DICK JOHNSON ON THE CURRENCY OPTIMIZATION ACT

CENT PROBLEM KICKED DOWN THE ROAD

The U.S. Treasury will abandon the cent, temporally at least, if new legislation proposed by Senators John McCain (AZ) and Michael Enzi (WY) is passed. Their bill (S759) calls for halting the production of cents (because of the cost of production is greater than face value of the coin). Also it calls for a search for a replacement composition for the nickel (also for savings) and diminishing the use of the paper dollar (for the greater use of the one dollar coin).

The law requires the cessation of striking the cent for ten years. After that time the Treasury could resume manufacture if it finds a suitable composition for the coin. (At present this is only paper or plastic. A decade’s time will not change that.)

The bill is called the “Currency Optimization, Innovation and National Savings Act of 2017.” If Congress really wanted to live up to the word “Innovation” it would consider my plan to revamp the entire coinage structure – not just one problem at a time -- as I have described in The E-Sylum before.

I proposed to eliminate both the cent and the nickel, and later the quarter. These coins to be replaced by two new denominations for circulation, a $5 and a $10 coin, and later a $20 coin. This would leave the dime, half dollar, and dollar coin denominations intact.

Not only is the reason for this the rising cost of metal in which the coins are struck, but also for the rise of the American economy. A loaf of bread cost a dime a century ago. Today it is two to three dollars. In the future it will rise to $5 or more.

It is a natural function of a vibrant economy for cost to gradually rise. As the cost of living rises so should income rise even faster. That increases our standard of living. Yes, we live better today, even though costs rise.

Am I saying we have a better living because of existing coin denominations? No, Coins facilitate commerce, acquiring and consumption of those goods. Coin denominations need to be the correct ranking to aid in the exchange of goods and services in commerce.

The cent is overdue for elimination. The nickel is close behind. The dime will be the lowest circulating coin. Prices will be rounded off to the nearest 10 cents. The complaint buyers will lose money is spurious. It balances out in the long run for both buyer and seller.

For the small cash purchase the dime, half and dollar coin will be satisfactory.

How does this affect collectors? The proposed law allows for the continued manufacture of cent coins for numismatic purposes. The cent could be allowed in proof and mint sets if the Treasury so chooses. Other Mint products would not be affected.

Obviously, it gives finality to the Lincoln cent series. A 108-year run with, perhaps, ten years of proof issues. Victor D. Brenner would be proud.

If the Treasury was pro active instead of reactive – addressing problems as they rise -- they could look forward into the future and realize our coin denominations need to be a higher value.

To read the bill and follow its progress, see:
S.759 - Currency Optimization, Innovation, and National Savings Act of 2017 (https://www.congress.gov/bill/115th-congress/senate-bill/759/text)

To read earlier E-Sylum articles, see:
DICK JOHNSON ON FUTURE COIN DENOMINATIONS (www.coinbooks.org/esylum_v10n28a23.html) http://www.coinbooks.org/esylum_v19n42a26.html (www.coinbooks.org/esylum_v19n42a26.html)

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