Why were the $1 bills discontinued?

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Hello, all!

Just want to ask you something...

Does anybody know why the $1 bills were replaced by the $1 coin, a.k.a. the "loonie" in 1989?  Were they discontinued as a cost-saving measure like the $2 bill being replaced by the "twoonie" in 1996?  Or were the $1 notes discontinued for other reasons?

You're stating the obivous.

Same reason as the $2

Thanks, can-banknotes, for your reply.  
And welcome to the board.  

Just from memory.
The $1 notes were replaced by the $1 coin, starting in 1987, with no more $1 notes made after 1989. The cost of replacement of the notes is such that the average life was less than 9 months, the coin should last 20 to 30 years.

Vending machines needed a coin of larger denomination than 25 cents, as most items required more money. Thus the loon was a good replacement for the note.

The $2 coin is similar, it took a little longer to upgrade all the vending machines to accept it.

The US has twice attempted to follow the lead of Canada, the SBA coin in 1979 was first (and before us), followed by the current coin. Unless the notes are actively withdrawn, and the vending industry comverts to coin, there is no reason to use the coin over the note according to public taste for change.

Rick

I still believe it was an error not keeping both like the US. One dollar and two dollars coins are not funny to have in our pockets. I have always a bunch of coins in my pockets. I think also that the 1$ and 2$ coins killed the 10$ bill as a common currency for change reason. BoC should have printed less 1$ and 2$ and keep the coin " as a need"

The thoughts at the time were if the $1 and $2 notes continued to be produced, they would be used rather than the coin.
I appreciate that having $20 or so in loons and twoonies is a little bulky, however, for the vending businesses, the same value in 25 cents would be even bulkiers.

The coins were produced as a cost saving measure and to aid the vending machine businesses. Both coins are distictive and durable. Beyond that, the use of small denomination notes is a matter of personal taste.

The use of $10 has diminished for a couple of reasons, one being they are so easy to counterfeit, and bank ATM machines dispense $20 notes rather than $10 notes. Our change has become $1 and $2 coins, and $5 notes. The use of banknotes has changed due to inflation and dispensing methods. The purchasing power of $1 and $2 notes is pretty slight. A coffee at Tim Hortons is now over a dollar, parking meters accept $1 and $2's coins. None of the vending machines accept paper money except casino slot machines (which of course take $5, 10, 20, 50, and 100)

Rick

Three questions:

1. When the $1 notes were discontinued in 1989, were there more $2 notes issued at that time?

2. When the $2 notes were discontinued in 1996, are there currently more $5 notes in circulation than before?

3. If there ever was to be a $5 coin (hopefully never), would there be more $10 notes in circulation?

The $1 was discontinued in 1987 as no new $1 bills were printed after spring of 1987. They discontinued the $1 and $2 bill to replace them with coins because it would be more cost efficient. There is no need to do like the US and print both coins and bills of $1 and $2 denomination.  

Just a correction to your post, JB-2005... the $1 coin and note were being issued simutaneously for about two years, from 1987 through 1989.

rscoins quoted the following on May 9, 2005, 10:51am:

None of the vending machines accept paper money except casino slot machines

Actually, some snack vending machines now accept fivers, tens, and twenties.  I say that someday the soft drink machines will be able to accept bills eventually.  

However, the disadvantage   is: If you put a $20 in a vending machine, you'll probably get up to $19 in twoonies and loonies (or worse, quarters! ) back.

If only there is a way for those particular vending machines to dispense fivers in change...

If only there is a way for those particular vending machines to dispense fivers in change...

Jonathan,

It is possible, to have a 1 demonination dispensing system. It's used quite a bit in Europe and Asia.

However, those mechanisms are VERY expensive and can be upwards of $6000 for a brand new mechanism for just ONE denomination. It's basically the same dispensing mechanism as the ones bank machines (ATMs) use.

No question about the cost savings from changing the $1 and $2 bills, however vending machine operators ultimately benefitted from this.

Instead of raising the price of an item from , say, 85 cents to 95 cents, prices quickly approached $1.  The consumer was screwed.

And if vending machines could be changed to accept Loonies and Twoonies, couldn't they have been changed to accept $1 & $2 bills?

As someone who ends up with tons of change everyday, I think changing the $1 bill (but not the $2 bill) was a mistake.  The Americans seem to be doing alright with their $1 bill.   JMHO.

A couple of points. The cost to accept notes is much higher than machines that accept coin. It is only recently that such mechanisms have become available, and each time a note is fundamently changed, the scanner inside needs to be programmed to accept both the old note and the new note. Casinos, with their high mark up, can well afford to change things.

In 1987, when the loon came out, there was no method of accepting $1 notes in vending machines, and little progress was made until after the release of the $2 coin in 1996.

For those that find the prices went up when the machines switched to loons and $2, it would have gone up a lot more had the technology been available to accept low denomination notes. It is all a matter of the cost to accept certain payment, which is simply charged back to the customer.

I note that when the new $20 came in last year, the casinos had the mechanism in place to accept them immediately, which lead me to believe it is possible that test notes were issued prior to the introduction of notes to the general public.

Rick