Why the US Keeps Minting Coins People Hate and Won't Use
Tom Wayne
coins. The good news is that, if the dollar bill is finally
discontinued, there will be plenty of dollar coins on hand to
immediately place in circulation to take up the slack.
http://www.bbc.co.uk/news/world-us-canada-10783019
Why the US Keeps Minting Coins People Hate and Won't Use
By Daniel Nasaw BBC News, Washington
August 10, 2010
Use of the $1 coin instead of a note could save the US $700m per year,
but Americans won't carry it
In hidden vaults across the country, the US government is building a
stockpile of $1 coins. The hoard has topped $1.1bn - imagine a stack
of coins reaching almost seven times higher than the International
Space Station - and the piles have grown so large the US Federal
Reserve is running out of storage space.
Americans won't use the coins, preferring $1 notes. But the US keeps
minting them anyway, and the Fed estimates it already has enough $1
coins to last the next 10 years.
And at the current rate, the inventory will grow to $2bn (£1.3bn) by
2016, the Fed estimates.
The coins began to pile up in 2007 when a law went into effect
creating a new series of $1 coins commemorating dead US presidents.
Already stamped into millions of pieces of eight-gram, manganese-brass
alloy are presidents no-one even remembers anymore, like Franklin
Pierce, and ineffectual executives like James Buchanan, whose
incompetence historians say helped lead the US to civil war.
Congress passed the law creating the coins despite evidence that
Americans never liked the $1 coin in the past.
In a 2002 report, for instance, the investigative arm of Congress
described "public resistance to begin using the dollar coin" despite a
three-year, $67m (£42m) effort to promote the previous series.
Since the presidential coin programme began, the US government has
spent an additional $30m to promote them but they still have not taken
hold.
"We have tried every major idea that we can come up with, with limited
success," US Mint Director Edmund Moy told a congressional panel last
month.
US officials say a peculiar set of factors have hindered public
acceptance of the $1 coin.
"Americans are creatures of habit," Mr Moy told Congress. "They are
very used to using the bill. They're not used to using coins in
regular retail transactions."
The US Mint has also identified an economic "awkward moment" in retail
transactions involving the $1 coin. The buyer is afraid the cashier
will reject the coin and cashiers are afraid buyers won't accept them
in change, so both are disinclined to try.
Mint and Fed officials have also identified a vicious cycle.
Retailers will not stock the coins because they do not see consumers
using them, while consumers will not use the coins because retailers
do not stock them.
Armoured car carriers and banks will not stock the coins until they
are in greater use; banks still see the coins as collectors' items,
not money that consumers will use.
And even some coin collectors dislike them.
"We've had any number of people over the years complain about
receiving a dollar coin," says Tom DeLorey, a Chicago coin dealer.
Yet the piles have continued to grow because the law requires the US
Mint to issue four new presidential coins each year even if most of
the previous year's coins remain in government vaults.
In addition to the millions spent to promote the coins, shipping,
storing and guarding the excess inventory costs money, though how much
is unclear.
Congressman Melvin Watt, a North Carolina Democrat who chairs a
subcommittee with jurisdiction on the issue, said Mint and Fed
officials had yet to respond to his requests for a detailed
accounting.
The US Mint declined to make officials available for an interview.
The Fed has warned Congress of rising storage costs but declined to
provide detailed figures to the BBC.
US officials and coin experts note that Australia, Britain, Canada and
Japan have successfully introduced coins in similar denominations, but
only after phasing out paper notes.
Most countries in the G8 have ceased to circulate a note in their base
unit of currency.
Because a coin can last four decades while a note lasts only a few
years, replacing the dollar bill with the coin could save the US $500m
to $700m per year in printing and paper costs.
Only an act of Congress could slow or halt the coins' pile-up, either
by phasing out the $1 note or halting the minting of the coins.
Neither is likely to happen soon in today's polarised, bitterly
partisan political environment, though some in Congress are clearly
frustrated.
"We shouldn't continue to push a coin that isn't going anywhere," Mr
Watt tells the BBC.
No legislation has been introduced to remedy the problem, though Mr
Watt says he anticipates taking action next year.
At least one congressman has called for legislation to phase out the
$1 note, noting the declining purchasing power of a single dollar.
"I don't see why we need to have the federal government go through the
expense of making and replacing paper money for an amount of value
that has traditionally in this country been represented by a coin,"
Congressman Brad Sherman, a California Democrat, said last month.
Until the US phases out the $1 note or stops minting the coins, they
will keep piling up in the vaults.
"People will grumble and [the coins] will be unpopular for a few
months but then they'll get used to it," says David Lange, director of
research for the Numismatic Guaranty Corporation, a service for coin
collectors.
"It's that simple."
Or, in the bureaucratic language of Congress' investigative arm: "The
most substantial barrier is the current widespread use of the dollar
bill in everyday transactions."
Michael G. Koerner
vaults? I've been seeing an AMAZING quantity of BU early-date state quarters
in circulation here in NE Wisconsin over the past year or so.
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Yes, stop making $1 banknotes and the coins will work just fine and also yes,
I would keep making the coins so that a sufficient supply will be on hand for
when that inevitable time arrives. In fact, with demand for and production of
all of the other coin denominations being way down, there should be more than
enough production capacity at the two USMint plants to make that needed
'cutover' supply.
--
___________________________________________ ____ _______________
Regards, | |\ ____
| | | | |\
Michael G. Koerner May they | | | | | | rise again!
Appleton, Wisconsin USA | | | | | |
___________________________________________ | | | | | | _______________
shreadvector
The dollar bill will end in 2011. Expect no action until after the
2010 election. There will either be lame duck action for the current
congress or the next congress will quietly insert the necessary text
into other legislation.
This is my psychic prediction. Expect no facts to back it up, as there
is no physical evidence.
Dave Rutan
To acclimate ourselves, we've begun playing Monopoly with white poker
chips. Can't wait to say good bye to the rag dollar.
shreadvector
>
> - Show quoted text -
I've got at least one coworker who buys a hundred shiny Prexibux every
month or two to use when he plays poker with his buddies.
Bremick
"shreadvector" <fred.e....@alum.mit.edu> wrote in message
news:e95406bd-ce5c-4120...@q16g2000prf.googlegroups.com...
**********
What would really be unusual would be to use the different recent $1 coin
types to represent different colored "chips" with different values. Ikes,
SBA's, Sac's, and Pres coins could act as four different denominations. At
the end of the game, the $1 "chips" would be returned to the host after
tallying up the actual winnings and losings. Might be interesting to coin
collectors, but maybe too wierd for outsiders.