$1 coins: Unwanted, unloved and out of currency
To all the great mysteries of life, add this: Why is the lowly, tarnished penny so revered, and the shiny $1 coin so reviled?
Pennies proliferate. They fill our pockets. Our jars runneth over.
When we drop a penny, we conduct the ultimate cost-benefit analysis: Should I pick it up?
Consequently, pennies are everywhere.
But where are your Sacagaweas? And where are all those John Quincy Adams presidential coins?
The answer: in the inventory of the nation’s Federal Reserve Banks.
The Federal Reserve Banks hold about $1.4 billion in $1 coins — enough to meet the demand for the next 40 years.
In fact, far more than half of all $1 coins ever minted are in government vaults.
Last year, more $1 coins were returned to the Federal Reserve than were paid out. More business returned the unpopular coin than asked for them. So the government’s stockpile actually grew.
All of this information is gleaned from a Government Accountability Office report this week with the evocative title: “U.S. Currency: Coin Inventory Management Needs Better Performance Information.”
The report traces the history of the $1 presidential coins from their inception in Congress in 2005, through initial distribution in 2007, through 2011 when the mint stopped making them because of a lack of public appetite to their current ignoble status as the coin that is now costly to store.
The $1 coins have a lot going for them. They are durable and can be used easily in vending machines. They far outlast paper money.
But in the rock-paper-scissors public opinion contest, paper always wins.
The public’s preference comes at a cost. The federal government would save $4.4 billion over 30 years — or about $150 million a year — if Congress decided to go metal, according to the GAO, which would like to see the $1 paper notes phased out.
One way to tilt public opinion would be to eliminate $1 notes, the GAO said. In Canada and the United Kingdom, public resistance to coins dissipated within years when there was “no alternative to the note,” the GAO said.
Dollar coins are also supported by the Dollar Coin Alliance, a group that includes vending and snack food associations, mining interests and a carwash association.
But the Treasury Department — which currently mints only a limited number of $1 presidential coins for collectors — is not swayed.
“Minting $1 coins that ultimately end up sitting in Federal Reserve Bank vaults — and serve no useful purpose for businesses, financial institutions and consumers — is simply not a prudent use of taxpayer resources,” the Treasury Department said when it stopped production of the coins.
So the government continues to mint copper pennies, which are largely zinc, and which since 2006 have cost more than a penny to produce. And it mints nickels, which cost more than a nickel to produce. But it eschews dollar coins.
A Senate bill seeks to improve the circulation of $1 coins. But GovTrack.us gives the bill a 1 percent chance of making it out of committee.