Advertisement
Most industrialized economies don’t waste time with paper money of such paltry purchasing power. For the 15 European countries in the eurozone, the smallest denomination of printed bank notes is the 5 euro, worth $7.83. In Britain, the lightest piece of folding money is 5 pounds, worth $9.85. In Japan, it’s 1,000 yen, about $9.30.
Even the humblest Mexican bill, a 20-peso note, is worth almost twice as much as the dollar bill. Canadians scrapped their paper dollar and switched to coins in 1987.
The Government Accountability Office has said that if the U.S. switched to $1 coins, it would save taxpayers about $522 million a year in production expenses. That’s mainly because a dollar bill, which costs about 4 cents to produce, has a life expectancy of 21 months. The $1 coin, which costs about 20 cents to produce, lasts 30 years or more.
For me, the issue was decided earlier this year when I returned to the U.S. after living abroad for 18 years. I wanted to buy a candy bar from a vending machine, but I didn’t have five quarters in pocket, so I fed the machine a $5 bill. I got my M&Ms all right — and I also got a gusher of change that made me feel as if I had just hit the slot machine jackpot.
So why does America cling so tenaciously to its dollar bills?
The argument in favor of paper that I heard most frequently is that Americans don’t like carrying around a lot of coins.
That also was the main complaint of Italians before the 2002 introduction of the euro. This was all about la bella figura and the supposed Italian obsession with looking good in their clothing. A lot of coins in your pocket, it was thought, ruined the line of your clothing. As it turned out, the euro did not result in carrying more coins, and Italians still cut la bella figura.
At a minimum, a $1 coin would mean four fewer quarters jingling around in your pocket. It would also mean that instead of scrounging around for eight quarters, you could feed a parking meter two coins for two hours of parking.
I know that previous attempts to wean Americans from their dollar bills ended in failure. The Susan B. Anthony $1 coin, rolled out to much fanfare by the U.S. Treasury in 1979, was widely regarded by the public as something akin to the Depression-era wooden nickel. The Sacagawea $1 coin, introduced in 2000, got an equally unenthusiastic reception.
“Americans are creatures of habit. They are used to using dollar bills, and it’s hard to get them to change,” said Edmund Moy, director of the U.S. Mint.
That didn’t surprise me, but what did was the news that the U.S. Mint was in the midst of yet another effort to get Americans to use dollar coins instead of dollar bills.
This latest bid might best be described as the stealth approach to currency modernization. The Presidential $1 Coin Act of 2005, passed by Congress and signed by President Bush, directs the U.S. Mint to produce a series of $1 coins carrying the portrait of past presidents. It also directs the U.S. Treasury and the Federal Reserve to assure “robust circulation” of the new coins.
The plan is for four presidents to be introduced each year, starting with George Washington.
Since their debut in February 2007, more than a billion new $1 coins have been minted. The John Quincy Adams came out in May. But most Americans have never seen one, and outside of collectors and other enthusiasts, very few people seem aware of their existence. If you show people one of the shiny, gold-colored coins, the almost universal reaction is, “It looks fake.”
A sampling at Chicago-area Walgreens, Jewel and Starbucks outlets turned up only two $1 coins in their cash registers. Cashiers said they never gave them as change unless people specifically requested them.
At the Bank of America branch on Michigan Avenue, teller Ashley Arellano had a small supply of the $1 coins.
“But the only people who ever want them are tourists from other countries,” she said.
The U.S. Mint’s Moy said the new strategy is to introduce the public to the new coins by focusing first on “coin intensive transactions,” such as vending machines and public transport, and then try to win the support of businesses that rely heavily on “cash intensive transactions.” The main targets here are the fast-food industry and giant retailers such as Wal-Mart.
Moy said that beginning next month the strategy will be test-marketed in four cities: Charlotte, N.C., Portland Ore., Austin, Texas, and Grand Rapids, Mich.
There’s a better way. If Congress is serious about modernizing U.S. currency, it could simply withdraw all the $1 bills from circulation within a fairly short time, say six months to a year. After that, dollar bills could no longer be offered as legal tender, except at banks, which would take them in exchange for coins.
The European Union successfully introduced the euro virtually overnight by making it clear that old currencies would be withdrawn quickly from circulation. Despite the deep attachment of the French to their francs and the Germans to their marks, everybody got used to the new currency within days.
