for circulation and the change is causing quite a stir amongst numismatists, for a number of reasons. It’s also leading some to speculate that the Australian 5 cent piece could be next.
A coin with a fascinating history, the Canadian penny denomination was, from 1858 to 1908, struck in England and shipped to Canada for use in circulation. The penny would ultimately become one of Canada’s first domestically produced coins, with the recently opened Royal Canadian Mint first striking the denomination in 1908. With several dates from the penny series attaining notoriety due to interesting background events or great rarity, this denomination has gained a significant following worldwide. For example, a 1923 King George V penny in Brilliant, Uncirculated condition could potentially realise upwards of $2,000 at auction, signifying interest in the history of the Canadian penny.
Perhaps the most famous example of that history is the 1936 dot cent. After the Death of George V in early 1936, dies were made that featured King Edward VIII, for use in 1937. Upon Edward’s abdication those dies became unusable, so the existing 1936 dies were used, with the addition of a dot under the date to distinguish them. Once new designs were available, the 1936 dot cent was destroyed. With only three known to exist and a recent sale fetching $400,000, it’s a prime example of the important place in numismatics of lower denomination coinage generally, and the Canadian Penny in particular.
Despite this rich history, the financial reality is that the 1 cent piece in Canada has proven too costly to produce. With a production cost 1.6 cents per coin, plus the cost of handling the millions of coins in circulation borne by banks and businesses, the Canadian government has decided to ditch the nation’s lowest denomination coin.
This change has driven demand for commemorative sets, as any change in circulating currency is, rightfully, watched very closely by numismatists worldwide. Demand for Canadian pennies of all kinds will only increase as they become progressively scarce.
This end of an era is part of a growing trend followed by a number of countries to remove their lowest face-value coins from circulation, and it raises the question: should Australia stop producing the 5 cent piece? Let us know what you think in the comments below.