So the United States is introducing dollar coins, again. Earlier this month, the Treasury put George Washington’s face on a golden coin, the first in a limited run that will eventually include almost every American president. (Only presidents who have been dead two years will be depicted, so if Jimmy Carter, Bill Clinton, and the Bushes are still healthy when their turns arrive, the series will end with the Gipper.) This is the government’s fourth attempt to move American spenders from dollar bills to dollar coins, after three flops that satisfied nobody but coin collectors. But these quite sensible efforts are destined to fail unless the Treasury finally does what it should have done long ago: Stop printing dollar bills.
There’s no reason the United States shouldn’t be using dollar coins right now. Canadian and Australian dollars are made of metal. So are the British pound sterling and the euro. That’s because coins are vastly more durable than paper money. Though a coin costs about three times as much to produce as a bill, it will circulate for an average of 30 years, whereas a dollar bill lasts 22 months, and for the last few of those, has all the charm of a grimy, germy handkerchief. In 2002, the United States General Accounting Office (now called the Government Accountability Office) * said we’d save $500 million a year in production costs if we shifted to coins; another GAO document puts the savings even higher, at $747.5 million. The catch is, people have to use them. Surveys suggest that the public prefers keeping the bill, by margins that vary widely from poll to poll, but the chief hold-up is habit. Shoppers won’t use dollar coins till they see businesses taking them; businesses won’t use them until banks give them out routinely; and the banks aren’t going to invest in infrastructure changes, like new coin-counting machines, until they see the public using the coins. Everyone’s waiting for someone else to move first.
Coins would be accepted in a matter of months, maybe weeks, if Congress phased out the dollar bill. (The Treasury does not set policy on these matters, merely carrying out congressional orders.) Instead, the Treasury just keeps stamping out coins, asking us politely to use them. In the early ‘70s, the Eisenhower dollar—the same size as the preceding century’s silver dollars—arrived, failing to circulate much because it was huge and heavy. (It’s a remarkable artifact of the space race, however: One side shows Ike’s bald noggin, and the other has the American eagle setting its talons down on the moon.) The next push came in 1979, with the infamous Susan B. Anthony dollar. As every American who was sentient that year remembers, it failed because its size, thickness, and reeded edge made it far too easy to mistake for a quarter. Tellers and cashiers immediately began making 75-cent errors. It was a fiasco, and a perfect symbol of the Carter administration: an eminently reasonable policy hamstrung by inept execution.
The next try, in 2000, produced the Sacagawea dollar, which encapsulates the ‘90s culture wars in one neat little golden tableau. Liberals insisted that we not go back to dead white men; conservatives wouldn’t allow another radical like Anthony. So we got a Native American (oppressed peoples!) carrying a baby (family values!) who led Lewis and Clark (proto-feminist?) but also bore a child as a teenager (not so feminist, and faintly pro-life). The actual portrait of Sacagawea is mushy and shapeless, but the object itself is a fine piece of industrial design. The coin’s smooth edge and thick border feel good in the hand, and well-thumbed specimens age to a nice mellow bronze. Moreover, there’s something oddly pleasant about buying one’s coffee with a big doubloon instead of a piece of paper. (They do feel heavy when you get too many in your pocket, but that just means it’s time to do your laundry.) I’ve gone out of my way to start using them, and the next time you stand in front of a vending machine, feeding it the same bill six or seven times as it is repeatedly rejected with that little vvmp-vvvvmp noise, you, too, may see the light.
Despite its utility, the Sacagawea dollar failed to ride out an early bump of interest. After two years and one huge ad campaign, a General Accounting Office report put the Sacagawea’s use at 1 percent of all cash transactions. The coins are mostly stockpiled, with almost none produced in 2003 or 2004 because they just weren’t needed. And now here come the presidents, four per year, each on a coin that’s the same size and heft as the Sacagawea. (Some of them must be very excited, out there in the great beyond. Grover Cleveland, this is your moment: Your two nonconsecutive terms mean you’ll appear twice.) Nobody in Washington says so, but I suspect that the new presidential coins are partly an attempt to remind the public that the gold dollars are out there, and sneakily jump-start their use.
The official rationale for the new limited series? Producing coinage for collectors is lucrative. Since the Treasury spends about 12 cents to make a dollar coin, it makes 88 cents’ profit whenever one is pulled from a pocket and stashed away. Collectors’ proofs and uncirculated sets, sold at a premium, are also profitable. Collecting anything manufactured in huge numbers like this is a little silly, but it’s fun for kids, and certain obsessive adults. The Mint has raked in $4.6 billion thus far on its similar state-quarters program. Making money, it seems, is a decent way to make money.
But back to dollar bills: Why keep producing them? The Bureau of Engraving and Printing pumps out 3.4 billion fresh singles every year. Pressure from bill partisans at the BEP even kneecapped the Sacagawea ad campaign. According to the GAO, “an informal Treasury restriction” prohibited the Mint from suggesting that a coin was superior to a bill—it could say only that a coin was also available. One TV spot showcasing a frustrating vending-machine moment (vvmp-vvvvmp, vvmp-vvvvmp) was scotched, after a combative meeting at the Treasury, on the grounds that it “negatively portrayed the dollar bill.”
Who on earth thinks like this? People who have a vested interest in producing dollar bills, that’s who. They come, principally, from three groups: the folks at the BEP; Mississippi cotton farmers, whose fibers make up the 100-percent-rag currency paper; and Crane & Company, a Massachusetts paper mill known for excellent stationery and a century-old papermaking contract with the government. Around the time the Sacagawea was proposed, they formed a lobbying group called Save the Greenback, which, according to press accounts, had the ear of Sen. Trent Lott of Mississippi and, back when he was in Congress, Rep. Joe Kennedy of Massachusetts. Save the Greenback’s annual lobbying expenses average a couple of hundred thousand dollars, presumably paid in crisp new singles. The group managed to get a piece of legislation called the Save the Greenback Act of 1997 introduced in the House; it died in committee, but the $1 Coin Act, which authorized the Sacagawea that same year, required that the bill be retained. The group’s archenemy is a pro-dollar-coin lobby called the Coin Coalition, backed by vending-machine and car-wash interests.
You know the Feds are acting like the Keystone Koin Kops when they’re outgunned by a New York state agency, but the Treasury really ought to look to the Metropolitan Transit Authority, which runs the New York subways. The MTA introduced an electronic fare card in 1997 but kept the token around for several years, making silly noises about the MetroCard’s poor “public acceptance.” New Yorkers were slow to adopt the card, even when a volume discount made it worth their while to do so. But the moment tokens went away in 2003, “public acceptance” was inevitable, and four years later, no one (except a few railfan cranks) is whining about the good old days. The public is slow to accept new currencies, but that same public has a mercifully short memory. Get rid of those dirty handkerchiefs tomorrow, and you’ll have forgotten about them by the time the first Martin Van Buren dollar lands in your palm.
Clarification, March 15, 2007: This piece originally stated that the Treasury’s new dollar coin series would include “every American president through Ronald Reagan.” Since the series will only include presidents who have been dead for two years, it will, of course, skip Jimmy Carter if he’s still alive when his turn comes. (Return to the clarified sentence.)
Correction, March 16, 2007: This piece initially referred to the United States GAO as the General Accounting Office. It has changed its name to the Government Accountability Office. ( Return to the corrected sentence.)