Opinion/Editorial - United States Coinage Needs Overhaul Now!!!

United States Coinage Overhaul Is Needed Now!!!The United States Coinage needs change (no pun intended) and here's three reasons why: Our current circulating coinage is staid, impractical, and change makes good budgetary sense. Have you ever wondered why our coinage looks like it does? Why each coin is a specific size, shape and composition? Do you know that the latest coinage act was over 45 years ago?When the US Mint first started coining money in 1792 the composition and weight of a coin closely approximated it's value. Coins were made of gold, silver, and copper, and ranged in denomination from Half Cent to Eagle ($10 gold piece). Over time, adjustments were made in order to keep the intrinsic value of the coins near but still below their face value. The Coinage Act of 1965 changed everything. Our coinage would no longer be made of precious metal, but made of base metal assuring that the cost of manufacturing the coins would be less than their face value. For the sake of continuity, the new coinage of 1965 would resemble the silver coinage that it replaced. Each denomination remained the same size and design of its predecessor, only the weights of each coin changed slightly. These coins were accepted readily in the marketplace and by the general public with very little resistance.In 1982, the One Cent coin became a financial burden when it too started to cost more than face due to a rise in copper prices. It suffered the same fate when the composition was changed to a 95% zinc coin with a copper coating. This solved the problem, but only temporarily. A little noticed fact of the manufacturing of money is the concept of seignorage, the amount of a coin's face value minus its cost to be made equals the profit made on coins. The profit is called seignorage and it is quite important to the federal government. Any seignorage derived from the manufacture of coinage is a direct profit to the government and thereby goes directly to our cost of government and in essence paying down the national debt.This is not a big long, political tirade on budgets and budget politics, this is just simple math. If it costs more than face value to produce a coin, then we are losing money making them. We are also losing potential seignorage from them. We currently have 2 coins that fit this description and the costs of making them adds to our national debt every day, rather than helping to alleviate it. If this were the only problem facing our coinage, the remedy would be apparent but the coinage problem is much deeper than simply fixing two denominations. The expense of the cent and nickel are not the only problems facing our coinage, the United States also has two coin denominations that fail to circulate: The Half Dollar and One Dollar coins. Let's examine them one at a time.During the first half of the 20th century, the Half Dollar coin was the workhorse of the American coinage. People used more Half Dollar coins than any other denomination. It was a very popular coin. Then in November 1963, President Kennedy was assassinated in Dallas. The decision was made so quickly that by the very next year, the Kennedy Half Dollar replaced the Franklin Half Dollar in the United States. No 1964 Franklins would be coined.Millions of Kennedy Halves were produced, but very few if any circulated. The removal of silver from the coinage in 1965 was blamed for the lack of use, but even the eventual removal of all silver from the Half Dollar in 1971 failed to induce their circulation. The coin had become a memorial in the eyes of the American public and it is my opinion that this is why people continue to hoard them to this day. The hoarding has become so severe that for lack of another coin, the American public has since started to use (and now prefer) the Quarter Dollar as their denomination of choice even though a Half Dollar coin would mean less bulk in their pockets and purses.As if the Half Dollar needed it, the vending industry has offered a final push towards extinction as a denomination. US vending machines don't accept half Dollar coins! Golden Dollars, yes. Susan B. ? Yes! Half dollars? Not on your life! The size of the coin is the likely offense and an adjustment could return this coin to it's once proud place in the public's pockets.As for the One Dollar coin, they have never truly circulated since the inception of the United States coinage. Many times in US history the minting of standard silver dollars has gone years with no production. The late 1800s saw a more regular yearly minting of silver dollars but they were rarely used and so stockpiled that in 1904 the US Mint stopped making them. They briefly resumed production from 1921-1928, but then stopped until 1934. In 1935 the reserve had grown so large that they were never made again. There was so little demand for them that 40 years later in the early 1970s the Government Services Administration sold off the US Treasury's stockpile of silver One Dollar coins. Remarkably, there were bags of uncirculated coins dating all the way back to 1878. A true testament to the people's love (or lack thereof) for the denomination.The Kennedy Half Dollar shows an example of how people can view our coins as memorials and the danger that idea poses. I would go as far as to say that the "memorial mindset" has taken over our coinage, and it is this mindset that has made our coinage design stagnant and staid within the short time span of 100 years.Beginning with the Lincoln cent in 1909 and continuing to the present day, we have replaced our designs with tributes to great Americans. The list is like a Hall of Fame roll call of great Americans; Washington, Jefferson, Roosevelt, Franklin, Eisenhower, Susan B. Anthony, even a "likeness" of Sacagawea have appeared on our coins. The problem is that eventually, you run out of denominations before you run out of deserving people. I would opine that commemorative coinage exists for exactly this purpose. Spotlight every American who deserves it. Don't place emphasis on one over another by permanent status on a coin. Memorials exist for remembrance. We want a specific memory to be permanent. That we never forget the event or the people for which we celebrate is the purpose of creating such tributes. Coinage, although a lovely tribute, is a bit too small as a venue to commemorate everyone who deserves it. The current economic climate also encourages us to change and redesign our coinage. Budget battles blanket the headlines recently and politicians are looking for ways to make our government run more efficiently and at a lower cost to taxpayers. Currently it costs over a cent to produce our one cent coin and over five cents to produce our current five cent coin. While most budget cuts involve political battles that some are not willing to wage, the coinage redesign is not an uphill battle, in fact, it could be a very popular program if handled in the appropriate way. It doesn't become a political liability, but rather a political benefit due to the potential popularity of such a program. A program that politicians can promote on a bi-partisan basis without fear of repercussion.Canada has now decided to discontinue the Cent. Economically they could not sustain cent production at its current cost of manufacture. Many are unsure what the economic impacts that such a change will make. Some fear an inflationary consequence, but most admit that they don't really know what will happen. We can watch and learn from their mistakes if we are willing to subsidize our coinage production until we decide, but given the innovations that Canada has demonstrated in the past and our complete unwillingness to follow their lead, you would understand if I was a bit skeptical of those possibilities.Coinage overhaul should happen now. It makes little sense to remain as we are. We cannot continue to manufacture coinage at a loss when we are looking desperately for ways to cut deficits, and we can't continue to promote a coinage system where 2 of 6 denominations cost more to make than their face value and 2 of the others don't circulate. Let's lobby for a coinage overhaul. Let's make our coins make cents again!

