AN OPEN LETTER TO CONGRESS, THE TREASURY AND MINT OFFICIALS

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V13 2010 INDEX E-SYLUM ARCHIVE

The E-Sylum: Volume 13, Number 6, February 7, 2010, Article 16

Dick Johnson penned the following Open Letter to U.S. government officials following news that coin composition changes are included in a new budget proposal. -Editor

To the credit of Numismatic News writer Darrin Lee Unser, he found a statement buried deep in President Obama's fiscal Year 2011 Budget, just released. He found the section "Other Savings: Coinage Material - Department of the Treasury."

Faced with volatile coinage metal prices, the U.S. Treasury is still attempting to solve what metal composition in which to strike cent coins. Instead of looking into the future for the need to even have low denomination coins, Treasury officials persist in seeking piecemeal solutions. This is in contraposition to the statement by Mint Director Edmund Moy two years ago to examine the entire coinage structure.

The Treasury needs to consult a futurist instead of bowing to the pressure of numerous lobbyists, most notable the zinc industry lobby which is backing Americans for Common Cents. Their lobbying efforts have been successful to the present to retain the cent coin.

A futurist would undoubtedly submit that cents and nickels should be abolished. The economic need for these coins no longer exists, and would decrease even more so in the future. Polls reveal that citizens still want cent and nickel coins around.

The only apparent reason for this is nostalgia. However, this nostalgia is costing American business millions of dollars every day in having to inventory, handle and dispense these low value coins. Tremendous savings would occur across the spectrum of individuals, business and government if the U.S. Mint would cease their manufacture.

All prices would remain the same, right down to the lowly cent. It is only the transaction amount -- what Canadians call the "tally amount" -- which would be rounded off to the nearest 10 cent amount, the lowest denomination coin proposed to circulate. Studies have shown that the criticism "venders would always round up to the extra cost to the consumer" is not valid. One Pennsylvania study proved the cost would be less than one dollar per year for an average family, if that.

The number of countries which have abolished their lowest denominations coins is growing, following the lead of Australia and New Zealand. It has been an over whelming success in all these countries.

What coins should America have in the future? Dime. Half dollar. And Dollar, certainly. To these should be added a new Five Dollar and Ten Dollar coin. Coins are necessary for small cash transactions. Paper and electronic transfer would still remain for large transactions. A futurist would agree coins will still be absolutely necessary far into the future. We will always have small transactions, from vending machine purchases to incidental purchases. The vending machine industry would certainly welcome coins available in the above denominations (this would eliminate their greatest nuisance criticisms of problems accepting paper dollars).

To satisfy Director Moy's request to examine the entire coinage structure, here are proposed coins that will be needed in the future and their specifications:

First you will note that each denomination is 5mm larger than the previous denomination. This size is perceptible to differentiate each denomination in the dark or even by the blind. The dollar coin is approximately the size of the present dollar coins.

The compositions are chosen for the following reasons: 1) They are in line with present and future costs, they would eliminate the metal costing more than its face value. 2) They purposely have several elements to discourage counterfeiting. 3) They each have a different color and weight for easy perception by inspection alone. 4) They are typical coinage metals with existing experience in coining technology. 5) They increase in value with each higher denomination. 6) The aspect of their scrap technology is taken into consideration for present coins when they will have to be recoined well into the future.

The U.S. Treasury should take two immediate actions. Take the suggestion of Chicago Federal Reserve Bank Economist Francois Velde and "rebase" the cent -- and the nickel -- to have a value of 10cents. This can be done by a fiat proclamation. Demand that all transactions be rounded off the the nearest 10cents. These coins and current dimes would be placed in the 10cent slot in cash registers.

Second, start engineering a new mint for the exclusive manufacture of the dime coin. I am not asking that sand (source of ceramic) and bauxite (source of aluminum) enter one end and dimes come spewing out the other. But engineer a mint where 20mm aluminum blanks would be struck then coated with a ceramic surface. Perhaps the ceramic could even be imprinted in color with a variety of designs. Since aluminum is easily coined, perhaps a press could strike 40 or 50 coins with every cycle of the press. After the ceramic is applied, imprint a different state design on the ceramic surface, for example.

Say it takes ten years to create such a mint. All cents and nickels would stay in circulation for that time -- at a value of 10cents each. After ten years these coins would be recalled to be melted and reformulated to be recoined.

The copper coated zinc was a brilliant choice for cents since 1982. It can easily be reformulated to brass, or used intact to coat the zinc core. The zinc industry should spend half of what they are spending for their unnecessary lobbying efforts to keep the cent. Instead spend this on research to coat bronze on zinc for a larger Half Dollar coin. Instead of whining and being an obstructionist they can actually make more money providing bronze coated zinc blanks for coining into Half Dollars well into the future.

Scrapping the copper nickel metal in five cent coins can provide the metal to be recoined into the Dollar to $10 coins by adding various clad operations.

A lot of thought has gone into this proposal. This is what future coins could be.