Monday, July 29, 2013

Presidential Dollars

Coin Of The Commanders In Chief Unveiled
(By Barbara Hagenbaugh, USA Today)
Can George be successful where Sacagawea and Susan failed?  The U.S. Mint is unveiling designs for its newest additions: dollar coins that will feature deceased presidents on a rotating basis, similar to the popular state quarters.  The coins will enter circulation with George Washington on Feb. 15, four days before President's Day, and will be gold in color like the Sacagawea to distinguish them from other coins. Like the Sacagawea, they will be slightly larger than the quarter.  While the presidential coins are expected to be popular with collectors, it's doubtful they will be used by consumers and businesses on a daily basis, some experts argue. Instead, with dollar bills still an easy alternative, they likely are doomed as a means of commerce, as Susan B. Anthony and Sacagawea before them, says David Sklow, a numismatic expert and former director of the library and research center at the American Numismatic Association.  "I hope it does get accepted, but I wouldn't hold my breath," he says. "Americans do not like dollar coins, they just don't. You want to carry three or four of these around? If you are a man (and carry money in your pocket), I don't think so."

A dollar coin hasn't widely circulated for more than 70 years, when the silver Peace Dollar was in use.  David Didriksen, owner of Willow Books & Cafe in Acton, Mass., says there's a reason for that. Dollar coins are often miscounted by customers, store clerks and banks, he says. He hopes people don't use them.  "As it is now, a typical trip to a bank involves carrying a bag of 20 or 30 pounds or more," he says. "The last thing we need now is more coins."  But many people, including Mint Director Edmund Moy and the lawmakers who sponsored the legislation to create the presidential dollar coins, beg to differ. They argue that the state quarter program has set the stage for acceptance and use of a dollar coin.  "We have an opportunity to build on the success of the state quarter program," says Sen. John Sununu, R-N.H.  Greater use of dollar coins instead of bills would save the government hundreds of millions of dollars each year, even though the coins are more expensive to produce. That's mainly because coins last for about 30 years, more than 16 times longer than dollar bills.  The Federal Reserve estimated in 1995 that replacing dollar bills with coins would save $500 million a year. The savings would likely be much bigger today, because the number of $1 bills in circulation has risen 40% in the past decade. More than a third of U.S. circulating currency is dollar bills, according to the Fed.  Dollar coins "cost a lot less in the long haul," says U.S. Treasurer Anna Escobedo Cabral. 

Studies, including those from the Government Accountability Office suggest consumers will embrace dollar coins only if dollar bills are pulled from circulation.  But the idea of replacing the dollar bill with coins has met stiff resistance from lawmakers, printing unions and paper manufacturers.  The public has also opposed eliminating $1 bills. In a USA TODAY/Gallup survey of 1,002 adults conducted Oct. 20-22, more than half said it was a "good idea" that the Mint was introducing presidential dollar coins.  But when asked their opinions on replacing dollar bills entirely, 79% said they would oppose such a move. Even when told that replacing bills with coins would save the government $500 million a year, 69% said they still opposed making such a change.  "Five dollars of coins weighs a lot more than five dollars of bills.", says retiree Ellen Barlow, 74, of Culbertson, Neb.  Other countries have done away with their low-denomination bills. Canada has replaced its one-dollar and two-dollar notes with coins, while in Europe, some euro coins have replaced bills.  Machine repairman Patrick Lawson, 35, of Cold Brook, N.Y., says he liked using coins for lower denominations when he was stationed in Germany in the military. It makes sense for the USA to get rid of the dollar bill and use coins instead, he says.

The last dollar coin to be introduced, featuring Sacagawea, a Native American interpreter and guide on the Lewis and Clark expedition, was largely a failure. Due to lack of demand, the Mint stopped making the Sacagaweas in 2002, a little more than two years after they were first introduced with much fanfare.  Demand has been so minimal that the Federal Reserve and the Mint as of June 30 had more than 200 million Sacagawea dollars in combined inventory, according to the Fed. That's enough to meet current demand for 31/2 years.  The Mint's Moy says that when he was nominated to be Mint director this summer, he went to five banks and asked for a Sacagawea. None had one.  The Mint spent more than $67 million to promote the Sacagawea coin from 1998 to 2001, according to the GAO. The money was used for marketing, advertising and partnerships with a variety of industries, including banking and retail. A float promoting the coins was in the Macy's Thanksgiving Day Parade in 1999, and they were featured on boxes of Cheerios cereal.  But despite the promotions, the public did not embrace Sacagawea.

"The Mint's new dollar coin marketing program raised public awareness of the new coin but did not produce long-tem increases in circulation," a 2002 GAO report said.  Instead, people had trouble finding the coins after the initial flurry, when they were handed out as change at Wal-Mart. Banks stopped ordering them, and they largely faded from view.  But supporters of the new dollar coins say this time, it's different.  That's because the new coins will rotate, introducing four new presidential dollars each year, starting in 2007. Plus, for the first time in more than 70 years, the coins will feature writing on the edge of the coin rather than just on the fronts and backs. The writing will be engraved, but will be detectable by touch.  Those two features, particularly the rotation of the coins, will lead to excitement about the money in a way that wasn't generated before, Moy says.  "Casual collectors will focus their attention on the dollar, just as they have with the 50-state quarter program," Moy says.  The presidential dollar coins come as the highly successful state quarter program nears completion in 2008. About 125 million people in the USA, or close to half the U.S. population, are collecting the state quarters, according to the American Numismatic Association.  The Littleton Coin Company has already sold thousands of specially designed folders with slots for the new dollar coins to collectors.

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