Dollar Bill May Be Doomed Congress Considers Creating Dollar Coin, Eliminating The Printing Of Paper Bills

It’s not one of the more high-profile debates raging here. There is no mention of it in the “Contract With America.” As a budget-cutting proposal, its merits are suspect. Consequently, few people outside the D.C. beltway seem to know that the dollar bill may be headed for extinction.

But it’s true.

Unlike America’s other two recent forays into dollar-coin country, proposals pending in both houses of Congress would eliminate the printing of dollar notes soon after the introduction of the new coins, which could be as early as 1998.

The Eisenhower dollar piece was first minted in the early 1970s. It was a failure. In 1979, the Susan B. Anthony dollar coin was introduced. It was an even larger failure. According to the U.S. Mint, more than 280 million of the original 857 million Anthony coins are still held in the mint and the Federal Reserve.

“This is another attempt to force the American people to accept something they’ve rejected twice in the past 25 years,” said Philip Diehl, director of the U.S. Mint.

If recent polls are any indication, the American people are poised to reject it yet again. The most recent poll, taken in June by USA Today, shows that 77 percent of those polled oppose replacing the dollar bill with a dollar coin.

Other polls have produced similar results. A January poll taken by the House Budget Committee shows 82 percent of the respondents oppose replacing the $1 bill with the $1 coin even if it would save money.

Still, “fiscal responsibility” is the mantra on Capitol Hill this year, and in that spirit, proposals to eliminate the dollar note were offered by a Democrat and a Republican in each house of Congress.

In its latest report, the Federal Reserve, a non-partisan government entity, estimated that a mandatory $1 coin would save an average of $456 million per year over 30 years. A General Accounting Office official testified before the Senate banking committee in July that the reserve’s estimate seemed “reasonable.”

Diehl apparently found the estimate entirely unreasonable. In a letter sent to Congress in June, he estimated that switching to the dollar coin would, in fact, increase the deficit by $20 million over the first five years.

Somewhere between the U.S. Mint and the Federal Reserve is the Congressional Budget Office, which estimated that switching from paper to metal currency would save about $20 million per year.

All parties agree that metal coins last, on average, nearly 20 times longer than paper currency. No one, therefore, argues that coins would be less costly to produce in the long run.

Opponents of a mandatory $1 coin point out that an estimated 30 million tons of copper ore would have to be strip-mined in order to supply enough copper for the 9 billion coins that would be required to replace the country’s supply of $1 bills. The Sierra Club, Audubon Society, American Rivers, and Natural Resources Defense Council all signed a letter to Congress stating that production of the coins “would be a clear loss to the environment.”

Tom McMahon of the National Automatic Merchandising Association, however, calls their concern into question.

“Since 1964,” he said, “we have made hundreds of billions of dimes and quarters out of the same material that we will make this dollar coin and I’ve never heard one complaint from the environmentalists about all of the copper that was being mined to make dimes and quarters.”

McMahon’s employer, NAMA, represents nearly 1,400 companies that sell food and beverages through vending machines. “The main reason we’re for it is that coins work better in vending machines than paper money,” he said. “Coins work about 99 percent of the time. Bills work probably around 90 percent of the time, so that’s a lot of lost sales for us which we can capture if we have a dollar coin.”

The vending machine industry produces about $15 billion worth of revenue per year, according to McMahon.

Though it is clear the vending machine industry would benefit from dollar coins, it is less apparent how the remainder of the population would take to the coins. Even James Benfield, the executive director of the Coin Coalition, which supports the mandatory $1 coin, admits that the Susan B. Anthony coin was an “abysmal failure” from a design standpoint.

The problem with the Anthony coin is that in both size and color, it closely resembles a quarter. The proposals recommend the new coins be “golden colored” and have a “distinctive” edge for the visually impaired. Its dimensions, however, would be the same as the Anthony coin so that transit fareboxes and other machines designed to accept the Anthony coin wouldn’t have to be changed.

Opponents of the mandatory $1 coin, such as Save the Greenback, a coalition of labor unions and companies involved in producing the dollar bill, say no matter what the coin’s appearance, Americans will not accept it.

Proponents of the coin point out that every major Western economy has introduced high-denomination coins and, in every case, eliminated the paper bill of the same value. Further, every country has faced initial opposition to the transition, only to watch that opposition slowly turn into acceptance.

“It will be inconvenient, but I don’t think it’s anything that can’t be handled,” said Laurie Robinson of the Washington Trust Bank in Spokane.

Matthew Cannon, manager of Take-A-Break Coffee Shop in downtown Spokane, sees a potential personal benefit in the change:

“I’d probably see a lot more in tips because people throw their coins in the tip jar.”

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