Dollars Aren't Only Coins Not Circulating
By Dan Knauth
It's been reported
that the Mint is going to be encourage people to
use the dollar coin in targeted cities. They're
probably paying a marketing company hundreds of
thousands instead of facing facts. Other than a
few coin collectors, people do not like the
dollar coin. They should change the dollar coin,
or just give up on it.
The dollar coin has been tried and failed for
almost 50 years. Since 1979, we've had the Susan
B. Anthony, the Sacagawea and now the
Presidential dollars. All failures. If they
really want to give the dollar coin a chance,
the Mint needs to stand up to the vending
machine lobby and change the dimensions. Make it
smaller and thicker than a quarter and a
different composition entirely, something like
the reeded-edge nickel-brass alloy 1 pound coin
used by Britain.
Some don't like the idea of having a dollar coin
smaller than a quarter, but the size is too
similar to the quarter, and the golden-brown
color hasn't helped it gain acceptance. Unless
we want to make a smaller quarter, it's easier
to go with a smaller diameter dollar, but
thicker to differentiate from a nickel. The Mint
won't need to pay for marketing; jokes about the
shrinking dollar will do the job for them.
Except perhaps for the quarter, most of our
coins don't actually circulate. They follow this
First, the bank sells coins to a merchant. Next,
the merchant passes the coins to the consumer.
The consumer takes the coins home and puts them
in a jar (except maybe quarters). Every year or
so, the consumer returns the coins to the bank
and the process starts over.
Most transactions today are handled with credit
and debit cards. Go to the grocery store, the
gas station, the drugstore - people pay with
plastic. When people do pay cash, they use
bills, not change. For instance, someone buys
lunch and the bill is $6.36. Most times, the
cashier will be handed a $10 or a $20 and make
change. Consumers rarely bother with exact
change - those brave souls who try receive
impatient grumblings from the people in line
and/or the cashier, reinforcing the decision to
just pay with paper.
Cents, nickels and dimes are only used if the
total due is just over a dollar amount - for
instance, if the total is $10.02 you might dig
around for 2 cents, but the motivation is to
avoid receiving more change. (Though the odd
collector might pay $11 solely to receive the
Small bills, on the other hand, do circulate.
People don't have paper money jars at home. In
the example above, you pay with $10. The note
goes in the cash register. The next person pays
with a $20. She gets your $10 in change. Maybe
she uses the $10 later on to buy coffee. The $10
bill is passed from person to merchant and back
again numerous times, only returned to the bank
when the merchant makes a large cash deposit.
The numbers don't lie - billions of coins minted
each year for 300 million people.
Look at it this way: The U.S. population is
about 300 million. That figure includes people
who don't use coins like kids under 3, who only
eat coins; or people in nursing homes (who might
collect them) So why do we churn out billions of
cents, nickels, dimes and quarters every year?
If coins were actually circulating, how many
coins, per person, would be required to support
commerce? I would guess that 25 cents, 10
nickels, 10 dimes and 40 quarters, per person,
would be more than sufficient.
So why are we making billions of cents a year?
At first it seems counterintuitive, but we mint
billions of cents each year precisely because
they don't circulate. Some are abandoned in
need-a-penny cups, or even discarded. Most end
up in penny jars; we don't like throwing away
cents, but they aren't worth carrying. When the
jar is full, we roll and return them to the bank
(or, if you have a bank with a coin machine, you
can empty the jar there).
How about encouraging people to empty their
It would be interesting if, instead of wasting
funds on another failed public relations
campaign promoting the dollar coin, the money
was used to encourage people to empty their
penny jars. It could be tied to a certain event,
the way we are reminded to change smoke detector
batteries at daylight saving time. The
government could set up collection points with
free counting machines to make it easier for
people to turn in change. I'm sure any number of
collectors would happily volunteer to man those
collection points. Who knows what we might find?
Based on mintage figures, there should be
billions of noncirculating coins sitting in
Don't get me wrong. I'm not saying that small
denomination coins aren't useful in commerce nor
am I advocating their elimination. I'm just
pointing out that most do not actively