StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



Dollar Coins Make Budget Sense, But You Likely Won't Get One In Change

22 Aug 2010
Posted by Stan Collender

This op-ed from Friday's The Washington Post about the failure of the current version of the dollar coin to become a circulating coin brought back lots of memories.

In 1999 and 2000, I headed the team that was hired by the U.S. Mint to increase consumer awareness of the new "Golden Dollar" coin.  The was the coin with Sacagawea and her child that replaced the much-reviled Susan B. Anthony dollar.  Thanks to it's color and design, not to mention an aggressive (and eventually award-winning) marketing campaign, the Golden Dollar was embraced by consumers.  Within 3 months consumer awareness -- which was all we were hired to do -- was at 85 percent and people were lining up for hours outside Wal-Mart stores to get them.

But unless you went to a post office and bought stamps from a machine, you seldom got a Golden Dollar in change.  The reason had nothing to do with consumers refusing to use it: Instead, businesses refused to order the coins and so didn't have any to give to consumers. 

Their reasoning made a great deal of sense.  Most large retailers pay to get bills and coins delivered to them by armored vehicle and, because they weigh more, coins are more expensive to deliver than bills.  The average retailer didn't want to spend anything additional for coins when there was a perfect substitute product -- dollar bills -- that it could get at a lower cost.  That meant that, unless they received a Golden Dollar as payment from a  customer, retailers had none to use as change.  Like almost any other new product, consumers quickly tired of asking for the coins when the answer almost always was no.

Vending machine owners and operators were a special case.  The vending machine industry had lobbied hard for the Golden Dollar because the device that breaks down most often in their machines, and the one they had to pay to have fixed most frequently, was the dollar bill acceptor.  But very few vending machines accepted dollar coins when the Golden Dollar started to be produced.  The Mint had been told that they would gladly retrofit their machines but, when the time came, the industry demanded that the Mint pay for the approximately $50/machine that would take.  The Mint refused and far fewer of the vending machines were ever made dollar coin-friendly.  As a result, you couldn't use a dollar coin to buy a cold drink or snacks and didn't get one in change.

Banks were also a problem because they still had a large supply of Susan B. Anthonys on hand; if you asked for a roll of dollar coins, you were at least as likely to get those as Golden Dollars.  Susan Bs looked and felt like a quarter and were such a flop that they were considered to be the Edsel of U.S. coins and the banks couldn't get rid of them.  But because it would cost the banks to ship the Susan Bs in their vaults back to the Federal Reserve, they refused to do so.  That meant that consumers, who couldn't get a Golden Dollar in change, also had a hard time getting one from a financial institution.

There were other reasons.  The most prominent was that the manufacturer of the paper for the dollar bills who wanted to keep selling it to the federal government, waged an aggressive anti-dollar coin campaign and trashed the effort every way imaginable.  For example, the Mint had to cancel a promotional effort in Boston because the paper manufacturer, which was located in Massachusetts, protested to its senators and the senators demanded that the Mint cancel the effort.

One of the most interesting things about the opposition to the dollar coin was that it was in spite of the fact that taxpayers actually benefit by having them.   The numbers at the time were incontrovertible.  It cost 22 cents to manufacture a dollar coin and 9 cents to print a dollar bill.  But the average coin stays in circulation for 30 years while the life span of the average dollar bill is between 9 and 12 months.  Therefore, over 30 years it costs taxpayers 22 cents to keep a dollar coin in circulation but more than 10 times that amount -- $2.70 -- for a dollar bill. 

That's a not insignificant savings and the additional cost over 3 decades is as close to waste as you can get in the federal budget.  But the retailers, vending machine industry, banks, and paper manufactures, all of which undoubtedly complain about government waste, didn't care.

 (BTW...I will send a dollar coin to the first person who correctly identifies the actor who did the voice-over for the Golden Dollar commercial shown above.)

Voiceover

That's not Dane Cook, is it?

If so - you need to add that to the reasons the dollar coin has not done as well as hoped. ;-)


Not Dane

Remember the commercial was shot in 1999 and used in 2000.  Dane was what...about 16 at that time?