 

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I would like to read this but it's very difficult when there are no paragraphs. Does anyone know how to write anymore?

Edit: The original Does have paragraphs. Read the original.

 

Trust me, he wrote it out very well. Problem is the CT formatting. Here's the link to the old one with the original paragraphing.
http://www.cointalk.com/t204230/

 

Even with paragraphs I still don't feel like reading the entire thing. The article is way too long and strikes me as a rant, it could use some editing for sure.

 

Interesting comments, just like the problem with current currency, people become distracted by format issues and don't see the solution.

 

I agree with many of the points made in the post. However, I don't think the half dollar fell out of use due to Kennedy's portrayal on it. I think inflation and the increasing use of dollar bills relegated the half dollar to the nation's change jar. Half dollars are just too big and bulky to be useful in today's economy (IMO). A while back, ModernCoinMart had a contest where they asked contributors to decide how they would change US currency if they had broad powers. Here was my entry: [h=6]As Director of the Mint, I would start by ending the current practice of spamming our coinage with constantly changing designs (ie; the State Quarters, Lifetime of Lincoln Pennies, and Presidential Dollars). I would take my cue from Theodore Roosevelt and commission a talented sculptor to make American coins impressive again - and then I'd stick with the same design for a decade or more. I think it's time that we turn away from showing dead politicians on our coins and instead go back to representations of the virtues of our Republic. I would have artistic representations of Liberty, Sacrifice, Duty, Honor, and Ingenuity put on the obverse of the coins, and use Roman numerals to clearly label denominations on the reverse. I would also reduce the weight of all circulating coins, especially the dollar, with weight directly proportionate to value.[/h]

 

Oh, hey, it looks like the contest is still going on for 4 more days: http://www.facebook.com/pages/ModernCoinMart/147900781933515?v=app_255220521240297

 

Great read, interesting points. I completely agree on the Kennedy half as I am NOT a fan of Kennedy himself or still living family members. Nothing against what he did in politics just personality-wise he rubs me the wrong way. Along those lines I also agree with why not honor with a commemorative and be done with it. Then again they did commemorative for states back around the 1920's (granted it wasn't all of them mostly centenials of varying lengths) and yet we still had the statehood quarter program. History repeats itself over and over again. We also do need to do SOMETHING to help our current situation minting coins that are over face value and yes it's an uphill battle. Case in point the business world will never get rid of the cent. How can they put that $10 item on sale for 9.99 if you don't have the odd 4 cents to pay for it? We still have 9/10 of a cent on gasoline for god's sake. It's the psychological edge marketers and sales uses to trick most people into buying something, buying more, buying because it's on sale even if just for a few cents. I personally think the better issue would be to if even possible make the coins a bit smaller or even thinner? I think a small diameter change would not be noticed by Jon Q. Public to cause outrage. The other item that isn't touched upon that could help reduce the cost/value differential is labor. I don't know but it's my guess that mint machinists are union and paid wonderfully. If nothing else to keep stealing down. Not to mention they are federal workers entitled to wonderful benefits that raise the production cost side of things. Cut those items back from all mint employees to Congressmen and watch the saving roll in from all directions. Maybe if they have to actually work then some coinage laws would be updated...lol.

