Why Presidential Dollars?

The Mint's 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 educational materials for schools and parents. Free downloads of these materials may be obtained from the Mint.

The Mint has also developed promotionals such as posters and brochures for financial institutions and businesses to inform their clients about the dollar coins.

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 realm, the Fed 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 has a name; it 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.

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 predicted 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 is growing evidence to suggest the Presidential Dollar coin is not gaining acceptance into everyday American life:

Evidence that Presidential Dollars are Not Gaining Acceptance

Presidential dollars seldom seen in circulation. A Harris poll in 2008 revealed that 75% of the respondents have never seen a presidential dollar coin in circulation. Mintage of presidential dollars continues to decline, so expect the 75% to increase.

The public prefers the paper dollar bill. The same Harris poll discovered that when asked about the their preference for the paper dollar or dollar coin, 76% of the respondents chose the paper dollar while only 13% picked the dollar coin.

Strong opposition to eliminating the paper dollar bill. An AP-Ipsos poll reported that about 75% of those surveyed opposed replacing the dollar bill with a dollar coin. No politician wants to risk the wrath of the electorate by proposing such an unpopular idea, so its safe to assume the dollar bill will continue to circulate. As the Harris poll indicated, the public strongly favors the paper dollar over the dollar coin if given the choice. Thus, as long as there is a paper dollar bill, do not expect widespread usage of the presidential dollar coin.

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 Presidential dollar coin is befalling the same fate. Merchants do not want to incur the expense of upgrading their cash registers or other devices. The State Quarters, by comparison, had no trouble merging with existing coin dispensing equipment.

Declining mintage. For the most part, the number of presidential dollars produced has been falling with each new release. Mintage is a key indicator of popularity and demand. The chart below illustrates the steady decline of mintage totals since the program's inception.

Potential barriers to circulation were voiced in a series of forums sponsored by the Mint prior the to the release of the first presidential dollar coins, and reminded us of the warnings sounded prior to the introduction of previous one dollar coins. What fueled the program with some early momentum was the fact that the Presidential $1 Coin Act required 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 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, and to date, many have chosen not to. Other than being more favored by coin collectors, the Presidential Dollar coin may never advance beyond its failed predecessors.