Dollar Coins Are Not a Waste of Money

     There has been some opinion expressed in Congress and the media that the billion dollars in surplus unwanted United States Presidential Dollar Series coins represents a waste of taxpayers’ money. As a conservative, I applaud the concern about waste, but the concern in this particular matter is based upon ignorance. Dollar coins do not waste money.

     The Presidential Dollar series began in 2007, at a rate of four presidential portraits a year (one every quarter of the year). It is scheduled to include all Presidents who have been deceased at least two years. This series is in addition to the Sacagawea Dollars, which have been renamed Native American Dollar Series because the reverses have been modified. 

     First of all, a billion Dollar coins are worth a billion dollars legal tender. In other words, they are not a waste of money; they are money. Even if collectors do not buy all up all of the remaining stock and the public does not get into the habit of using them, the federal government nonetheless will use them. It will use them as it did the unpopular Susan B. Anthony Dollars: in vending machines at Post Offices, for example. The Anthony Dollars, which were minted from 1979-1981, were used up in this way. By 1999, the supply of dollar coins had run out. The U.S. Mint then produced Anthony Dollars again in 1999 until it began producing the Sacagawea Dollar in 2000. Thus, the surplus supply of Presidential Dollars will also be used up, regardless of its popularity or whether the series is discontinued. 

     Second, dollar coins cost less than a dollar each each to produce. The mint earns money for the United States through seigniorage, the difference between the cost of the production of a coin, including its metal content, and its face value. In other words, dollar coins make money.

     Third, coins of the same denominations as Federal Reserve Notes save money because they last longer, meaning they do not need to be replaced as quickly. Dollar coins, for example, last many times longer than dollar bills. In other words, to the extent they are used instead of bills, dollar coins save money. 

     Dollar coins have seldom been popular in American history, with the exception of Morgan Silver Dollars, which were especially popular in the West in the late Nineteenth and early Twentieth Centuries. The public should be encouraged to use dollar coins more. I find dollar coins more convenient than dollar bills for paying tolls. They work well as tips, especially as a paperweight on top of other bills or the check. The current golden-colored Dollar coins also make better presents for children than bills, aside from their educational value. 

     There has been a proposal for two dollar coins featuring an image of Christopher Columbus. I suggest higher-denomination dollar coins, such as ten or twenty, to reduce the heavy usage of the commonly-used ten and twenty-dollar bills. A reintroduction of silver to general American coinage – with enough seigniorage to allow for the volatility of the price – would restore some faith in the dollar and in the United States government. Only a relatively small amount of the precious metal would be necessary to be included with base metals (either as an alloy, plating or cladding) to keep the coins appropriately sized.

     See also my post on the Presidential Dollars Series, Commentary on Current U.S. Coins, from April of 2009, http://williamcinfici.blogspot.com/2009/04/commentary-on-current-us-coins.html, in which I discuss my objections to the series. If the Presidential Series should be ended early, however, it ought to be ended for the right reason, not the wrong one.