 

While Mike makes some very good points, he just doesn’t go far enough. If you really want to make fiscal sense, and I know this is utter numismatic blasphemy, we should eliminate coins completely and deal only in credits. Coins are actually obsolete and the only reason we use them anymore is because of tradition. Getting rid of coins would cause a few important things to change (no pun intended). Banking costs would plummet, cash registers would be unnecessary, armored cars would become armored sub-compacts, copper, nickel, silver, zinc etc. would be better used in computer hardware, and thousands more positive changes would save this country billions annually.

Now coin collectors would tar and feather the guy that suggests such a move and I would most likely brake out my torch and join them, but the coin has outlived its usefulness and has no real value anyway. The only reason it has value is because we say it does just like the almighty greenback. Since we are only fooling ourselves, why not move to a credit based economy and eliminate the lie of the value of our coins and currency? What's that on the horizon? It seems to be the glow of torches coming this way. :help!A:

 

because hard money (coins and notes) are the only defense that every day people have from computer hackers, bank officials or anyone else corrupt who would rather they didn't have any means of purchase outside of the commercial loop. A credit society opens us up to corruption on a grand scale and takes every day money decisions out of the average person's hands. As in the days of intrinsic coinage, there will always be some form of coinage that is used in transactions between the public because the public will never be satisfied to have their money on a theoretical basis. They will want some hard cash. It may not be what we know today, but something of value will always be a vehicle of exchange.

 

The vast majority of people in this country do not have hard money at their disposal even with the option available to them. That doesn't represent much of a defense if people have the option and don't use it. If people have actual vast quantities of hard money, it is in all likelihood sitting in a bank where it is just as susceptible to computer hackers and bank officials. I used to say that I'd never use an ATM but now I prefer them to actual tellers. People will go with what they get used to whether it is a coinless/cashless society or a credit based society. I currently use a debit card more often than I use cash. I almost never have cash in my wallet. I and many others are already on our way to a cashless society whether we know it or not. It is coming and I bet it isn’t that far off. My paycheck is deposited directly to the bank. I use my debit card to draw on those funds. I pay bills electronically. I shop for groceries using a debit card. I am virtually using credits now. It’s coming.

 

My point, moen, is that a credit or cashless society will be easier to cheat or corrupt. A computer hacker can make himself seem like a millionaire or even become a real one in a computerized system.

People to people transactions will always need some sort of currency, be they beaver pelts, paper dollars, buttons, stamps, etc., because people inherently don't trust authority figures and governments and also because it's harder to commit fraud with a currency in place.

 

Hum? Your position seems resolute. I disagree for the reasons already stated. I'm not looking forward to or even hoping for a credit based society, I'm just saying that it is just a matter of time before it is here. It will simply be too cost effective to avoid regardless of what people might want or not want. It will happen most likely in your and my lifetime.
Sure people will always trade one item for another or simply trade for some type of favor but a government sanctioned physical currency is in its twilight. Do you disagree that we are at least in part already on our way to a credit based society based on the examples I have previously mentioned?

 

OMG, look what the cat dragged in. Thank God for the poker boom huh Moen? At least there is one competing interest to a cashless society. Do you miss me on PRWE?

 

Poker uses poker chips not money.

 

Last time I checked, you can't buy poker chips with a credit card. CASH ONLY!

Admit it, you miss me!

 

I try to keep the conversations from down south away from this part of CoinTalk. So should you.

 

What are you talking about? Going south is a poker term, did you know that?

 

Although I agree with the concept of a reduced or coin free society her in the United States. I cannot come up with a better system. Maybe eliminating the cent first as they are doing in Canada and see how it works. I would take fifty years or more for the circulating coinage to be used up. The credit thing I don't know. I pay bills in person still. The computer thing not for me. Therefore a credit type of system I don't think so not anytime in the near future.

 

This article is spot on: There is a definite need to revamp our coinage regarding the denominations available (get rid of the penny), the designs, and how we should be using commemorative coins. We won't be getting rid of coins anytime soon, though! The reason the Mint hasn't gotten rid of the penny is because the customers (that's us) still want them! I don't think anyone above has mentioned charities: Pennies are used for gathering rather large amounts of money for charities that acquire them in small amounts from donors. After all, it's always easy for people to give away a bunch of pennies, right? What if charities started asking for quarters? Maybe not so much, I think.And if we don't get rid of the penny, what about that idea that came about in 1974 to replace the zinc and copper penny with a 100% aluminium coin? I can't imagine that the zinc industry has enough politicians in their pockets to keep that from happening, do they? There ARE solutions that don't require the total removal of a denomination.