Congress to look at eliminating the one dollar bill

posted at 1:01 pm on December 1, 2012 by Jazz Shaw

I know that we’ve been debating getting rid of the penny for some time now, and there are a couple of reasonable arguments to be made for that. They cost more to produce than they’re worth and far too many of them are sitting on the sidelines. But until now I had no idea that we were considering dumping the dollar bill. And yet that’s precisely what Congress will be examining soon.

American consumers have shown about as much appetite for the $1 coin as kids do their spinach. They may not know what’s best for them either. Congressional auditors say doing away with dollar bills entirely and replacing them with dollar coins could save taxpayers some $4.4 billion over the next 30 years.

The latest projection from the Government Accountability Office on the potential savings from switching to dollar coins entirely comes as lawmakers begin exploring new ways for the government to save money by changing the money itself.

The Mint is preparing a report for Congress showing how changes in the metal content of coins could save money.

They list a few ways that the dollar bill is costing us money, some of which I’d never heard. One rather obvious one is that a coin will stay in circulation, on average, for thirty years, while dollar bills wear out and need to be replaced every four or five. And there are some niche groups – particularly vending machine owners – who favor coins for being less likely to jam, making their machines cheaper to maintain and keeping them in service longer.

But that doesn’t change the fact that almost nobody seems to like them, including most retailers.

But most people don’t seem to like carrying them. In the past five years, the U.S. Mint has produced 2.4 billion Presidential $1 coins. Most are stored by the Federal Reserve, and production was suspended about a year ago…

Even the $1 coin’s most ardent supporters recognize that they haven’t been popular. Philip Diehl, former director of the Mint, said there was a huge demand for the Sacagawea dollar coin when production began in 2001, but as time wore on, people stayed with what they knew best.

The solution – if you can call it that – seems to be to force people into using the coins by simply eliminating the paper dollar at the same time. Apparently Canada did it, going to the “Loonie” coin (no, I’m not making that up) and it’s worked out okay. There is also the question of abandoning the concept that the money we hold needs to have some value in and of itself, rather than representing a “promise of payment.” There was a time when coins were made of precious metals and the coins themselves had value. This hasn’t been the case in the US for a very long time, so if cheap metal (essentially worthless) coins save us some money over cheap paper (equally worthless) bills, why haven’t we already done away with the dollar bill? Doug Mataconis dredges up an interesting explanation.

The cost to produce a paper dollar seems unjustifiable in the face of the cost savings that would be obtained from switching to a coin, and it’s rather obvious that the main reason that previous dollar coin experiments have failed is because they did not include an effort to phase out the paper dollar. Interestingly, the reason for that isn’t necessarily because Congress was deliberately setting the dollar coin up to fail, but because power politics and cronyism intervened to essentially ensure that the experiment would be a failure. Specifically.the paper used by the mint to print currency is made by only one company, Crane & Co. of Massachusetts. When efforts were made in past years to tie the creation of a Dollar Coin to the elimination of the Dollar Bill, it has been strongly opposed, and ultimately blocked by the state’s Congressional delegation, including Senator John Kerry who last year introduced a bill to eliminate the Dollar Coin completely.

Well, imagine that. All of the paper used for printing money comes from a single vendor who probably controls the price? And the Congressional delegation from the state where they do business opposes coin currency? Who could have predicted that?

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First it will be dollar coins, then it will be trillion dollar bills so Obama can pay of the debt with spending to spare. //sarc

Jurisprudence on December 1, 2012 at 9:41 PM

Wallet, phone, keys, comb etc. and now a load of metal to carry around. Think again o’ wizards of smart.

diogenes on December 1, 2012 at 11:59 PM

Of course we all are ignoring the monster in the room:

Their ultimate goal is to get everyone on credit / debit cards for even tiny little purchases, so that they can be certain to grab every possible tax, AND to track everything we purchase / sell.

Some will no doubt find biblical implications in this as well, but I’ll leave it to others to talk about that.

LegendHasIt on December 2, 2012 at 12:42 AM

>>I personally prefer dollar coins to the bills. My criteria is that it shouldn’t take a pocket full of coins to buy a soda pop from a vending machine. Dollar bill feeders on vending machines are temperamental. However, the marketplace (US citizens) reject it each time it is re-introduced. As a result they don’t circulate sufficiently.

Second the motion. Want to buy $2.50 chicken salad sandwich from vending machine and the bill acceptor won’t work. Change machine doesn’t always work either but I can get dollar coins (etc) from
transactions elsewhere, if I could…

$1.50 20 oz soda: One dollar coin, two quarters.

Got a kick out of when I visited Toronto in the 90s and wanted to use the coin laundry at the Days Inn. Two slots–one slightly bigger
than the other. Oh of course: one for the loonie, one for
the quarter.
I have no problem with dollar coins. They are slightly bigger
than the quarter and colored gold. Fine.

raccoonradio on December 2, 2012 at 8:20 AM

guys, cost of a tip at a strip club is gonna increase 5x….

clement on December 2, 2012 at 10:06 AM

Yet another government department’s long skid into irrelevance.

SomeCallMeJohn on December 2, 2012 at 11:44 AM

Has anyone done any research to see what senator’s state is home to the leading manufacturer of belt coin changers?

Investment opportunity in 3…2…1…

red villain on December 2, 2012 at 12:11 PM

guys, cost of a tip at a strip club is gonna increase 5x….

clement on December 2, 2012 at 10:06 AM

As if these places weren’t already highway robbers. Eight bucks for a beer? Seriously. You could buy a whole 6 pack of high quality quaff for that.

Red Creek on December 2, 2012 at 2:16 PM

Our paper currency is issued by the Federal Reserve as debt. Coins are issued by the U.S. Mint without incurring any debt. This would be a step in the right direction, but we sill have far to go. Bill Still made a terrific documentary about how our money system works called The Secret of Oz. I learned of this documentary from a link in a blog comment well over a year ago. There is a YouTube video of the whole film here.

ChesterHunter on December 2, 2012 at 8:23 PM

How many more times is the same idiotic crew going to make a coin which is indistinguishable (by ordinary folks) from the quarter???

The article is correct that our government seems to be unable to formulate workable transition plans. The predictable result is continued chaos, widespread misery, and utter failure.

This inability to formulate reasonable and workable plans also permeates government programs on healthcare, energy, and a host of other subjects.

landlines on December 2, 2012 at 11:07 PM

I was just in Australia for a couple weeks. They did away with the penny and paper $1 years ago.

Their coins system is okay but the 50 cent piece is too big.

The $1 and the $2 coin take a bit to remember to use at first but by the end of the second week I was doing pretty good. Those 2 coins are on the small side, with the $2 coin being smaller than our nickle but thicker so perhaps heavier, and both $ coins are bronze.

I easily had $20 in change in my pockets at times and minus the 50 centers it would have been like carrying $2 American.

RalphyBoy on December 3, 2012 at 1:40 AM

Crank up the presses at Treasurery. Time to familiarize the generally stoopid public as to just who the hell was Thomas Jefferson.
Yea, that guy, on the $2 bill. Remember him?
Bet the Obowmao voters don’t have a clue. Right Drywhail?

Missilengr on December 3, 2012 at 11:33 AM

The Canadian dollar coin is called a “loonie” because it has a loon on its obverse. The two dollar coin is called a “twoonie”. (Though I preferred the name “doubloon” it never caught on.)

Mark on December 3, 2012 at 2:45 PM