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?