As Congress and the Obama administration scramble to slash spending and reduce the federal deficit, they should dust off the government reports and economic studies that have long pointed to the fact that the United States wastes hundreds of millions of dollars annually because of failure to stop printing $1 Federal Reserve notes and implement another of the reports’ findings by letting all those dollar coins the U.S. Mint has been striking and stockpiling since 2000 function in commerce.
Back in 1992 when he was a member of Congress, Jim Kolbe of Arizona made the case: "Paper is difficult to count and process; coins are easy. Coins are reusable. Coins save money. ... I’m convinced that we will have a dollar coin. The only question is how much time and money will we waste before we have one."
The amount that could have been saved is staggering. The Government Accounting Office reported in 1993 that the government could save $395 million annually by using a dollar coin instead of the $1 FRN. In 1995 the GAO revised its savings estimate to $456 million annually. In April of 2000 the GAO again revised its estimate to $522.2 million per year. Were the GAO to revise its estimates for 2011 to 2012, the figure would no doubt be approaching a billion annually.
Eight years after Kolbe made his statement regarding the need for a dollar coin, gold-colored Sacagawea dollar coins were indeed in full production and being released into the banking system, but the public never embraced them.
Failure of a dollar coin to circulate in the United States was easy to predict. Canada and more than two dozen other nations by the early 1990s had proven that the only successful way to achieve circulation is to withdraw the paper equivalent.
However, every time legislation was introduced to stop production of the $1 FRN, leaders of the International Plate Printers, Die Stampers, and Engravers Union of North America and their lobbying arm — Save the Greenback — would fire up the PR engine, flooding the media with emotional rhetoric and public opinion polls to sway elected officials from taking the needed action. It didn’t take much digging to find that a major contributor to the Save the Greenback coalition was none other than Crane & Co. of Dalton, Mass., the sole supplier of security paper to the Bureau of Engraving and Printing — the government factory that produces all of the United States’ paper money. And that most of the BEP’s workforce is represented in collective bargaining by the printers union. The Save the Greenback coalition’s mantra was generally, "If it ain’t broke, don’t fix it.’’
Well, here we are 19 years later and everybody agrees, the nation is broke and its coinage system is functionally broken. Currently the U.S. Mint is producing at least two coinage denominations — the cent and 5-cent coins — that cost more to produce than their face value. Also it is producing two denominations — half dollar and dollar coins — that don’t circulate.
If the half dollar were resized, it may circulate. But in its current size, few vending machines accept it, so it is essentially obsolete in today’s economy. The dollar coin has been resized and made distinctive, but its barrier to circulation is the continued availability of the $1 FRN.
It is long past the time to make real change in the United States’ coinage system.
Leaders who have the power and responsibility to make needed changes should be investigating the costs of the systemic failure of our coinage and currency system. It’s time for action. n