Is It Time... For the $1 Coin?

Bills have been reintroduced for 1989 in the House and Senate regarding the $1 coin. The proposed act calls for introduction of the coin 18 months after the law is enacted. Printing of $1 bills will stop 18 months after the coin is introduced (example: 36 months after the law is passed). Since the average life of a $1 bill is also 18 months, the paper dollar will not go out of circulation until at least four years after the law passes, so there is plenty of time to prepare.

More operators are using Anthony dollar coins and report increased until sales and profits. (Dollar coins do help). The proposed new coin will work in existing dollar coin mechanisms.

Phasing Out the $1 Bill

There is a common misconception that the general public rejected the Susan B. dollar. In fact, cash retailers killed the coin. Note that no automatic teller machines dispense $1 bills, and bank customers seldom demand more than the minimum number of $1 bills when cashing checks. Where do $1 bills enter the system? The answer is convenience stores, fast-food restaurants, grocery stores, taverns, sports arena concessions, and drugstores. These merchants stock their cash registers to make change as quickly and accurately as possible. No cash retailer would ever think of stocking two forms of the same denomincation, and retailers will certainly remain with the familiar standard - the $1 note. That is why the $1 bills must be elimiated if a $1 coin is to circulate. If the $1 bill had been removed in 1979, the Susan B would have succeeded. This simple observation has led every country that has introduced a high-denomination coin since 1980 to remove the equivalent paper.

The Canadian dollar coin, the so-called loony, introduced on July 1, 1987, is an excellent prototype and has been well received. The Bank of Canada issues its last $1 bill on June 30, 1989. It will no longer be issued.

Cost Savings to the Government (Taxpayer?)
Some skeptics of coinage reform suggest that we are heading for a cashless society so why worry about such matters? Federal Reserve printing orders to the Bureau of Engraving and Printing, however, seem to suggest that cash is becoming more popular than ever. In 1972, there was printed a total of 3.1 million notes; by 1987, that number had grown to 6.9 billion. Of these, 48% were $1 notes, down from 55% in 1972. In 1987 Treasury estimates indicate per-unit printing costs for the dollar bill are $.026 versus $.035 for minting a dollar coin. Both of these costs have risen recently, since the cost of ink rose about 40% in 1988 and the cost of copper also is up. But even using those figures, the estimate circulation life of 20 years for the coin as opposed to 18 months for the bill means that the savings on reproduction costs would exceed $120 million annually.

Counterfeiting
Notes have generally been difficult to counterfeit, but that is no longer the case. The reverse is true for coins, because validators measure not only the coins' size, but also their magnetic eddy currents.

Conclusion
The United States now has the "weakest" high-denomination coin of any Western economic power. And we are paying for it. It is time for the $1 coin and the elimination of the $1 bill.