Why coins won’t replace dollars any time soon

Remember how popular those Sacagawea dollars were?

Or, if you’re old enough, do you remember how eager you once were to fill your billfold with Susan B. Anthonys, or “Sussies,” as we affectionately called them?

I thought so.

Conventional wisdom says these coins failed because Americans just don’t want to replace dollar bills with jingling loose change. That’s what opinion polls have said — 70 percent of you prefer to keep the paper bills, according to Lincoln Park Strategies.

Change, as both sides agree, is difficult. That’s a statement that has two meanings. We don’t want those things dragging down our pants.

But the Dollar Coin Alliance says the Sussies and Sacagaweas failed because the government tried to run two systems at once. What needs to happen, they say, is for the government to completely eliminated dollar bills, then mint the coins.

People will complain, as they did when the government forced everyone to change to digital television, but they soon will get used to it. And getting used to it means saving the government money, without raising taxes or cutting any programs.

I’m writing about this because, at a congressional hearing this week, the nonpartisan Government Accounting Office once again recommended the switch to coins. It was the eighth time in 22 years the GAO has done so.

But, even in a time of economic distress, the message isn’t any more likely to take hold this time than in the past.

I spoke with Shawn Smeallie, executive director of the Dollar Coin Alliance. He has some logical reasons for making the switch.

“This is a product of inflation,” he said. Today, the dollar is worth approximately what a quarter was worth in the 1970s. “Would we want to have a paper quarter? At some point it becomes ridiculous to have a paper dollar.”

The average dollar bill circulates for 4.7 years before it becomes unusable and has to be shredded and put in the landfill. A coin can remain in use about 40 years before it degrades, and then it could be melted down to create some more.

The difference would save about $11 billion, Smeallie said. That’s not enough to move the nation even an inch from the fiscal cliff, but “if we can’t do even this much, it sends a bad signal.”

Smeallie has answers to all the common objections. To people who say they don’t want to be weighed down by coins, he comes back with: “How many dollar bills do you have in your wallet right now?” Most people don’t have many. That means they wouldn’t have many dollar coins.

He even plays the “distrust of the Federal Reserve” card. The Fed makes 95 cents off every dollar printed, he said. The U.S. Mint would create dollar coins and sell them at face value. This is why, he said, the Fed stands in the way of any move to a coin.

Here is why the change won’t happen, at least not at this time:

First, dollar bills — greenbacks, lettuce, the mean green, the almighty dollar — are a big part of American culture, and the dollar remains the world’s leading currency. Turning it into a coin would be seen by politicians, and many in the public, as sending a bad signal to the rest of the world.

Second, the nation is rapidly become cashless. We use credit cards, we shop online, we now use mobile phone payment apps. If it costs less to mint coins than it does to print bills, think how much less it will cost to do nothing.

Smeallie laughs at that, saying we won’t be cashless until we fly around in “George Jetson cars.”

He’s right that low-income people still rely on cash and that you still need it to ride a lot of mass-transit systems, but Americans use much less cash than they did a few years ago, and the trend is accelerating.

Here’s an idea to save money: Instead of doing away with $1 bills, just reduce their size each year commensurate with the inflation rate. That saves on the cost of paper and ink and is a constant reminder to the public that the dollar is literally shrinking.

Eventually, when dollars are the size of the strips that come out of a paper shredder, people will demand coins.

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About the Author

Jay Evensen

Jay Evensen is the Senior Editorial Columnist for the Deseret News. He has 32 years of journalism experience covering politics and a variety of other assignments at news organizations ranging from United Press International in New York City to the Las Vegas Review-Journal and the Deseret News, where he has worked since 1986. During that time, he has won numerous local, regional and national awards. Most recently, he was given the Cameron Duncan Media Award, given annually in Washington, D.C., by the advocacy group RESULTS, to the journalist judged to have done the most to further the cause of the world's poorest people.

10 comments

  1. Va Voter

    The real problem is that the coins are too much like quarters. The real answer has been obvious for some time: get rid of the 1/2 dollar (when is the last time anyone got one of those in change), make the dollar coin closer to the 1/2 dollar in size, and get rid of the 1 dollar bill.

  2. GZE

    Cutting funding to PBS is a good symbolic step to getting our financial system under control? But saving $11 billion isn’t? Really?

  3. Steve

    I really prefer a dollar coin, but I HATE the Sacagawea dollar! Whoever came up with that size and design should never have been allowed even close to the process. They should be made so even a blind person can easily tell the difference just by feel. Dollar bills should be made so you can tell the difference by their size and/or color as well. Like the say, it’s not rocket surgery.

  4. Hutterite

    Coins are acutually a good idea, cost effective and easy to use. If you’ve used twonies and loonies like I have in Canada, you’d know how easy they are to use, and even how interesting the design can become. They’re nowhere near similar to a quarter. The other thing we need is a truly universal debit system, with debit machines available in even the smallest stores. In canada I never carry any cash because you don’t need it, and everyone laughs if you pull out a cheque.

