Why $1 coins haven't caught on
Uncle Sam stopped the mass production of $1 Presidential coins because most people don't like to use them. Why is that?
Updated April 3, 2012, at 3:50 EDT.
There was a sad day late last year for those who enjoy the heft of $1 coins in their pocket. Because there are so few of you, the government abruptly halted the mass production of $1 Presidential coins, right after the James Garfield dollar and just before the Chester A. Arthur coin.
Ending the program will save the U.S. government $50 million a year in production and storage costs, the Treasury Department said. About 1.4 billion unwanted Presidential dollar coins are taking up space in Federal Reserve vaults around the country. (New Presidential coins will be minted for sale to collectors at higher than face value.)
People are funny about money. Though it makes economic sense to replace flimsy $1 bills with sturdy coins, they want no part of it.
Americans, that is. Canadians use the $1 "loonie" coin and the $2 "toonie," and Europeans have their one and two euro coins. Yet, we resist. "I suspect the biggest limitation is that people don't like change (pun only sorta intended)," "Nickel" at FiveCentNickel.com wrote.
Why haven't Americans embraced the dead presidents or other $1 coins? Some possible explanations:
Dollar bills are still being produced. "The Fed policy has been to promote the dollar bill and the dollar coin, and Americans have consistently chosen the dollar bill," U.S. Rep. Kevin Yoder, R-Kan., told USA Today. There is no one euro bill or Canadian $1 bill. Those folks aren't given a choice.
It would take an act of Congressto phase out $1 bills, and we all know how that goes. Congress in 2005 mandated the mass production of the Presidential coins, starting in 2007 with George Washington. (The Treasury secretary has the authority to alter that, and did.) But Congress hasn't seen the need to get rid of the dollar bill (or the much-maligned penny).
According to Politico, the Dollar Coin Alliance, representing industries that would benefit as well as other groups, isn't giving up its fight to phase out the paper dollar. Others say it's time to move on, for now.
"Elimination of the dollar bill has been a long-time goal for the vending industry, but congressional opposition was too strong. At this point, it makes little sense for the vending industry to expend any resources on this effort," VendingMarketWatch opined. Post continues below.
They weren't promoted enough, and maybe the depiction of dead presidents wasn't the best choice. Quarters featuring each state were very popular, but a coin honoring Andrew Johnson?
We don't understand the benefits. Using dollar coins instead of bills would save the government an estimated $5.6 billion over 30 years, according to a Government Accountability Office report (.pdf file). That's because coins, though more costly to produce, last longer than bills -- up to 40 years vs. an average of 18 months.
We like dollar bills. Dollar bills are light and fit nicely in a wallet. Dollar coins would necessitate a bigger change purse -- or more frequent use of credit or debit cards. A poll by Lincoln Park Strategies (.pdf file) found that 76% of Americans oppose the demise of the dollar bill.
On the other hand, the Dollar Coin Alliance maintains: "A January 2011 poll conducted by the Tarrance Group and Hart Research found that Americans favor the transition to a dollar coin by a two-to-one margin once the potential government savings are explained."
We have no idea what to do with dollar coins. Vice President Joe Biden said 40% of the Presidential coins have been returned to the Fed. That's enough to last for 10 years, given the current rate of use. Many people say they've never seen one.
- Smart Spending on the go:Get our app for Android phones or iPhones
I got one as a prize at the supermarket and later left it as part of a tip. I bet that waiter was thrilled.
Wrote Chelyen Davis on Fredericksburg.com:
In my wallet is a dollar coin. It looks like a quarter, except it's gold and has Ulysses S. Grant's face on it. I got it from an automated change machine in a Richmond parking garage, and frankly I wasn't sure anyone else would take it, because I haven't seen anyone use dollar coins.
What's your preference? Should we switch to coins and retire the dollar bill?
More on MSN Money:
The point that most folks don’t take into consideration, especially in this current fiscal environment is the cost of printing dollar bills – which have a finite lifetime (as does all paper money). While all of the news surrounding the elimination of the presidential coin program what isn’t mentioned is that we spend way too much taxpayer money EVERY year to print paper money as it wears out in a relatively short period of time. However coins, pennies, nickels, dimes, quarters, half dollars and dollars last essentially forever. If the government really wanted to save money we would ELIMINATE paper dollar bills and make the permanent switch to dollar coins – I have little doubt that if that was accomplished there wouldn’t be dollar coins sitting around in storage.
Save taxpayer money and eliminate paper dollar bills (and while you are at it – stop making pennies!)
