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