Still not Dane Cook

I had thought of that age issue prior to guessing, so I looked up Cook's age. Wikipedia states he was born in 1972. I would have guessed his immature "comedy" and amateurish delivery made him 10-12 years younger than that.

Keaton was a darn fine option.


voiceover

Jeff Goldblum?


Jeff Goldblum?

Jeff Goldblum?


a guess

Bob hope?


I listened to it five or six

I listened to it five or six times and I just can't figure it out. However, Dane cook is older than you think. He and I graduated the same year from high schools about two towns apart. So he was 27 or 28 when that ad was run. He was not however, famous enough yet to get a gig like that. He's also not funny and his act is so immature I'm not surprised you thought he was still in his late 20's.


Michael Keaton

I'm guessing Batman loves the Dollar coin. Michael Keaton?


Mr. Mom

Michael Keaton?


Sounds like Michael Keaton

In an unrelated note, I bought some tee shirts for people a few days ago and received three dollar coins in change.

The vending machine issue is a big problem. At least they solved the other issue--the Suzie B's could be confused quarters, which the gold ones cannot.

I miss the Toonie, and wouldn;t mind seeing TJ (who already made the Buffalo extinct) replaced with coinage.


Dollar coins are great.

Having lived overseas now for a number of years, I've found dollar coins (or the local equivalent) to be wonderfully convenient. The problem with dollar coins in the US is not with the coin itself or the reactions toward the coins by the public, but simply that the government never phased out the dollar bill, which remains in competition with the coin. In all the other countries with a dollar coin, there is no bill of the same denomination (or if there is, the numbers are so few as to make the bill a rarity). Get rid of the dollar bill.

On a more personal note, when I did live in the US, I used to keep a number of the gold dollar coins in my front pocket while walking around. That way I always had spare change available for the homeless who, more often than not, were shocked to receive that coin (most asked for a quarter and were surprised to receive a dollar, and the Sacajawea coin was new at the time and I suspect most of the homeless had never seen the coin before).


Umm....I don't think that

Umm....I don't think that you're correct about banks having tons of Susan Bs lying around. In fact, the mint actually had to mint new Susan Bs in 1999 because the limited demand (things like fare kiosks) exceeded the supply that they had on hand, and they wanted to introduce the golden dollar in 2000. And of course most machines don't distinguish between Susan Bs and Golden dollars. It's no accident that they have the same size, weight, and electrical properties.

But your central point stands, they spend too much time trying to sell the dollar coin to the public, and not nearly enough time trying to sell it to retailers.


Yes...They minted more Susan Bs

But that was largely because of the need for them in other places -- like US Postal Service vending machines, and for coin collectors.  If you went into a bank you were more likely to get a Susan B from before 1999 than a Golden Dollar.


Coins are inconvenient

A point I don't see anyone else has made yet is that coins are inconvenient as cashless transactions grow more common.

Among my mid-20s friends the occasional restaurant that doesn't split individual orders creates a complex scramble to figure out which group members are even carrying cash.

Change purses were formerly common, but I only carry two quarters in my wallet as a parking-meter-specific reserve, otherwise avoiding coins even more than I avoid cash. If you pay in cash as the exception, you only want to carry what you need for that circumstance, and coins are bulky.


Dollar coin not accepted by public

I will accept as correct most of what you said in the article, but I think that the general public was also against the coin. I was all for the new dollar coin when it came out, but I took an informal survey of people I know. I could not find a single one of my co-workers, acquaintances, friends, or relatives who wanted anything to do with the dollar coin. They were all opposed to the idea of having to deal with another coin. Most of the people I know do not want to deal with coins - they find them to be an inconvenience. By the way, I am over 60 and I rarely carry cash - I pay for everything, even small convenience purchases of $1 or $2 with debit card.


Some places refuse them

Imagine my surprise. Today I waited in line at a post office for about 30 minutes. I was only there to buy 4 postage stamps, but when I finally got to the window and presented my 2 dollar coins, I was told, "we don't accept those." The teller told me that the bank won't accept them and neither will they. This, in New York City - of all places.




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