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Steel to make coinage comeback

Steel cents are in our future. The only thing is, they won’t look like steel cents. This isn’t as strange as it may sound. We already have zinc cents that don’t look like zinc cents.

The steel concept is the same. The core will be coated or bonded to an outer layer of copper so the public will not be able to visually detect the difference.

At issue is timing. There are two bills in Congress. At a hearing on Tuesday the divisions became clear. One bill gave discretionary authority over coin composition to the Treasury secretary. The other essentially leaves that power in the hands of Congress unless an extensive round of consulting and public input occurs.

Which is Congress likely to go for? My money is on the one where it retains the most power. What they agree on though is the necessity of changing the cent’s composition.

That brings us back to steel and timing. It will be around two years before the Mint can line up all of its ducks and suppliers. That seems slow, but that is what the Mint director said. We live in an Internet age where we figure if we can conceive of it, it will be done.

The Mint operates industrial plants and things don’t move that quickly.

The new composition will save taxpayers money.

Any changes to the other denominations depend on which of the two pieces of legislation passes. Let’s watch and see.

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2 Responses to Steel to make coinage comeback

  1. Mark says:

    And to think I actually got a 1943 steel penny in my change yesterday.chxkg

  2. Scott Barman says:

    It appears that the bill with that allows congress to retain the control is the one that will be considered. Remember that both Ed Moy and Henry Paulson said that giving the Mint this power may be unconstitutional.

    The new bill is HR 5512, introduced by Zack Space (D-OH) and sponsored by Barney Frank (D-MA) and Luis Guiterrez (D-IL). Frank is the Chairman of the House Finance Committee and Guiterrez is the Chairman of the Domestic and International Monetary Policy, Trade and Technology subcommittee whose jurisdiction is the Treasury and the Mint. The bill differs from HR 3956 in that it sets the metal contents for 1-cent and 5-cent coins rather than leaving it up to the Mint.

    The testimony offered by Ed Moy (and I lost the link, sorry) was that the Mint needed two years to adjust the processes in order to successfully mint these coins on new planchets. The issues were that the Mint recently purchased the metals and were under under contract with the suppliers through the end of fiscal year 2009 (9/31/09). The Mint also needed time to test the metals to ensure that the designs can be properly struck on the new planchets. Dies and die life will have to be adjusted for the new metals.

    Regarding the statement that "[t]he new composition will save taxpayers money," No it won’t! The Mint is a manufacturer of coins that and is a profit making organizations. Their profit is based on the difference between the manufacturing cost of the coin and its face value, called seignorage. Even with the "losses" for the cent and nickel, the Mint does very well–better than most top ranked for-profit companies. That profit is deposited in a Public Enterprise Fund managed by the Department of the Treasury.

    What is missed from the discussion is that the Mint and the Bureau of Engraving and Printing are not appropriations out of the general Treasury. All operating costs for the Mint and the BEP, including security and purchasing of metals and papers, are paid for from the Public Enterprise Fund. I believe that the last time the PEF could not support the Mint and BEP was in the early 1960s.

    Even with the alleged losses, the Mint reported a seignorage of $750 million based on $666 million in seignorage for circulating coinage and $84 million on sales of numismatic collectibles. That’s $750 million that will be deposited in the Public Enterprise Fund for use next year. The PEF has enough money to support the Mint’s operations budget which is projected at $2.2 billion.

    While there is a need to keep the PEF properly funded, the taxpayers are not "directly" contributing to its operation.

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