2006-11-21
Dollar, Dollar Coin, Y'all!
I like to think of myself as a sort of amateur numismatist (gosh I hope I spelled that correctly, for if I didn't I'd be a very very amateur numismatist.)

I don't know if you saw the news, but yesterday the US Mint said they're going to release new Dollar Coins with all of the Presidents' faces on them.


This really upsets me. I'll let you know why.

First off, I'm not a fan of the US Mint 50 State Quarters Program. I think it's a hokey attempt at getting people to collect - and not spend - the money. And you know who makes money when money is saved away and not spent? The US Mint. They produce it, and then if goes right into some dude's collector's album. Plus then the mint also gets to sell more of their fancy sets of uncirculated coins and whatnot. Ca-ching!

That being said, I'm a huge fan of the dollar coin. I was really pushing for the Golden Dollar Coin back in 2000, with Sacagawea on it. Lot of good that did me.

Did you know that, according to a 1995 report, a dollar coin would last about thirty years in circulation, while a bill lasts only one and a half? So even if it costs twice as much to produce a coin as a bill, it's worth it after two years! The Mint, and the people of the US, save money.

There's a great report from the US General Accounting Office from September of 2002 called NEW DOLLAR COIN : Marketing Campaign Raised Public Awareness but Not Widespread Use. It's all about why the Golden Dollar Coin failed.

I'll quote a few paragraphs, emphasis mine:

    The Mint faces a number of barriers in its efforts to increase public use of the new dollar coin, the most substantial of which is the widespread use of the dollar bill in everyday transactions and public resistance to start using the dollar coin. Encouraging people to switch to using the dollar coin is especially difficult because retailers will not stock the dollar coin until they see the public using it; the public is unlikely to use the coin until they see retailers stocking it; and banks and armored carriers are reluctant to invest in new equipment to handle the coin until there is wide demand for it. This interdependency of demand, which economists call the "network effect," will be difficult to overcome. Other countries, such as Australia, Canada, and Japan and many European countries, have successfully introduced a similar denomination coin but only by phasing out the note of the same value. Other barriers that hinder wider circulation of the new dollar coin by the public include potentially negative public perceptions of a dollar coin after two failed introductions, insufficient public understanding of dollar coin savings to the government and other advantages of the dollar coin's use, and the weight and bulk of the coin. For commercial users, additional barriers limit the coin's use. Among these are commingling with the Anthony dollar coin, the coin's unavailability at some banks, packaging concerns, and higher delivery fees. Problems unique to individual promotion partners also created barriers to the new dollar coin's use.

    Our previous work and the early experience with the new dollar coin have shown that the most substantial barrier is public resistance to switch to using the dollar coin rather than the dollar bill in everyday transactions. To overcome this resistance, the Mint will have to persuade businesses, consumers, and suppliers to change at the same time. Increasing the coin's use is especially difficult because of the network effects previously discussed, which will be difficult, if not impossible, to overcome with the dollar bill in circulation.

I love the air of exasperation in the next few paragraphs:

    We have reported public resistance to new dollar coins in previous studies. For example, in May 1990, we evaluated the acceptability of the dollar coin to replace the dollar note by reviewing survey data and interviewing the public and industry associations. In this study, we found public resistance to a dollar coin in the United States. Nearly all of the general public and private-sector respondents indicated that the dollar note would have to be eliminated for a dollar coin to circulate successfully. These respondents uniformly believed that if a dollar note and dollar coin were both available at the same time, the public would choose to use the note.

    For our May 1990 report, we also contacted officials in other industrialized countries and found that most of the countries that had introduced high-denomination coins faced public resistance to the change. Officials in these countries said that a high-denomination coin could not be introduced successfully unless the note of similar value was withdrawn. For example, officials in the United Kingdom said that as long as the equivalent note circulates, the public would resist new coins. Similarly, French officials said the public accepted their new coin only when the note was demonetized. Mint, Bureau of Engraving and Printing, and Treasury officials said, in our 1990 report, that the experience of many of the European countries in successfully replacing a note with a coin of similar value might not be a valid indicator of the prospects the United States would have in mandating a dollar coin. These officials said that because of basic differences in these countries, such as a parliamentary form of government that made it easier to impose unpopular changes on the public, a central banking system with more control over banks, and a smaller scale of coin and currency, it would be much harder for the United States to successfully replace a dollar coin with a dollar note.

    In a March 1993 report on the dollar coin, we described Canada's experience in introducing a dollar coin in June 1987. Canada stopped issuing the equivalent dollar note in June 1989. We reported that the public resisted the coin initially, but 3 years after the note was withdrawn, according to public opinion survey data, only 18 percent disapproved of the coin. Similarly, businesses and associations we surveyed in the grocery, transit, and vending industries said that the majority of public resistance lasted from 3 months to 2 years. Officials in Canada said that the decision to withdraw the dollar note from circulation was based on the experiences of other countries, including the United Kingdom and Australia, as well as on the failed introduction of the Anthony dollar coin in the United States.

    More recently, we analyzed the use of coins and notes in countries that make up the G-7 and found that the United States is unique in attempting to cocirculate a high-denomination coin and note of the same value. Consumers in Germany, France, and Italy have the choice of 1-euro and 2-euro coins, but there is not a note of equal value to compete with the coins. The lowest value euro note is the 5-euro note. Japan, the United Kingdom, and Canada have succeeded in introducing high-denomination coins by withdrawing the note of similar value.

Do you feel that the GAO is trying to say: "NO MORE STUDIES! NO MORE REPORTS! THE PUBLIC ISN'T GOING TO ACCEPT THIS DOLLAR COIN UNTIL IT'S THEIR ONLY OPTION. FOR THE LOVE OF GOD REMOVE THE DOLLAR BILL FROM CIRCULATION, YOU IDIOTS!!"

So now, instead of pulling the dollar bill, they're making the dollar coins "collectible" and "limited". Huh.

It's rather frustrating, as a numismatististist.
posted by Josh @ 10:37 PM  

Josh and Liz are two American kids who got married in August. Liz has lived in Dubai since 2003, Josh since August of 2006.

Follow along in the culture shock of being recently married and (for Josh, at least) recently transplanted to Dubai.


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