The changing face of $1 coins - U.S. Mint officials say they believe consumers are ready this time for an alternative to paper dollars, as well as for another collector's item
By Azam Ahmed
Copyright © 2007, Chicago Tribune
Published February 13, 2007
This time it's going to work, they swear.
A $1 coin is the right piece of change at the right time, said the U.S. government, which will unveil the presidential dollar this week.
Other attempts, such as the Eisenhower, Susan B. Anthony and Sacagawea, were doomed to fail when $1 coins were deemed obscure or unnecessary.
But with inflation, it's become inconvenient to lug around quarters: think parking meters, where one quarter buys about 10 minutes, or laundry machines, where handfuls are required for just two loads.
"The timing is much different today than even six years ago," about the time when the Sacagawea golden dollar coins came out, said U.S. Mint Director Edmund Moy.
But tell that to Chicago consumers like Derek Duman.
"I prefer as little change as possible," said Duman, 43, who works in sales. "We're becoming a cashless society, so I think it's a waste, personally."
While Duman said he liked the idea of presidential coins, he pointed to his cup of Starbucks coffee to make a point. "I just bought this $2 cup with a credit card. I think the coins are cool, but I just don't know how much I'll use them."
And then there are folks like Donna Crabbe, a retiree, who doesn't so much think they're useless as foreign and unfamiliar.
"I like change but I'm just not used to using them," said Crabbe. "If you did away with the dollar, maybe I'd get used to using them."
That won't happen. The coins are not specifically aimed at replacing the paper dollar, but to give consumers options, according to a congressional bill passed in 2005.
Proponents of the $1 coin also think the timing might be right based on examples of acceptance of coins around the world, where small denominations come only in coins. The British 50 pence coin as well as the 1- and 2-pound coins are one example, as are the 1- and 2-euro coins.
Moy said he thinks the new coins also will succeed because they will be stamped with presidential profiles, making them collector's items and educational pieces.
Starting Thursday, the Mint will roll out George Washington coins and will continue down the line with every president afterward, provided they have been deceased for at least two years. Four coins will be released each year, one every three months, putting John Adams, Thomas Jefferson and James Madison up to bat in 2007.
The program hopes to mimic the popularity of the 50-state quarter program, which releases five new coins every year. By Mint estimates, about 140 million Americans collect the state quarters, roughly half the U.S. population.
"The 50-state quarter program is by far the most successful coin program the mint has ever done. The idea is to take some of the successful lessons learned and apply them to the dollar program," said Moy. "We suspect that a lot of the 140 million people are also going to be interested in collecting the presidential dollar."
But in terms of the coin's acceptance, there are hitches: Cities, for instance, must decide whether to retrofit parking meters so they can accept the new coins. And they won't get any financial assistance from the federal government. For that matter, neither will other retailers that the Mint is hoping will push the campaign forward.
"This is an economic decision that the users of coins each need to make themselves," said Moy. "The way we're going about it is to convince consumers of the benefits of these coins."
The presidential coins will be the same size and proportions of the Sacagawea coins, which means vending machines and parking meters that are equipped to accept Sacagawea coins will not have to make adjustments on equipment.
The City of Chicago already converted its downtown business district parking meters to be golden-dollar friendly, said Ed Walsh, spokesman for Chicago's department of revenue. As a result, the city is hoping that no further modifications will be necessary.
And while some people prefer paper dollars to coins jangling in their pockets or purses, the vending machine industry prefers coins.
"In the vending industry, using a dollar coin is much more efficient than a dollar bill," said Brian Allen, director of government affairs at National Automated Merchandising Associations. "Bills tend to jam in the machines, which can be very expensive to fix."
The estimated cost in lost sales and repairs from jammed dollar bills is about $1 billion a year, according to the trade group.
Supermarkets, however, are concerned about possible delays in checkout because some people in the past have confused dollar coins with quarters.
"It was a little bit of a problem five years ago," said Will Vargas, an assistant store manager at Treasure Island in Chicago. "Even for the cashiers, it was kind of hard to tell apart from quarters because they looked almost alike."
Self-checkout lanes, an increasingly popular option in grocery stores, may also have to install new machines that accept the coins.
The Mint also claims it will make a profit selling the coins to the Federal Reserve Bank. The coins cost 20 cents to produce, and when the Fed buys them at face value, the 80-cent profit is deposited in the general U.S. budget.
The Mint also says coins are more cost effective to make than paper currency. Coins last a minimum of 30 to 40 years in circulation, said Moy, while dollars last roughly 18 months and cost about 4 cents to produce. Over a 30 year period, the approximate cost of having dollars in circulation would be 80 cents, compared with the 20 cents for a dollar coin.
So far, the Mint has made 300 million George Washington coins, the exact amount the Fed has ordered, Moy said. After producing nearly three times the number of Sacagawea dollars needed in 2000, about 1.3 billion, Moy said the Mint had no plans to produce more than demand requires.
"Part of the problem with Sacagawea was the Mint overanticipated what those orders were going to be," he said. "This time, we have geared ourselves to make whatever the Fed wants quickly and exactly to their order, because we don't want to be left with inventory."