US Wants to Take Your Dollars -- and Replace Them With Coins

Americans are a tight-fisted people when it comes to their dollars. So in order to replace the paper currency with dollar coins -- a long-advocated move that could save the government an estimated $5.5. billion over 30 years -- the General Accountability Office called on Congress, theFederal Reserve and the Treasury to help yank the $1 note from circulation. In the past 20 years, the GAO, Congress' investigative arm, has issued four recommendations for a switch to metal dollars in order to save all the money spent to replace worn-out dollar bills. Dollar bills last longer than they used to and now have a life span of up to 40 months. But the coins have an average life span of 30 years.
The most recent study suggests that if a transition to dollar coins began this year, the annual net benefits derived from the cheaper production costs of coins and their greater durability would exceed the initial startup costs of minting more coins by the fifth year. And over 30 years, it would save taxpayers an annual $184 million. But so far, all the government efforts to get the public to use the more than 4 million dollar coins in circulation have met with only "moderate success," GAO official David Wise said in the latest report to Congress. "The United States is one of the most conservative countries when it comes to the use of coinage," said Ute Wartenberg, executive director of the American Numismatic Society and a member of the government's Coinage Advisory Committee, a group of citizens that weighs in on currency policy and designs. Several surveys commissioned by the GAO suggest that the public is wary of giving up its George Washingtons, simply because it's what they know and because they are reluctant to carry around more coins. In the most recent survey, a Gallup poll conducted in 2006, 79 percent of respondents opposed eliminating the $1 note and replacing it with $1 coins. Even when respondents were told the replacement would eventually save taxpayers a lot of money each year, the opposition was still at 64 percent. Mark Wilson, Getty ImagesMark Bowen loosens a stack of $1 bills on a vibrating table before they are cut into singles at the Bureau of Engraving and Printing in Washington, D.C, on March 26, 2009."You have to withdraw the actual dollar bills, because we already have plenty of dollar coins and no one even knows what they are," Wartenberg told AOL News. "They don't use them and people refuse to accept them." That was how the British and Canadian governments dealt with similar popular challenges when they replaced their lowest-denomination notes in the 1980s. And once the notes were withdrawn, 1-pound coins, for example, quickly became the accepted norm in Britain. The European Union, Australia, Japan and Russia, among others, have similarly dispensed with paper notes for their lowest denominations, and all have benefited financially. The Canadian House of Commons initially estimated that its switch to coins for one Canadian dollar would save the government $175 million over the first 20 years. But Canadian officials later determined that between 1987 and 1991 alone, the savings totaled $450 million. In Washington, though, it has been difficult to get Congress on board, in part because legislators from the South fear the end of paper dollars would be very tough on the cotton industry that supplies the Bureau of Engraving and Printing, Wartenberg notes. Dollar production -- at a pace of 1.9 billion notes last year alone -- accounts for about 45 percent of the Bureau of Engraving and Printing's currency production.
In his report, the GAO's Wise said the agency has told Congress and the executive branch in the past that they "would have to lead rather than follow public opinion for a transition from the $1 note to the $1 coin to succeed." "This point was reiterated by Canadian and U.K. officials we spoke with, who said that the only way to transition from note to coin is to stop producing the note," Wise said. "While observing that the public was resistant at first, they said that, with no alternative to the note, public dissatisfaction dissipated within a few years." Wartenberg speculated that the increased popularity in recent years of the state quarter series -- with symbols of different states on the back of each new 25-cent piece -- might have helped by nourishing an affection for coins. But, she added, "trying to change people's mentality is a difficult thing."