Legislation has been simultaneously introduced in the House and Senate to allow the Treasury secretary to change the composition of American coinage, and to allow public participation in the process.
The bills, H.R. 3330 and S. 1986, were introduced just before Congress was scheduled to start a summer vacation that should last until after Labor Day.
Rep. Barney Frank, D-Mass., chair of the House Financial Services Committee, and Coinage subcommittee chair Luis Gutierrez, D-Ill., introduced the measure in the House. Colorado?s two senators, Wayne Mallard and Ken Salazar, representing the state where the Denver Mint is located, put forth the measure in the Senate.
This marks the third time in the last 42 years that the Mint is being asked to make serious changes in its coinage composition. The first came with the Coinage Act of 1965; the second came with the proposal in 1973 to change the composition of the cent from copper to aluminum. Copper-nickel clad coins and a zinc cent that is copper plated were the end result.
This legislation is far more encompassing and looks to the future and the need for prompt action by the Treasury secretary as the price of copper, nickel, zinc and other raw materials rises faster than Congress can cope with them.
As Rep. Gutierrez, who chairs the Subcommittee on Domestic and International Monetary Policy, Trade and Technology, said in prepared remarks to the House of Representatives, ?The immediate purpose of this legislation is to address the rising cost to taxpayers of minting pennies and nickels. Currently pennies are made mostly of zinc and have a copper-plated surface.?
The Treasury Department, which supports the bill, estimated that changing the composition of pennies and nickels will save the government over $100 million a year. By making similar changes to the half dollar, quarter and dime, the government can save as much as $400 million annually, Treasury said.
Edmund Moy, director of the U.S. Mint, spoke out on the measure. ?This proposed legislation establishes an open, flexible process to evaluate and use alternative materials for producing our nation?s coinage more economically,? he said.
?Throughout the history of our nation, we?ve been required to change the composition of coins occasionally. Congress wants us to respond quickly and this legislation would allow the U.S. Mint to meet the expectations of Congress and still allow the public a say in the outcome,? Moy explained.
Some of the problems in the past had a lot to do with a lack of public participation. The vending machine industry, particularly, complained that they were not adequately consulted before coin changes were announced ? even if the Treasury later had to retract the announcements.
Treasury has undertaken several major studies of coinage composition in the last half century. First of these was by the Treasury and entitled, ?Treasury Staff Study on Silver and Coinage? (1965). Treasury also contracted for private studies.
One of these was by the Battelle Memorial Institute, entitled ?Final Report on a Study of Alloys Suitable for Use as United States Coinage? (1965). Both of these reports are reprinted in ?Coinage Act of 1965: Hearings on H.R. 8746 Before the House Comm. On Banking and Currency, 89th Cong., 1st Sess. 163-380? (1965).
An even more comprehensive study of domestic coinage was done under contract from the Mint by Research Triangle Institute, a North Carolina consulting firm. Published data from the study included ?Research Triangle Institute, a Comprehensive Review of U.S. Coinage System Requirements to 1990: Project Summary? (1976).
RTI also prepared ?A Comprehensive Review of U.S. Coinage System Requirements to 1990: Summary,? (1976); ?A Comprehensive Review of U.S. Coinage System Requirements to 1990: Current Denominations and Alloys,? (1976) and ?A Comprehensive Review of U.S. Coinage System Requirements to 1990: Coinage System Alternatives? (1976).
There was also a 1974 study of aluminum and other alloys entitled ?One Cent Coinage? (1974). There?s a document that summarizes 1973-1974 Treasury-Federal Reserve committee studies, which called for the elimination of mintmarks on coins, introduction of a two-cent coin as legal tender, size reduction of the dollar, probable elimination of the half dollar, and termination of the use of the one-cent piece.
There is also the official Treasury Staff of Silver and Coinage, and the companion ?Final Report on ?A Study of Alloys Suitable for Use As United States Coinage,?? prepared by the Battelle Memorial Institute.
Congress weighed in with hearings on the Coinage Act of 1965; in March 1974, the House Banking committee held hearings on a proposed aluminum cent, ?Proposal to Authorize a Change in the Composition of the One-Cent Coin: Hearings on H.R. 11841 Before the Subcomm. on Consumer Affairs of the House Comm. on Banking and Currency? (93d Cong., 2d Sess. (1974).
These 1974 hearings explored in great depth the problems associated with a proposed change in the weight and alloy of the cent. Congress began with the various studies ? as they no doubt will again if the bill, as expected, moves forward.
In considering these studies, it should be noted that they are to a certain extent self-serving. In the case of the Treasury Department?s studies on ending the use of silver in coinage, and on introduction of an aluminum cent, it is apparent that conclusions were drawn before the reports were written, and that the studies thereafter attempted to justify the conclusions.
This is particularly evident in the 1973 aluminum cent study, a point not lost on the congressional subcommittee considering the matter. Despite this shortcoming, the technical data and conclusions of the studies are invaluable because they afford the researcher access to otherwise unavailable documents, plus insight into the official thinking that ultimately frames legislation designed to change, or fundamentally alter, an existing aspect of American coinage.
Gutierrez said, ?Under current law, the Treasury secretary cannot change the base metals used to make our nation?s coinage without congressional action. The secretary has the authority to vary the alloy of copper and zinc comprising the penny, but there is little room for further adjustment.?
His solution is H.R. 3330. ?This legislation would grant the secretary the authority to change the base metals used to mint coins, potentially saving taxpayers hundreds of millions of dollars, without changing the visual features of our coinage.?
Before any changes take place, both the Senate and House must approve in identical bills and the President must sign it into law. Odds are this one will move ahead, given its powerful backers.