  5. Charles

    Voter is correct. The problem with the dollar coin is that it is much too close in size and weight to the quarter dollar. And because it would be cost prohibitive to retool vending machines designed for the failed Susan B Anthony dollar, the Sacagawea coins are exactly the same size and weight, with just a slightly different outer edge on them. Every other coin of US currency is quickly and easily distinguished from the others. Penny, nickel, dime, quarter dollar, half dollar, and the old full silver dollar coins are all markedly different from each other in size and weight. The gold color on the new dollar coins helped. But not enough.

    About the only place they make any sense is in vending machines. But with improved bill readers and now even credit card readers on vending machines, the need for dollar coins is lapsing. In fact, the very inflation that argues for eliminating the dollar bill, has also largely made the dollar coin ineffective even in vending machines. A growing number of items now cost well over a dollar, even more than 2 dollars. Why bother with any $1 coin or bill? Drop in a fiver or swipe the debit/credit card.

    Also, let us not ignore the social aspects of the choices for whose likeness has adorned the dollar coin. All other coins in the US inventory bear the likeness of former, late presidents. Among the bills still in circulation, all bear the likeness of former, late presidents except the $10 and the $100, with Hamilton and Franklin respectively. Hamilton as first secretary of Treasury and the main mover behind starting the first national bank is an obvious choice for a bill even if he were not a leading federalist (author of how many of the federalist papers) that helped bring about the constitution that authorizes the printing of money by the federal government. Franklin was the oldest signer of the Declaration of Independence, our ambassador that helped secure the assistance of the French to win the war of Independence, an inventor, founder of public libraries, etc.

    While Susan Anthony is among the most important of American historical women, the insistence that the dollar coin had to bear the image of a woman rather than looking for a recognizable and significant PERSON be of whatever race or gender he/she might, smacked of the emerging and excessive political correctness of the day in which the coin was issued. To follow up with a child, polygamous bride who was either purchased or won by her husband, is to just dig too deep trying to elevate ANY woman to a position of historic significance equal to those who have otherwise been remembered in coin. Certainly Sacagawea was a help to Lewis and Clark. But to suggest she is more worthy of a spot on a US coin than those who lead the expedition?!?!? For her admirers to elevate her to some great symbol of independence? Affirmative action for history perhaps. Washington’s face on the dollar bill is cultural. To suggest he be replaced–not merely augmented, but replaced–by someone else?

    Finally, let’s address the real elephant in the room. Why do we accept inflation as a fact of life? Why do we not insist on an honest, stable money supply so that life savings are not stolen over time by inflation? Congress has absolute authority to regulate the value of our money. We don’t have to have inflation. Congress could legislate that money supply be matched to various economic indicators such that the value of a dollar remains more or less constant over time. On the one hand, we say people should save money. But then we enact monetary policies that discourage saving by eating away at those savings.

    At the end of the day, we are all creatures of habit and we seem to like that familiar old $1 bill. I kind of miss seeing the $2 bill as well. Still in circulation, but rarely seen.

    Thanks for the article Jay.

  6. Dan

    When they take a poll on the dollar coin replacing the bill, it should only include the people standing in line behind the guy with a bad bill trying to get a vending machine to take his bill

    Also after spending time in Canada I LOVE the two dollar coin. Best coin ever.

  7. Harold Hasfjord

    Look at a cash register drawer. You see a slot for $1.00, $5.00, $10.00 and $20.00 dollar bills. Merchants do not like the $2.00 bill because there is no place to put them. They are stuffed under the cash tray and returned to the bank at the end of the day. The coin slot has a space for the penny, dimes, quarters and half dollars. No place for the dollar coin. It seems simple to eliminate the $1.00 bill and the half dollar coin leaving the merchant with a space for the $2.00 dollar bill and the $1.00 coin. The current tax base does not allow for eliminating the penny. Copper is an expensive metal certainly something cheaper can be used for penny production. In 1943 steel was used. The merchant is the first line of distribution for currency after the bank releases it to the consumer. Make it easy for them you will hear less whining during conversion period.

  8. Bruce D Ranger

    I concur with Harold.

    Been using the $2 notes for the past 40 years and since the newer “golden” dollars have become available, I have added them to my repertoire.

    Citizens would acclimate to the $2 note easier, if there was some sort of BEP campaign, to advertise their existence.

    Lots of people have never seen a $2 note and question it’s place in the register drawer.

    Again, I agree with Harold’s comments.

  9. John G

    Canada has been VERY successful in replacing their $1 and $2 dollars with COINS AND eliminating the PENNY. Spending a lot of time there gives a true perspective of the impact (all positive) and the cost savings to the taxpayer.

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