And to reinforce other points mentioned:
> The coins are NOT confusable with quarters any more than dimes and pennies are. The color is different, the edge is different, and the relative size difference (what the brain uses, not absolute differences) between dollars and quarters is greater than that between dimes and pennies. The Canadian quarter and Loonie have exactly the same size and color ratios, and confusion has simply NOT been a problem; ditto for several euro coins.
> The assertion that 76% of people polled prefer bills is only half of the story. When the question was changed to include how much the coins would save, approval went up to over 60%.
> We've made a similar but MUCH more expensive mistake by being (again/still) the only non-metric country. That decision to protect us against the communist plot to count by tens costs about $100 billion (with a "B") each year in lost exports, conversion mistakes, etc. but once again, it's just too difficult for us Americans to do what 95% of the people on earth do all the time.
> To those worried about the placement of "In God We Trust": GET OVER IT. No coins had the motto before 1864, and nickels didn't have it till 1938. It wasn't on any of the bills that the Greatest Generation had in their wallets yet somehow they triumphed over those German soldiers who all went into battle wearing badges reading "Gott Mit Uns" (God is with us). It seems to me the issue is whether God is In your heart and mind, not in your change purse.
Dollar coins were changed to gold color and edges changed to smooth from reeded to prevent quarter confusion so any claims the "golden" dollars were being confused is a canard. Susan B Anthony dollars did have a real confusion problem but those are not circulated much anymore.
No, Congress just needs to get its gumption up and cancel the paper dollar and the penny. The latter will free up a dish in merchants' change drawers for dollar coins. If they want to appease the masses who will lament the loss of Lincoln on a coin, they can assign him the permanent spot on the obverse when the line of presidents completes.
msSusieQ: I haven't seen a dollar coin since the 80s, so they may have changed it since then.
?? The "golden dollars" were first released in 2000, with (at the time) a fair amount of hoopla. Here in the east every major bank has them. Many transit systems use them, and some give them as change from ticket machines. And the point made in so many comments here is that rejecting the new coins based on memories of the horribly-designed SBA dollar is a non sequitur .The new coins WERE modified in 2000 to address the problems you mentioned. They're gold-colored, have smooth edges, and use distinctive images. They're modelled on the Canadian Loonie which has been extremely successful(*)The second major problem was that there was no place in a standard cash register to put them.
Again, ?? Nearly every register I've either used or seen has a 5-slot drawer. If clerks are told to stop using the 5th slot for paper clips and gum packets there would be no problem storing $1 coins. And the few smaller registers that only have 4 coin slots also have only 4 bill slots. Most cashiers seemed to put any 50s they got under the 10s, and any 100s under the 20s. It's a lot easier to avoid mistakes now that bills are different colors, but accidentally slipping out a 50 when you meant to hand over a 10 was a far worse goof than mixing up a two coins - which, BTW, hardly ever happens in countries that use higher-value coins full time.(*) But Canada was smarter than the US and simply stopped making $1 bills.
RELATED ARTICLES
DATA PROVIDERS
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.
Editor Bev O'Shea lives and works in the foothills of the Appalachians. A former copy editor for The Atlanta Journal-Constitution and the Orlando Sentinel, she joined MSN Money in 2007. She's a fan of sunsets, college football and free shipping, among other things.
Having worked as a writer, reporter and editor for more than 25 years, Editor Julie Tilsner is the sort of person who can't help but correct grammar in Facebook postings and on billboards. She's written for BusinessWeek, the Los Angeles Times, Parenting, Redbook, AOL and others. She lives in Los Angeles County with her family and loves to drink wine and practice yoga, although not generally at the same time.
A writer for MSN Money since January 2007, Donna Freedman won regional and national prizes during an 18-year newspaper career and earned a college degree in midlife without taking out student loans. She also writes about smart money tactics for magazines and on her own site, Surviving and Thriving.
Mitch Lipka has been warning people about scams and shining light on questionable business practices for more than 20 years. Mitch, the consumer columnist for The Boston Globe, has also been a reporter and editor at The Philadelphia Inquirer, Consumer Reports, South Florida Sun-Sentinel and AOL. He won the 2010 New York Press Club award for best consumer reporting online and was honored in 2011 for his reporting on child product safety.
Marilyn Lewis is an award-winning writer with a passion for getting readers clear, straight information that helps them stay out of financial trouble. A former reporter for The San Jose Mercury News, she works from her home in Port Townsend, Wash. Contact her at MarilynLewis@Outlook.com.
LATEST BLOG POSTS
Those shackled with student loan debt are increasingly being targeted by scams and shady companies promising relief.
VIDEO ON MSN MONEY
TOOLS
Best rates on savingsFind the highest rates on savings accounts, CDs and money market accounts.
- Are you saving enough for retirement?
- Find a great credit card
- Car insurance premiums by model
