Tuesday, November 27, 2007

four dead presidents, and counting . . .

It occurred to me this morning, as I went to pick up a roll of the new James Madison dollars, that I've never shared here about my obsession with dollar coins. I can't even remember now exactly how or when it started. I think it had something to do with thinking they'd be easier to use on buses than paper dollars, which got me looking for more information and finally becoming a die-hard supporter of the things (even though I rarely use cash on the bus anymore).

A couple of months ago, I was checking out in David's (a local whole-foods type market)--I think just a box of falafel mix, so I paid cash--and the rather young cashier, after examining the coins carefully, asked, "Are you sure you want to use these?" After some contemplation, I politely answered, "Yes," foregoing the more elaborate response I was thinking: Yes, I'm sure I want to use coins that will likely be here when you and I are dead and gone, when the government that issued them is nothing more than a historical memory, rather than paper dollars that will be out of circulation in a month or two. In a store that dutifully asks whether I want a bag or not, do I really need to explain my preference for currency that will never have to be thrown away, and only replaced at the rate the coins are lost or collected? Her question was a good one--only the referent was misplaced. Ask it instead of every person who comes in using $1-bills.

The real travesty is that we even have paper dollars left in circulation. They have only two things going for them--habit, and the fact that they don't make noise in your pocket. Dollar coins, on the other hand, are much easier to use in machines and infinitely more durable. I don't know or care how the cost of initial production compares--once you factor in the rate of deterioration, it's a no-brainer which is more economical and environmentally friendly in the long term.

When I first started using dollar coins, probably a couple of years ago, the biggest problem was finding them. Initially I was able to get them from the bank in the building where I worked, but that supply dried up quickly. They didn't actually maintain a stock of dollar coins--they just collected in rolls whatever they were unfortunate enough to receive, which apparently happened at a rate slower than I was using them. I tried a couple of other banks that I could walk to on my lunch break and the bank we belonged to near home--same story. Someone I knew could get them from her bank; I tried one of their branches, and apparently it was only certain locations that had them. Eventually, I got so frustrated that I wrote my senator, who happened to be the ranking Democrat on the Finance Committee, which had sponsored the bill to issue Sacagawea dollars. I asked how it made any sense to have dollar coins in circulation if they could not be readily obtained by those who wanted to use them, and what I could do as a citizen-advocate to promote their use.

To my surprise, it didn't take very long to get a meaningful response. A cover letter came back from the senator's office, with an attached response from the deputy director of the U. S. Mint. He acknowledged the problem and even cited a recent GAO study that had investigated the issue. He also pointed out that a new bill had been passed, to start a program that would hopefully improve the availability and circulation of dollar coins. Starting the following year (2007), new dollar coins would be issued with pictures of deceased U. S. Presidents, in chronological order, at a rate of four per year until the list is complete. Based on the success of the state quarters program, the hope was that this would increase activity.

I have no idea whether the program is increasing actual usage of the coins in any way. Personally, I have never received a dollar coin as change (though I must admit, the opportunity is limited, since I try to make sure I never get back $1-bills as change), and I don't think Julie has either. It has certainly improved availability at banks, which is something anyway. At least now I have no problem keeping a supply onhand, and like a modern-day Johnny Dollarseed, I do what I can to spend them into circulation. I suspect that for the most part they are either socked away by collectors or quickly taken back to banks, to get them out of circulation. But I'm doing my part, including turning in paper dollars to the bank whenever possible.

As far as I'm concerned, there are only two negatives associated with using dollar coins. It seems like most vending machines are now set up to receive them as payment, but in my limited experience change and token machines are not. So if you need quarters or arcade tokens, a dollar coin may not be of much use. The bigger problem is the noise they make in your pockets. This is especially an issue for me, since I try to carry a supply, so I never have to receive $1-bills as change. I suppose I should revel in the sound they make, but I really don't like making noise when I walk. I would like to have a belt dispenser, but so far I haven't found any designed to fit them. I thought about getting one of those plastic squeeze change purses, but settled on wrapping them in a piece of rag. It does the trick, with the added benefit of winning sympathy points whenever I have to pull it out and unwrap them to pay somebody.

