The nature of U.S. circulating coinage changed dramatically with the Coinage Act of 1965. The coin collecting hobby changed dramatically along with it.
Legislation just introduced in Congress as it recessed for its August summer break could be even more sweeping in its scope than the Coinage Act of 1965.
Where the compositions of the dime, quarter and half dollar were primarily dealt with in 1965, the new legislation seems to promise to deal with every denomination, cent through dollar coin.
Most collectors know that it costs the U.S. Mint more than a cent to strike a cent and more than a nickel to strike a nickel. We have been expecting some sort of proposal for more than a year to address this problem. Until the latest legislation was introduced in the House of Representatives and the Senate, all we saw was a prohibition on the melting and exportation of cents and nickels.
While it is currently not profitable to melt a cent for its zinc and copper content, which is worth 0.88 cents as this is written, the nickel coin because of the high price of copper and nickel has made a fatter and much more tempting melting target. Currently it is worth almost 6.7 cents in metallic value. Just a few months ago it was over 9 cents and seemed poised to shoot past 10 cents.
Recent declines in the price of nickel have reduced the temptation to hoard or melt nickels, but haven?t eliminated the possibility despite the fact it is illegal to melt them. Hence the need for further congressional action.
Rather than make a specific coin alloy recommendation to Congress for the two lowest denominations, the Treasury has asked for authority to make alterations to all of the circulating coin compositions at will whenever it thinks it is necessary. This is probably a wise proposal in the light of wildly fluctuating markets.
What particularly caught my eye was the estimate of savings. Changing the cent and nickel would save $100 million per year. Changing the dime, quarter and half dollar would save a further $400 million.
These estimates imply two things. The first is the Mint has a specific set of compositions in mind and knows their costs in order to make these estimates. Second, the fact that the Treasury sees fit to make an estimate about dimes, quarters and halves, which nobody had been expecting, indicates that the Mint must have something up its sleeve regarding these denominations.
I have gone on record recommending plated-steel planchets for the cent and nickel as is done in Canada. This paper has reported that a Mint supplier has licensed the technology to do this.
But could it be that we are about to get plated-steel planchets for the dime, quarter and half dollar also? That would be a bombshell. High costs do not currently threaten these copper-nickel clad coins, but merely reduce the profit, called seigniorage, that the Treasury places on its books for each one struck.
Is a sweeping change that would exceed the Coinage Act of 1965 in scope about to be authorized by Congress, or is the Treasury?s proposal just an enabling measure that opens the door to making compositional changes as necessary? We will soon find out.