MORE ON THE U.S. MINT'S ALTERNATIVE COIN METALS STUDY

In regard to the comment from Dave Lange about the alternative metals study and your follow-on comment, the U.S. Mint was required to perform the alternative metals study by law. According to the Coin Modernization, Oversight, and Continuity Act of 2010 (Public Law No. 111-302), the U.S. Mint was told to "conduct any appropriate testing of appropriate coinage metallic materials" and "solicit input from or otherwise work in conjunction with entities within or outside of the Federal Government" in order to "develop and evaluate the use of new metallic materials."

The law requires the U.S. Mint to report "[b]efore the end of the 2-year period beginning on the date of the enactment of this Act, and at 2-year intervals following the end of such period" with "detailed recommendations for any appropriate changes to the metallic content of circulating coins in such a form that the recommendations could be enacted into law," "include recommendations for changes in the methods of producing coins that would further reduce the costs to produce circulating coins," and minimize the alterations that would have to be made "to coin-accepting and coin-handling equipment to accommodate changes to all circulating coins simultaneously." The report cannot recommend that "a specification change that would facilitate or allow the use of a coin with a lesser value produced, minted, or issued by another country, or the use of any token or other easily or regularly produced metal device of minimal value, in the place of a circulating coin produced by the" U.S. Mint.

Since the law was signed by President Obama on December 14, 2010, the report was due to congress by December 13, 2012.

Restrictions placed on the study by congress made it a lesson in futility. While reading the full 400-page report it was evident that there are no alloys that would make U.S. coins unique and be able to satisfy all of the competing interests especially the coin-operating equipment lobby. Since the U.S. Mint was required to do this study, they did their job and made as much news by recommending nothing as they would have by recommending anything.

Congress will have to show leadership in this matter. After all, Article I, Section 8 of the U.S. Constitution says that “The Congress shall have Power... To coin Money, regulate the Value thereof...." Congress passed the laws that govern what coins are produced, where they are produced, what the metal content will be, and sometimes the design of the coins (see 31 USC § 5112). There is not much the U.S. Mint can do without an act of congress.

If the U.S. Mint was being run like a business, the one and five cent coins could be classified as loss-leaders since other coins generate the profits (seigniorage) that provides the U.S. Mint with a healthy profit. To make profits even stronger, congress could eliminate the one-dollar note and reap a 72-cent profit (based on 2011 costs) for every dollar coin put into circulation. But that is another issue for another time!

COIN MODERNIZATION, OVERSIGHT, AND CONTINUITY ACT OF 2010 (www.gpo.gov/fdsys/pkg/PLAW-111publ302/pdf/PLAW-111publ302.pdf)
31 USC § 5112 - Denominations, specifications, and design of coins (www.law.cornell.edu/uscode/text/31/5112)

To read the earlier E-Sylum article, see: NOTES FROM E-SYLUM READERS: DECEMBER 30, 2012: Why Bother Studying Alternative Cent and Nickel metals? (www.coinbooks.org/esylum_v15n54a09.html)

Wayne Homren, Editor

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