I read that GAO report, by the way. The overriding message was that no successful implementation of such a program has ever established dual usage. They always phased out the paper dollars altogether. If you give people a choice, they'll tend to stick with what's familiar, regardless of the relative advantages. Our government is not yet prepared to take that kind of decisive step, probably because it's so reluctant to get rid of anything. We add, but we do not take away. And surely someone's budget would be slated for cutbacks if we actually scrapped the $1-bill. My favorite example that highlights this mentality, also from the GAO report, is what became of the advertising campaign to improve circulation of Sacagawea dollars. Someone came up with a great idea for a commercial, showing someone trying unsuccessfully to feed a tattered paper dollar into a vending machine, while someone else made a quick and easy purchase by depositing a dollar coin. It was never used, however, because the Mint and Engraving & Printing are both part of the same government agency, and it was deemed inappropriate to advertise one by reflecting negatively on the other.

So, I assume that when this program is completed, things will go right back to the way they were. (Maybe I should start hoarding now.) But for the next few years, anyway, I'll enjoy the easier access. None of this has much to do with anything, though of course I can always find a relevant Simpsons quote. When Homer is trying to help out Comic Book Guy after his heart attack, he takes him to Moe's:
Homer: Now, when you've got a bum ticker like we do, you need all the friends you can get. And Moe's is the friendliest place in the rum district.
[opens the door. Inside, Moe aims his shotgun at a bar patron.]
Moe: Get out, and take your Sacagawea dollars with you. I'll give you 'til three.
[cocks gun. The man leaves.] One! [fires]


Justin said...

I think the reason you can't find them is that there just aren't that many of them. I spent every Sacagawea dollar I could get my hands on, but they dried up pretty quick.

The U.S. Mint's website has some pretty telling stats on how many coins they mint each year.


8.2 billion pennies
1.5 billion nickels
2.8 billion dimes
2.9 billion quarters
4.4 million 50-cent pieces
7.7 million dollar coins

So the Mint wonders why they aren't used by people in general circulation? Self-fulfilling prophecy at its best. "We didn't make many, so they're not being used in circulation! Make fewer of them!"

I suppose I should give them some credit for trying once, but considering that they created 5 times as many quarters and 11 times as many pennies that year, I give them no credit.

I'm sure it made sense to somebody, but I'm no numismatist.

Trevor said...

Yeah, it doesn't seem like they were ever that optimistic about them going into wide circulation. I guess I can see some logic. Roll out a bunch with some hoopla in 2000, and see what happens. If there seems to be a lot of demand, make more; otherwise, make less.

Of course, they must have gone somewhere. If no one wanted them, they'd all eventually end up back in banks, and there should be a decent supply for anyone who wants them. Probably most of the activity was on the part of collectors, who pulled a significant amount out of circulation. I guess one question is, how do you get banks and vendors to put them back in circulation? I don't have much recollection from when they started the Sacagaweas, except something vague about one person I knew getting one as change or something somewhere.

Was it ever at all likely that you'd get one as change in a store or when you cashed a check at the bank? Did anyone ever ask, "paper or metal?" Or did they all just assume that unless someone asked for coins, they probably wanted the old standby? If vendors only ever deposited the things, and banks only gave them up by request, you'd have to have specific motivation to go looking for them and use them. Most people probably aren't that ambitious.

It's kind of like the warehouse that I used to work for. The company prided itself on being environmentally friendly, so it established a policy of using only biodegradable packing materials. Up until that point, there was a fairly efficient cycle. Stuff comes in with styrofoam peanuts, you collect them for re-use on stuff that goes out. You might need to fiddle a bit with the supply and demand, but generally speaking, they stay in use as long as possible. With the new policy, they would have to bag up all the offending material that came in and give it away to less scrupulous companies. For the most part, they had to buy their own biodegradable materials fresh every time. It seems like most people would rather just go with the flow. If I get styrofoam, I'll use styrofoam. If I get paper dollars, I'll use paper dollars. Why should I have to go to the bank all the time to make the switch?

So maybe my whole strategy is wrong. If I want to change the system, is feeding a few more dollar coins into it really going to matter? Or will they just end up back in banks as soon as possible? How do you actually promote the demand that will cue somebody that maybe we need more of these things?