— wm Knowlton Thomas

because its use had diminished,

and the penny became the
smallest denomination of currency
in the United States. 150 years later,
North American government and
economists are wondering if it is
now time to retire the penny.

There are many valid reasons
why the penny shouldn’t retire,
however. In abolishing the penny,
prices for goods would have to be rounded up or
down—and you can bet safely that you’re going to
see more ups and downs. The penny’s vanishing
act, then, would trigger a small wave of inflation.
Research suggests that inflation would create $600
million of extra spending over a year, although if
you take America’s population of over 300 million,
that’s less than $2 per person. Still, sudden inflation
would also likely cause the government to spend

[: 1857, the American halfpenny was abolished

12

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more money. An economics professor at Penn State
University estimates that abolishing the penny
would result in $1 billion more in government
spending over a five-year period because payments
from many government programs are linked to
inflation in both Canada and the U.S.
Furthermore, no penny would likely mean
more nickels. While the penny costs nearly two

When somebody drops a penny, they often don’t bother to pick it up—the
time and effort isn’t worth regaining possession of the coin. It may even
be a while before somebody else decides to pick up. It isn’t a lucky penny
anymore, as the old adage goes, but rather dead weight and a nuisance
when you’re looking for other coins in your pocket or purse.

cents to produce, as revealed from the Obama
administration’s recent budget, a nickel costs
nearly a dime. While both cost twice their worth
to produce, the nickel costs significantly more
overall, and increased nickel production would not
serve to reduce costs in making small change for
North Americans (Yes, a penny saved is worth two
pennies melted, but you’re not the first to think of
it, and no, it’s not legal).

So there are a few potential downsides. Still,
the negative connotations with abolishing a penny
are, rather inarguably, outdated. North America is
lagging behind the times. Australia removed its
one- and two-cent coins in the early ‘90s. So did
New Zealand—in fact, they even demonetized
their five-cent piece. The United Kingdom gave up
their farthing, a quarter penny, and their halfpenny
once they became redundant.

In the 13" century, a farthing
could buy an entire chicken.

By the 1950s, just before it was
demonetized, the coin could be
exchanged for a single gumball.
At best. This sort of dramatic
reduction in value is no different
with the cases of the Canadian
and American pennies.

With the Canadian and American pennies
equally as useless, and with many other leading
countries dropping their smallest coins, it makes
sense for us to abolish the penny and consider
the nickel soon after. Inflation has eaten away at
the penny for decades and rendered insignificant.
According to a Royal Canadian Mint survey
released in October 2007, 42 per cent of consumers
would support abolishing the penny, with only 33