New dollar, same old mistakes
August 2, 2018
On Oct. 13, 2016, I was one of the U.S. Mint’s invited guests who attended its first Numismatic Forum. The concept of this program was to exchange ideas between U.S. Mint officials and a handful of significant influencers in the numismatic and precious metals markets.
I wrote a column for NumismaticNews.net (http://www.numismaticnews.net/article/mint-holds-forum) that was published on Oct. 21, 2016. As part of this column, I included the entire text of my suggestions delivered to the U.S. Mint under the headline of “Ways to Stimulate and Revitalize the Hobby: Observations and Suggestions from a 52-year Collector, 35-year Dealer, and Numismatic Media Participant.”
This report included multiple points under four headings – Strengths, Weaknesses, Opportunities and Threats.
My first point under Opportunities listed several potential circulating coins and coin series that the U.S. Mint might consider for future production. The very first idea on this point was “Historic inventions by state.”
Within two months of my submitting this report to the U.S. Mint, a bill was introduced in Congress titled “The American Innovation $1 Coin Act.” This bill, H.R. 770, was amended and passed out of Congress on July 18, 2018. It was signed into law by President Trump two days later.
I was never told that my suggestion was the spark behind this legislation, and I don’t claim any such responsibility. This coinage idea could have been conceived by many people who were in a more influential position to push for the legislation (but it is still nice to dream I might have made a difference).
If you have not already read other news reports on the details of this new program, this dollar coin series will include 57 coins. The first issue will come out later in 2018, the design of which the Citizens Coinage Advisory Committee considered in their July 31 teleconference. The common obverse design for the series will be dominated by the Statue of Liberty. The reverse of the 2018 release will include a facsimile of President George Washington’s signature on the very first patent issued by the U.S. government, which was in the year 1790. Issues two through 57 will honor on the reverse a significant innovation, an innovator, or a group of innovators from each of the 50 states, then for the District of Columbia and the five U.S. territories. From 2019 onward, these coins will be issued at the rate of four per year, making this a 15-year program.
In my judgment, the manner in which the American Innovation Dollar Coin series will be handled will end up minimizing public awareness, interest and demand for these coins. As a result, I expect that the U.S. Mint will realize far lower profits on this program than it could. As detailed in my 2016 report of suggestions to the U.S. Mint on how to stimulate the numismatic hobby, here is where I think this new coin program is missing the mark:
Unfortunately, these coins are not being issued for circulation. They will only be offered for sale by the U.S. Mint to collectors at prices above face value. What this means is that the general public will not learn about this coin series by examining the coins they receive and spend in everyday commerce. And, if they aren’t even aware of the existence of these coins, the public certainly won’t have any interest in owning them. Consequently, I expect demand for coins that people would collect or accumulate to be far lower.
In view of the planned distribution channel, the U.S. Mint intends to strike only four million specimens of the first issue. For a circulating coin, that would be a desirable relative rarity. As a non-circulating commemorative coin, that would be an enormous mintage. Compare this to what happened with the Sacagawea and Presidential dollar coins placed into circulation. Even in 2011, the final year of the Presidential dollars struck for circulation, each issue had a combined mintage of more than 70 million coins. Since the costs to produce these coins is only a tiny fraction of their face value, the Mint could make far higher profits off 70 million coins than it could on four million, even if the latter were sold at prices above face value.
Along with the plan to not put the new coins into circulation, the U.S. Treasury is not planning to retire the $1 Federal Reserve Note. Several other nations have successfully eliminated the equivalent value currency with coins, including Australia, Canada, the Eurozone, New Zealand and the United Kingdom. The U.S. Treasury has received multiple studies that replacing the $1 Federal Reserve Notes with coins would increase overall U.S. government profits from its monetary issues. Public demand for the new dollar coins would be far, far higher if the Federal Reserve dollar note was withdrawn from circulation.
The decision on what or who will be honored on each of the coins will be decided by the Treasury Secretary, with input from each state’s governor or the equivalent official of the other jurisdictions. In my opinion, part of the strong public interest in collecting the state quarter series is that the decision of what would be on each coin was decided by the respective state’s governor, almost always with significant public input. This public input helped stimulate public demand to later acquire and collect these coins. By not including the public in the decision as to what will be honored on each issue, the Mint is missing a great opportunity to attract new numismatists.
Further, the law specifies this process in creating the proposed designs for the theme of each coin: “(4) SELECTION OF CONCEPT AND DESIGN– . . . (B) DESIGN. – Each of the designs required under this subsection shall be selected by the [Treasury] Secretary after—(i) consultation with—(I) the Governor or other chief executive of the State, the District of Columbia, or territory with respect to which coin is to be issued under this subsection, and (II) the Commission of Fine Arts, and (ii) review by the Citizens Coinage Advisory Committee. (C) SELECTION AND APPROVAL PROCESS—Proposals for designs for $1 coins under this subsection may be submitted in accordance with the design selection and approval process developed by the [Treasury] Secretary in the sole discretion of the [Treasury] Secretary.”
What all this fancy language means to me is that either the public will not be allowed to submit actual design ideas at all or will be only able to do so after complying with an intimidating and onerous process. In discouraging or preventing public input on the actual design, teachers will almost certainly be unable to give students assignments to create designs that will combine multiple subjects of learning in a single task. As with the inability to suggest what or who will be honored on the coins, the lack of public participation in the design process will also minimize public awareness, interest and demand for these coins.
The final major flaw in the concept for the series is that it will run for 15 years. The final issue will arrive in 2033. As we have seen with the state quarters and other long-running coin series, collector fatigue leads to lower demand for later issues. This problem is magnified when collectors have to wait three months between each issue.
When Canada issued a series of 25-cent pieces in 1992 to honor the nation’s 10 provinces and two territories, it came out with a new issue every month! Demand by the Canadian public to collect these coins was so strong that it laid the groundwork for advocates of the U.S. Mint issuing the series of state quarters.
If the American Innovation dollars could be issued on a monthly basis, the entire program would be finished in less than five years.
Putting all these points together, the net result will be far lower demand for the American Innovation dollar coins, with therefore lower profits to the U.S. Mint – which are passed on to the U.S. government. If you want a recent example, just look at the First Spouse $10 gold commemoratives, where the U.S. Mint probably would have made higher profits selling these as bullion-priced coins.
I wish the U.S. Mint officials and members of Congress had put more time and thought into conceiving the American Innovation $1 coin series, from the perspectives not only of public awareness, interest, and demand but also of the ultimate profitability of the U.S. Mint.