Back in July of last year I wrote about the impending death of the Canadian cent Here. Well that is apparently not the end of it. Yes in Canada electronic transactions will continue to be rounded to the nearest hundredth, but now cash transactions will be rounded to the nearest twentieth, or the nearest nickel as it were.
Canada also plans to reclaim all of the cents from circulation over the next six years or so and reclaim the metal. Starting February fourth the Canadian treasury plans to start the reclamation that will result in the destruction of over six billion small cents. The Canadian small cent had been in production starting in 1920 and ending finally in 2012. Our small cent has been in constant production since 1857. The change from large cents, both about the size of a modern-day quarter, were to save on the material cost of the copper as it went up in price over the years, then in 1982 for the United States and 1997 for Canada the transition to a copper plated zinc cent was made to further reduce the cost of production. Canada then switched in 2000 to copper plated steel. Finally the Canadian Finance Minister calling the cent a nuisance advocated for its end.
Many papers and studies showed that the Canadian cent should have been ended as early as 1982, which is interestingly about the time Canada stopped producing paper dollar bills. Now the question is moving on to the Canadian nickel.
The Canadian nickel has long been under reclamation process by the treasury/finance department of Canada. The reason for that is in 2000 Canada switched to a steel coated core for their nickels. From 1982 to 1999 the nickel mimicked the American makeup for the nickel of 75% copper and 25% nickel, prior to 1982 the nickel was composed of 99.9% nickel* all the way back to 1922 when the nickel stopped being made of silver.
As the price of nickel went up the mint and treasury made it their business to pull those coins out of circulation for reclamation, kind of the same way our government pulled 90% silver coins out of circulation in 1965-1968, incidentally causing the coinage shortage that was blamed on coin collectors as the government lined their vaults with reclaimed silver as it went up in price.
Now with individuals hoarding nickels in Canada, in the United States too (recently the metal in a U.S. nickel has been worth as much as 7 cents, prompting the bill to keep Americans in the United States from melting nickels and pre-1982 cents) the treasury departments are looking at the cost of creating, supplying, and distributing an increasing amount of Canadian nickels. There are some that believe the tipping point to a production cost that cannot continue is right around the corner.
If their nickel dies, start watching our own cent and nickel production as they come under increasing fire for their high production costs, 1.6-1.8 cents for each cent and 6.8-7.2 cents per nickel, and their termination becomes more likely.
A sad day for collectors and for consumers, as they say it won’t result in inflation based on closed model simulations used on overseas military bases where the cent has been eliminated for weight.
*the nickel was briefly made out of tombac, a copper tin mixture in 1942-1943 and chrome plated steel in 1944-1945, 1951-1954 because of war shortages.