Dollar Bill Demise a Bit Deja Vu|
August 29, 2013
The dollar bill, and the one cent coin that non-collectors refer to as a “penny” are once again under assault in the name of economy and efficiency in government. The claim is that the dollar coin is a better value than the dollar bill and that the cent costs the mint 2.4 cents to make, which is to say that each coin produced is at a loss.
The nickel, which the same questioners say costs 11 cents to manufacture, is also under attack. U.S. Senator John McCain, R-Ariz., wants the paper dollar phased out over a period of five years – not unlike what Great Britain did with the £1 note.
Canada has virtually eliminated the cent for largely the same reason the U.S. is being asked to: inflation has made the coin nearly irrelevant.
A reporter for The Hill, a daily publication when Congress is in session, asked McCain about complaints that the coins would be “awkward” for exotic dancers, he quickly responded, “Then I hope that they could obtain larger denominations,” later going on to expound: “Fives, tens, one hundreds!”
One congressman jumped all in declaring that the shift could save American taxpayers $181 million dollars. The problem with all this is a sense of deja vu. Two years ago, in 2011, using very different numbers, the Congressional “supercommittee” whose task it is to bring down the federal deficit took aim at the very instrument that measures its success: the dollar bill.
They claimed that by eliminating it, they could save billions of dollars over the next 30 years. The only problem: its predicated on the American public switching from a dollar bill to a dollar coin, which time after time, and poll after poll, they have found just won’t work.
Look, I’m a coin collector and proud to be at it for more than 50 years. New coins promise better collecting. But dollar coins, even small-sized, just don’t circulate.
The Joint Select Committee on Deficit Reduction – dubbed the “Super Committee” – whose works is to adopt deficit reduction measures – wants to K.O. the dollar bill.
Probable genesis is a 2008 Gallop survey, commissioned by the Mint, which suggests that a public relations and education campaign could result in a change of public opinion, and cause the presidential dollar coins now being struck to be prematurely terminated.
The Gallop Organization, which did not ask if people would decline to use the coin, is a pioneer polling organization and surveyor of public opinion. Other studies from earlier periods do not suggest encouraging results.
Back in 1995, a battle of titan proportions spilled over from the editorial pages of the nation’s daily press to the halls of Congress over whether or not a new, golden-colored small-sized dollar should be a mandatory replacement for the familiar greenback dollar bill. The key word is mandatory, as is what the super committee called for in 2011.
Rep. James Kolbe, R-Ariz., now retired, then a ranking member of the House Appropriates and House Budget committees, introduced legislation to create a small-sized dollar coin in 1987. Initiative for a smaller dollar gained momentum in 1995 when the Republican “Contract with America” alluded to a proposal to save tens of millions of dollars each year by replacing the dollar bill with a coin.
Back then, Philip N. Diehl, who was appointed by President Clinton as director of the Mint in 1994, denounced the Kolbe proposal as “another attempt to force the American people to accept something they’ve rejected twice in the past 25 years.”
Until this point, the Treasury Department and the Mint had a position of studied neutrality, based in part on the Mint’s own studies of two decades ago that strongly suggest that a dollar coin is ripe for the American people.
Actual origins of a modern small-sized dollar coin, and elimination of the dollar bill, begin in 1975 when the U.S. Mint let a contract for $107,000 to Research Triangle Institute (RTI), a North Carolina think-tank.
Charge of their mission was to undertake what was finally called, in published form, “A Comprehensive Review of U.S. Coinage System Requirements to 1990”. RTI recommended a small-size dollar coin in its September 1976 report.
Having already had advance word on the conclusions, the Treasury Department rushed to press an August, 1976 publication entitled “A New Smaller Dollar Coins - Technical Considerations.” Among the technicalities: a dollar bill substitute.
Congress bought into some, but not all, of the Mint’s arguments, and utilized them to replace the large, 38.1 mm (inch and a half diameter) Eisenhower dollar with the Susan B. Anthony substitute that is substantially smaller at 26.54 mm.
They rejected the part of the proposal that the researchers of the prior generation said was essential to its success: elimination of the one dollar bill. Without that, it was contended – and the experience in 1979 proved – the American people will simply reject the coin in favor of a paper, fiat substitute.
Reasons offered in the dusty report that favor a one dollar coin, and elimination of the dollar bill, are virtually identical to those offered by all who support it:
“The average lives of a coin and paper dollar are estimated to be 15 years and 15 months, respectively,” the 1976 report notes in its appendix, on page 23. In 1987, Kolbe gave technology the benefit of the doubt: coins now last an average of 20 years, and dollar bills have a lifetime of about 18 months.
Back in 1976, the Treasury believed that an annual savings of $18 million would result. Today, some of the numbers have changed – the cost of the coin is now about 13 cents , while the dollar bill is about 10 cents – but now, given inflation, an analysis by the Congressional Budget Office suggests that over the next 30 years, a $400 million to $800 million annual savings would result, averaging more than $100 million each year, depending upon actual demand.
Treasury’s initial proposal in 1976 called for a coin struck on a multi-sided blank. Testing was done at the 10-side and 11-side stages. Patterns in fact were struck using the old 1965 dies that tested the first clad coinage.
Some thought that the coins would not be vending-machine compatible, as well as difficult to strike multi-sided, caused the ultimate product that became the Susan B. Anthony dollar to be round with an interior border that was multi-sided, supposedly to aid the visually impaired.
For now, Congress will likely revisit the issue but whether they will be moved by statistics, facts, or the emotional call to retain both denominations quite simply remains to be seen. What is clear is that the numbers seem to change almost as frequently as the recommendations do.
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On August 29, 2013 Clifford Johnson
On August 30, 2013 Steve Riggs
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