Stupid Question ™
June 10, 1999
By John Ruch
Q: Why are Canadian coins nearly the same size and weight as US coins? Didn’t anybody think that would be a problem?
A: In Canada’s colonial times, a confusing array of currencies circulated as money: first French, British and Spanish-American, later accompanied by US money and a variety of privately issued tokens.
The move toward self-rule included proposals for a Canadian currency. Then as now, the US was Canada’s biggest trading partner. So Canadians proposed to ease trade by establishing a dollar-based, decimal-denomination currency exactly like that of the US, with its value tied directly to that of the US dollar.
In 1858 the Province of Canada (modern Ontario and Quebec) issued 1-, 5-, 10- and 20-cent coins that had the exact same value as their US counterparts. (You could exchange one US cent for one Canadian cent and vice versa.) After its 1867 birth, Canada followed suit.
Coins in those days actually contained an amount of precious metal worth the face value. (A 10-cent piece contained 10 cents worth of silver.) So coins of the same face value—whether US or Canadian—would be the same size.
In practice, however, Canada generally used alloys with a higher percentage of actual precious metal. This meant most of their coins were slightly smaller than their US counterparts.
The opposite was true for the Canadian one-cent and five-cent, which were both somewhat larger until they were shrunken in the 1920s, apparently to conserve metal.
In any case, US and Canadian coins wound up looking very similar, and continue the tradition today.
As long as the Canadian dollar was tied to the US dollar, confusion was a non-issue; a Canadian coin was worth the same as its US counterpart. Indeed, until 1870 non-gold US coins were still legal tender in Canada, redeemable for their face value in gold at Canadian banks.
In many US border cities, Canadian coins were accepted at face value and deposited at banks without comment.
(The only problem was confusion between unequal denominations. Canada dropped its 20-cent piece because it was the same size as the US quarter.)
But in 1969, Canada unleashed its dollar from that the US to better control inflation and interest rates. There’s been an uneven (if stable) exchange rate ever since, with the US dollar currently worth about $1.50 Canadian.
Now there are relatively few of the devalued Canadian coins circulating, as fewer businesses will accept them. In Canada, however, US money can be spent freely in border cities, often at a posted rate of exchange figured out by the merchant. US coinage, especially pennies, is fairly common in Canada.
But average joes who find the other countries’ coins snuck into their pocket change are in the same boat: both US and Canadian banks will exchange foreign paper money only.