The Jefferson dollar is released later this morning at the Jefferson Memorial in Washington, D.C. The coins will be officially released to the banking system tomorrow, though I have already had reports of early releases in several places around the country.
Predictably, at least one nonhobby columnist has taken the opportunity to raise old ghosts about the so-called effort to replace the dollar bill with the $1 coin. I am sure others have or will make the same point, but I have not looked for them.
It probably will be news to them, but that horse left the barn. The dollar bill is here to stay. The Presidential dollars are a signal of defeat, not another step toward doing away with the paper dollar.
America had the dollar bill-dollar coin debate when Canada made the switch 20 years ago. That’s right, 20 years ago. Now our political establishment can be slow, but even its members aren’t that slow. Congress intervened to make sure that any proposal to do away with the dollar bill would have to be explicitly approved by it. You know what that means? It won’t happen.
The real secret to the Presidential $1 coin is that it is a revenue ploy. The U.S. Mint operates on nonappropriated funds that it generates itself through its own operations. As long as that profit is high and rising, the Congress lets it alone.
The rising costs of recent years set off a search to find new ways to add to the Mint’s bottom line. One of the largest contributors is seigniorage, which is the difference between the cost of producing a coin and its face value. The dollar coin costs around 8 cents to make, leaving 92 cents in profit. That’s pretty good. Every dollar the Mint turns over to the Treasury is one less dollar the government has to borrow.
When the Sacagawea dollar was introduced in 2000, almost 1.3 billion of them were struck. Most of that total fell right to the government’s bottom line. It was a one-year deal and that revenue bulge has been tantalizing the establishment ever since.
So Presidential dollars were approved. What better way to get that $1 billion a year in revenue than strike 250 million to 300 million Presidential dollars for each of four designs during the year?
Collectors and the public like to save them, or so the government believes. So far, it has been proven right.
Every column denouncing the dollar coin is free publicity. More and more Americans who may not have heard of the new coins become aware of them and more hoarding takes place.
The anti-dollar coin pundits say that Americans don’t want the coins jingling in their pockets. Hey, the only jingling being done is the money being poured into the pockets of Uncle Sam.
And you didn’t think he was that clever.