The Mint has stated that a primary purpose of the Presidential Dollar Coin
series is to enkindle public interest in U.S. history and past Presidents.
To support this goal, the Mint is distributing an assortment of educational
materials for schools and parents. Free downloads of these materials may
be obtained directly from the Mint at
www.usmint.gov/$1coin.
The Mint has also developed promotional items such as posters,
flyers, and brochures for financial institutions and businesses to help inform
their customers about the new
coins.
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Federal Reserve Building in Washington, DC.
The "Fed" was created by Congress to provide the nation with a safer, more
flexible, and more stable monetary and financial system. Within this job
scope, the Federal Reserve is responsible for the distribution of coins and
currency to the public. |
Another important, but much less publicized reason for having the Presidential
Dollar coin is the fact that if it finds acceptance with the public, the program will generate hundreds of
millions of dollars, more likely billions, in profits to the U.S. government.
This
is true because it will cost the Mint only 10 to 20 cents to produce the dollar coin, which
it can "sell" to the Federal Reserve at face value. This type of
profit for Uncle Sam is called
seigniorage. The Federal
Reserve then distributes the coins to the populace through their network of
banks.
Consider too, how a widely circulating dollar coin
would reduce operating expenses at the Bureau of Engraving and Printing. A
one dollar bill costs only a few cents to make, but its lifespan is relatively
short, averaging only 22 months. If a dollar coin were to wholly or
partially supplant the paper bill, many millions would be saved by not printing
one dollar bills, because a coin can survive in circulation for decades.
Moreover, unlike coinage, the government does not receive seigniorage profits
when paper money goes to the Federal Reserve, so all the more reason to
encourage the dollar coin concept.
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Newly minted state quarters almost ready to leave
the Mint. Every time a collector removes one of these from circulation, the
government earns about 21 cents it would not have had otherwise. Since the
State Quarter Program began in 1999, untold millions of quarters have been
set aside by collectors. Will the Presidential Dollar coin realize the
same success?
United States Mint Image |
One need only to look at the
success of the Mint's
50 State Quarters Program
to understand the profitability of issuing coins. About every
ten weeks since 1999, a new state quarter design has been released, inspiring
many people to collect, or set aside, examples of each. This created
additional demand for quarters, above and beyond what normally could have been
expected for commercial requirements.
The widespread popularity of the State
Quarter Program over the years has resulted in significant additional revenues to the Treasury.
For FY 2004, the latest year for which data is available, the Mint returned
$597.7 million in seigniorage profits to the Treasury, of which $395.9 million
came from quarters. As the State Quarter Program has matured, naturally,
the collector component of quarter demand has gradually decreased, but still
remains a revenue enhancer.
As the State Quarters Program has shown, a frequent design change on circulating
coinage can heighten demand. Market research commissioned by the Mint
predicts extensive popularity of the new Presidential Dollar coin, with about
half of the survey respondents showing an interest in collecting the coin.
While Mint officials hope to build upon previous fortunes, there are a few areas
of concern that suggest some difficulties for the Presidential Dollar coin
rolling its way into everyday American life:
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A typical cash register has slots for pennies,
nickels, dimes, quarters, and half dollars. Where will a one dollar coin
go? |
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Coin dispensing equipment. Most cash registers, for example,
are not configured to handle one dollar coins. The cost to modify them was
a disincentive for the Susan B. Anthony and Sacagawea dollars to circulate
freely. The same fate may befall the Presidential dollar coins. The
State Quarters, on the other hand, had no trouble merging with coin dispensing
equipment.
Delays in check out lines. If retail employees have to take the
time to explain or promote the new coins, the extra delay could result in long
check out lines in busy stores. The retail industry has expressed concern
to the Mint about loosing business because of unhappy customers.
More costly to handle coinage. It is more expensive for
retailers to process and handle dollar coins versus paper bills. The Mint
may help retailers with distribution costs to overcome this barrier.
Tarnish. Some merchants have noted that the Sacagawea dollar
tarnished quickly, making it difficult to easily identify. The
Presidential Dollar is made of the same metallic composition, but the Mint has
developed a tarnish-resistant coating they say will prevent this problem.
These potential barriers to circulation were voiced in a series of forums
sponsored by the Mint, and remind us of the warnings sounded prior to the
introduction of previous one dollar coins. What may fuel the program with
some early momentum is the fact that the Presidential $1 Coin Act requires all Federal government agencies, the
U.S. military, the U.S. Postal Service, any federally funded transit systems, and any business operating
on Federal government property, to be ready to fully accept and dispense the new
dollar coins by the first day of January, 2008.
However, all other coin
handling organizations are not required by law to actively promote or
distribute the new coins. If the cost of doing so is widely perceived to
be too costly, the Presidential Dollar coin may never advance beyond its failed
predecessors.
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