No More Dollars and Cents?

Over the past quarter century, the U.S. Congress has authorized the minting of four different dollar coins. The Eisenhower dollar was minted for a few years in the mid-1970s. Then, the ill-fated Susan B. Anthony dollar was produced for only three years, in 1979, ’80, and 1998.

Then, in 2000, the government decided to make the dollar coin gold in color and inscribe on it a likeness of the Indian woman who helped Lewis and Clark on their expedition, Sacagawea. The color soon turned to a coppery tarnish, much like an old penny.

Finally, this year, the U.S. Mint started producing the Presidents’ dollar, starting with a likeness of George Washington. They plan to rotate through the presidents over the next several years.

Why does the Treasury keep trying to force dollar coins on us when the only people who use them regularly are big-city commuters? The answer is that coins, over the long run, cost far less to produce than paper dollars, because they last so much longer in circulation. So it’s an economic issue.

But the dollar bill is venerable and time-tested. It will not be given up by those who use it unless it is taken out of circulation. We are used to dollar bills. They are light-weight and can be accessed easily with other denominations when we open our wallets.

Coins are heavy and must be accessed separately from larger bills because most people keep coins in a different pocket or purse compartment from bills.

But the feds have a point. Dollar bills cost more to make than they used to, due to inflation. Coins would save taxpayer money. But as long as they keep making the dollar bill, the coin will never catch on. For that reason, Congress should consider retiring the dollar bill. Perhaps we should follow Canada’s lead and start minting a two-dollar coin so our pockets won’t be weighted down so much.

Another piece of currency that they should retire as soon as possible is the penny. Starting in 2006, the penny’s cost to produce became higher than its face value. Since the Mint sells coins to banks at face value, the Mint loses money every time it sells a penny. It costs about a penny and a quarter to make a penny these days.

It also costs more than a nickel to make a nickel, but I think nickels are still relatively useful for cash transactions. Pennies can easily be eliminated simply by rounding every transaction off to the nearest five cents.

Some people claim that would cause things to go up in price, because everything that now costs 99 cents (or $1.99, or $2.99, etc.) would be rounded up to the nearest dollar. But when you add sales tax and the fact that most people buy more than one item at a time, the randomization factor kicks in and tends to favor neither the customer nor the retailer.

As long as it was profitable for the government to make a penny, there was little chance that it would be retired. But now that it’s costing the Mint money, its demise may not be too many years away.

Pennies are heavy, ugly, and they take up far too much room in pockets. They slow down cash transactions as people fumble through their pockets looking for exact change. They are so useless, I don’t know of too many people who would even bother to bend down and pick one up anymore. I don’t.

And now that they are no longer cost-effective to produce, the government should stop minting them and let the ones still in circulation slowly disappear from existence.