Time to Revisit the Benefits of $1 Coins
On April 21, 2010, the U.S. Treasury released its new version of the $100 bill. Featuring an updated portrait of Founding Father Benjamin Franklin, the bill boasts advanced measures to obstruct counterfeiters. However, while the federal government has recently focused on this large tender, more attention needs to be paid to the other end of the currency spectrum: the $1 coin.
In 1997, Congress authorized the Sacagawea $1 coin to replace the Susan B. Anthony $1 coin, as its supplies were thinning. Approximately 1 billion Sacagawea coins are presently in circulation and 250 million more remain in reserve. On December 22, 2005, former President George W. Bush signed the Presidential $1 Coin Act, creating coins to honor former U.S. Presidents. Four new coins are produced each year, depicting presidents in sequential order. The Native American $1 Coin Act, signed into law in September, 2007, created a rotating design on the Sacagawea coin celebrating the important contributions made by Indian tribes and individual Native Americans to the history and development of the United States. All that remains to be done is large-scale introduction of these coins into circulation.
The advantages of using a $1 coin are obvious and substantial. According to an April 7, 2000 Government Accountability Office (GAO) report, replacing the $1 bill with a coin would save taxpayers $522.2 million per year. Most of the cost savings associated with coins comes from their comparative durability. The Bureau of Engraving and Printing produces approximately 3.4 billion $1 bills each year, each of which costs 4.2 cents to manufacture. Each bill has a lifespan of approximately 21 months. By comparison, the $1 coin costs slightly more to produce – 12 to 20 cents – but has a lifespan of 30 years or more.
Other benefits include savings on the processing of money by banks and businesses. Coins cost 30 cents per thousand pieces to process at Federal Reserve Banks, compared to 75 cents per thousand for $1 notes. Large-scale private-sector users reap even more savings. Processing bills costs them more than 500 percent above processing coins. Coins are also much more difficult to counterfeit.
In part, the slow progress in introducing coins is related to the public’s disdain for carrying around loose change. However, a December, 2002 GAO report asserted that public opinion shifts when respondents learn of the cost savings associated with a switch to coins. The GAO reported: “When told that it would save about half a billion dollars a year if the U.S. government replaced the dollar bill with the dollar coin, the number who said they were opposed dropped from 64 percent to 37 percent and those who said they were in favor of such a proposal increased from 17 percent to 55 percent.”
The U.S. Mint has been circulating the new $1 coins since 2000, but the federal government needs to do more to make $1 coins as common as $1 bills. Only then can taxpayers and businesses realize the great benefits that come from $1 coins.
