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Time to Kill the Dollar Bill?

Leon Kaye | Tuesday October 4th, 2011 | 3 Comments
Soon to be extinct? Photo by Leon Kaye

Soon to be extinct? Photo by Leon Kaye

Will the United States join other developed nations and . . . get rid of those beloved yet pesky dollar bills?  Past attempts at US$1 coins did not do very well.  The Eisenhower dollar coin made for a great saucer or frisbee but usually sat in a bowl on someone’s dresser.  The 1979 Susan B. Anthony dollar coin was a polite nod to the women’s liberation movement of that decade but ended up less popular than Jimmy Carter.  Sacagawea’s mug shot made for a pretty gold tinted coin that was popular in casinos, transit systems, and Ecuador, but was still a flop.  Finally, the presidential dollar coin has done a solid job in remember past presidential greats like Rutherford B. Hayes, but has proven less popular than the U.S. state quarter dollar series.

Now Congress again is mulling another attempt at rolling out dollar coins.  The Currency Optimization, Innovation, and National Savings Program, or COINS Act, was introduced last week by Arizona Republican David Schweikert.  At at time when the federal government is looking to cut costs just about everywhere, Schweikert suggests that the legislation to phase out $1 bills will reduce waste, figuratively and literally.

But could it work?

Plenty of countries have phased out currency notes of smaller denominations and have managed to function.  In Japan, for example, the smallest note is a ¥1000 note, about US$7 to $12 depending on the Yen-Dollar Exchange rate.  The beauty of Japanese currency is that vending machines happily eat those excess coins, and it is perfectly acceptable to buy a pack of gum with a ¥10,000 note.  On the other side of the globe, the Euro zone’s smallest note is a five Euro bill– €1 or €2 comes in the shape of the shiny (yet boring) coin.  And north of the border, Canadians have long ditched small notes for the single “loonie” and two dollar “toonie.”  Considering the state of American politics, the Canadian term for its single dollar coin is nothing short of perfect.

But here’s the catch:  the only way a dollar coin would work is if the US$1 note is completely eliminated.

Would Americans part with the dollar bill and all its symbolism, culture, and history?  After all, despite disdain for pennies, Americans are resistant to part with the copper coin even though it is so useless, even penny candy usually costs a nickel.  Never mind that current costs are about 1.8 cents to make one penny, not to mention the waste and toxins associated to mint them.  Still, most likely the penny will not disappear anytime soon.

The biggest complaint about dollar bills is that they are hugely inefficient.  Heaps are shredded annually and sent to landfills.  Their shelf life is about 18 months, as opposed to years for coins.  And to address the claims that we will be saddled with more heavy coins, the fact is that if dollar bills are phased out, those coins will disappear quickly as we will carry fewer quarters.  Finally, despite the banks’ threats to charge fees for debit card usage, most of us carry less cash anyway. Naturally, Massachusetts politicians are upset, as a local company, Crane & Co., supplies the paper needed to print the measures.  But the arguments of senators Scott Brown and John Kerry ring hollow as they are more interested in protecting a local New England business rather than doing what is right.

In the grand scheme of things, the financial and environmental costs and footprints of printing versus minting dollars are small.  But if common sense and convenience rule, the paper dollar should be eliminated.  One thing is for certain:  a modest stimulus will result for some businesses as vending machines and cash registers need to be redesigned–and strong bodies will be needed to empty vaults that house dollar coins that currently are not in circulation.

And here is an idea–instead of the usual presidents, let’s have some past writers, scientists, artists, and cultural figures boast their profiles on these new coins–and show our visitors that we are more than Washington and Lincoln, but about Babe Ruth, George Washington Carver, Walt Whitman, and Emily Dickinson, too.

 

Leon Kaye is a consultant, writer, and editor of GreenGoPost.com and also contributes to The Guardian Sustainable Business; you can follow him on Twitter.  He lives in Silicon Valley.


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  • Peter Hopkins

    It’s a shame that you are basing your analysis on so many incorrect “facts.” The most obvious are that the $1 bill now lasts more than 40 months in circulation as opposed to 18, as you claim. Also, you say the biggest complaint about the $1 bill is that it is hugely inefficient. Actually, when you read the GAO report you will find that coins are hugely inefficient, as it requires at least 3 dollar coins to replace 2 dollar bills in circulation. Dollar coins do not circulate with the efficiency of bills. And this is the only reason the GAO concludes there would be savings from the switch to a $1 coin. The more coins the Mint makes, the more profit the government makes in seigniorage. So, why not just mint a few trillion coins and be done with the federal deficit? The savings argument rings hollow. And when you read the GAO report you will find that the switch would cost more than 3.2 billion dollars to put into effect, and the cost of the conversion is never fully recovered, even after 30 years. So the deficit-reduction argument rings hollow.

    And speaking of ringing hollow, where do you think the vast majority of the copper to make dollar coins comes from? Yup, Arizona. Have you checked to see how many copper superfund and other toxic copper sites there are in Arizona? I have.

    So you may know where my perspective comes from, I am historian for Crane & Co., the company which makes paper for U.S. currency – no trees – recovered cotton and linen fibers.

    • http://greengopost.com/working-with-ggp/leon-kaye/ Leon Kaye

      well you will have to find a job in academia because every other country that has replaced notes with coins has saved money and improved currency circulation. That is a stubborn fact. Nice try trying to defend your company but we have to think big picture- not what is good for Massachusetts. Maybe a copper mine in Arizona will need a historian, though.

    • http://greengopost.com/working-with-ggp/leon-kaye/ Leon Kaye

      Oh and one more thing. Cotton has one of the largest environmental impacts. But yes I know. As a history major, the tweed jackets who write papers read by 6 people on average didn’t teach us that either.