Monday Morning Brief for June 29, 2020: Coinage shortage
- Published: Jun 29, 2020, 7 AM
Every few decades, the United States seems to find itself facing a shortage of coinage in circulation. Each coin shortage has its own causes and solutions.
The shortages during the Civil War were driven by fear and a growing imbalance between the worth of coinage and the brand-new federal paper money. Emergency money — encased postage stamps, private tokens and scrip — flourished. Today, these emergency issues are popular with collectors.
The 1960s shortage was largely driven by the growth of coin-operating vending equipment, though Bureau of the Mint officials pointed a finger at collectors, dealers and speculators in coins as also contributing to the problem. The solution was to go all out in producing huge numbers of coins, striking coinage 24/7 at all Mint facilities. Passage of the Coinage Act also led to a temporary suspension of Mint marks (Take that, collectors!), and a date freeze that authorized the Mint to continue striking coins of one date into a new calendar year. The act also authorized changes to compositions of the dime, quarter dollar and half dollar as silver rose to price levels that threatened to make them worth more as bullion than their face values. These changes made coin collecting a little less interesting for many.
The 1974 shortage was limited to cents, which were being hoarded, not because they were valuable, but instead because they were deemed so worthless that people receiving them in change tossed them aside — into dresser drawers, change jars — rather than returning them to circulation. The Mint staged a public campaign to get people to return “hidden pennies” to circulation and even offered a Treasury Department citation for turning in cents.
Today’s shortage is driven by the COVID-19 pandemic. With many bank lobbies closed, in-person retail transactions down, and coin-return kiosks getting reduced traffic, people are again not returning their coins to circulation, but instead are tossing them aside. The Mint and Federal Reserve are working hard to alleviate the problem. Whether this shortage will affect collecting much remains unanswered.
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