The US Mint is going once more into the breach with a dollar coin, an admirable enterprise that will fail again partly because of a fatal design error for the coin itself, but mainly because the government (including Congress) is unwilling to do what’s necessary for its success. This time the hope is that putting all the presidents on them successively will do the trick, but getting a dollar coin to circulate has almost nothing to do with what’s on the coin. The story is a sort of ongoing bleeding sore, and interesting on its own.
Very few developed countries have a bill of as low value as the US $1; the smallest Canadian bill, for example, is $C5, the smallest Euro note is €5. Because coins last so much longer than notes, substituting coins for the $1 bill would save the government a lot of money, in the $100s of millions. So the idea is not goofy, nor was it in 1978 when the mint came up with the idea for a new dollar coin.
Design criteria for such a coin are that it be small and light, but easily distinguishable from a quarter by feel (in your pocket, and by the blind), and easily manageable by vending machines (which rules out square coins, for example). As it happens, if you make each side of an odd-numbered regular polygon a radius from the opposite corner, you get a figure that has corners, so it doesn’t feel round, but also has a constant diameter (the British 20np coin has such a scheme built on a heptagon) and the mint proposed such a shape of eleven sides. As it turned out, the vending machine people hated this idea, because when it rolls, the center of gravity bounces up and down, so the mint made a really bad mistake: they kept the original size, only slightly larger than a quarter, gave it a milled edge, which feels like a quarter’s, and incised a hendecagon inside the rim. It’s hard to imagine a worse result: a silver coin that looks as though it will have corners, but doesn’t, and isn’t otherwise different enough from a quarter to distinguish reliably. Apparently most people really dislike spending a dollar when they owe 25c. The extremely modest reputation of Susan B. Anthony nationally didn’t overcome the nice reverse with an eagle landing on the moon, either, nor did the politically correct demand for a historical woman (not “Liberty”). This coin went out, and came back almost instantly.
In 2000, they tried again, with the Sacagawea dollar. The same size as the Anthony coin so they could be interchangeable in vending machines and rolls, it was given a different color and a smooth edge. Unfortunately, the smooth edge is traditionally used only with small value coins, and the color is a fake-looking goldish plating that ages badly, so the net effect is just cheap. Sacagawea, by the way, was the Shoshone who guided Lewis and Clark and is depicted with a child on her shoulder in a carrier; at least one wag suggested the child was named Gawea and the coin named for the Sack o’ Gawea represented.
These coins are constantly pumped into circulation by, for example, Postal Service stamp vending machines, one of which gave my wife two Anthonys this morning, leaving her muttering about why the stamps cost so much. Surely she would have spent them for quarters if I hadn’t happened to point out what they were, thinking about this post. Got one in change lately? No? Neither have I.
It’s actually a great deal for the government to make coins that go into circulation and get saved, because the difference between the face value and the cost of manufacture, called seignorage, is a free loan. But it’s not so good if they go out and come right back, which is what’s happening to both dollar coins. The problem is that these coins are systematically filtered out of circulation upon their first use in commerce, because there’s no need for them, we have a widely established habit of using dollar bills, and – most important in my view – no place to put them in a cash register. Try it: if you spend one, it goes into the leftmost of the coin trays with the odd half-dollar, Canadian nickel, some paperclips, and a cough drop. Instead of being given out in change, it goes back to the bank with the miscellany and is not seen again until someone buys stamps.
Why not just stop making $1 bills? As they gradually wore out, store clerks and citizens would certainly learn to manage the dollar coins and get used to using them (not without stentorian press outrage, of course). But Congress won’t let the Treasury do that, for reasons that completely escape me. Perhaps the presidential coins will be collected, for a small profit from the seignorage, but they will most assuredly not circulate as long as the governing law nails the mint’s feet to the floor by requiring bills to be out and about, and the sound, efficient financial goals of the whole project will again be sabotaged from the start. Some things can be accomplished bit by bit, like learning to speak French, but some, like a back dive off a board, have to be begun with full commitment from the start; substituting currency forms is in the second category. The whole story reminds me a little of the joke about the British plan to switch to right-hand traffic, under which the new rules would only apply to professional drivers (buses and trucks) for the first week, while cars would make the changeover later.
UPDATE: Kevin Drum and his commenters have been going over much of this ground: great minds in the same track. Actually honesty requires me to note that some of his commenters occasionally fall somewhat short of the point of greatness… 🙂