Apr 9, 2012 | cents, coins, currency, policy
Since the Canadian government announced that the Royal Canadian Mint will stop striking “pennies” in the Fall of 2012 and that cash transactions will be rounded to the nearest five-cent increment. Non-cash transactions will not be rounded.
As part of the transition to the centless society, Canada will withdraw these coins from the market using redemption programs to allow citizens to return the coins for compensation. The Canadian government has also committed to working with charities to use this as an opportunity to raise money for their causes.
Since the announcement, there has been a lot of chatter from around the world regarding the elimination of the lowest denomination coin from various countries, including here in the United States. While other countries have eliminated their lowest denomination coin, Canada is the largest economy who have made this move.
Canada’s proximity to the United States has generated a lot of discussion about the United States doing the same. Those arguing for the elimination of the cent begin with that it costs the U.S. Mint 2.11-cents to produce one coin, losing 1.11-cents per coin. Similarly, Canada began their discussion with that it costs the Royal Canadian Mint 1.6-cents to produce their one-cent coin.
If Canada can drop their penny, then why can’t we do that in the United States?
In 1986, Canada stopped producing one-dollar currency notes and went to exclusively coins. Nearly ten years later, Canada began to produce two-dollar coins eliminating the two-dollar paper note from circulation. If Canada can drop their lowest paper currency denominations, why can’t the U.S. do the same?
Those of us who use the argument that other countries no longer use paper currency as their basic unit of currency are told (paraphrasing) “we are the United States, we don’t have to do what others are doing.” Now those same people who want the U.S. Mint to stop striking cents are pointing to Canada using a similar argument and bristle when given the same response to their argument.
Every study by even the most partisan group shows that the government will “save money” by eliminating the one-cent coin, change the composition of the nickel, and produce the dollar coin rather than paper. The differences in the studies are what they call opportunity costs—the cost borne through the changes and processing by the businesses, banks, and citizens affected by the changes.
The concept of the government “saving money” is wrong. Production of money does not cost taxpayers any money. The high production costs of the cent and nickel does reduce the amount of seigniorage the government earns when the coins are sold to the Federal Reserve.
Ending the production of specific denominations is not new to U.S. coinage. The last change occurred in 1933 when the gold was no longer used for coinage eliminating the quarter eagle, half-eagle, eagle, and double eagle coins. At times in the past, the U.S. Mint also produced half-cent, 2-cent nickel, 3-cent, 20-cent, and dollar gold coins. All were seen as a good idea at the time but fell out of favor for many reasons and were discontinued.
At some point, the decision criteria must be baselined in order to come up with a fair analysis in order to determine the best policy. To start that analysis, let the policy basis be on the least amount the government could do in order to maximize seigniorage while treating all markets fairly. Based on those guidelines, eliminate the one-cent coin, but also eliminate the half-dollar and the one-dollar paper note. Even if the five-cent coin does not undergo a composition change, all studies show that the government will earn more in seigniorage than any other option.
Based on other studies, this policy will have an economic impact on the markets outside of the government and the Federal Reserve. But that is for the markets to work out on their own and not for the government to dictate.
It is also a policy recommendation that will make everyone upset on all sides of the issue, meaning that it wreaks of compromise—which should not be a dirty word when making serious policy decisions.
Dec 12, 2011 | Canada, cents
“Every 1859 cent has something to offer if you look hard enough,” is the quote on the front page of a new website by noted numismatic researcher Dr. James A. Haxby. The website, www.vickycents.com, attempts to document every die variety and die combination used in minting the 1859 Canadian Large Cent.
If you haven’t figured it out, “Vicky Cents” are the cents produced under the reign of Queen Victoria.
The site is not complete and looks like it came online on December 10, 2011, but has some very interesting information on the coin whose handmade dies offers a variety hunter a lifetime treasure trove of searching. However, it looks like Haxby will help collectors of these coins figure out which of the many varieties they have of what seems to be a fascinating coin.
While searching for information about Canadian Victorian Cents, I found a few other interesting sites:
See what happens when you find an 1899 Canadian Cent in a box that was supposed to only contain United States coins? Now to go learn more about Victorian Cents.
Sep 25, 2011 | cents, errors, history
In the world of collecting, collecting coins with errors is a relatively new specialty. The specialty can be traced to the discovery of the famous 1955 Lincoln Cent Doubled Die Obverse (DDO), known as The King of Errors. Finding this coin lead to collectors to search for errors, varieties, and anything out of the ordinary.
What is a “Doubled Die?”
In order to strike coins, the U.S. Mint creates dies from hubs that contain the engraved image of the coins. The hubs are pressed into the dies to transfer the image. In years past, the U.S. Mint used to use what they called a two-squeeze process to make sure the die had a full image. This meant that when pressing the hubs into the dies, the die makers squeezed the two parts twice.
Sometimes, the process does not go smoothly and mistakes are embedded in the dies. In the case of the 1955 DDO Lincoln Cent, the hub and die did not line up correctly on the second squeeze. The result was lettering that appeared shifted or doubled.
Initial Reaction to the Coin
When the coin was discovered, there were two reactions. One group of people saw the coin as an exciting find and wondered whether it happened on any other coins. Another group was not as happy. They referred to the coin as “spoiled” and refused to acknowledge it as a valid collectible. Some considered the coin so unremarkable that one club publication wrote how they were having a hard time selling the coins for one dollar each.
A New Hobby Segment is Born
Those who were excited by the new find began to form clubs dedicated to the finding and education of errors and other variety in U.S. coins. They started the Collectors of Mint Errors (COME) club in 1956. As the nascent club tried to find its footing in the hobby, two factions began to form around different error and variety types. COME disbanded in 1960 because of the in fighting between the two organizations.
Some former members of COME came together again in 1963 to form the Collectors of Numismatic Errors (CONE). The people who formed CONE focused mostly on die varieties such as doubled dies, repunched mintmarks, major die breaks, die cracks, and die chips. Other collectors who were more interested in major minting errors like the 1955 DDO Lincoln Cent formed the Numismatic Error Collectors of America (NECA).
The two clubs existed for many years as rivals believing their form of collecting errors was better than the other. During this time, both clubs provided a lot of research into errors and varieties and how they could have occurred. The publications from both clubs continue to be the basis of the knowledge still used today.
Combining Forces
In 1980, the two organizations began to find common ground and discovered that it was better to work together than against each other. As the two clubs started to work together, many collectors became members of both clubs. To strengthen the hobby, both clubs voted to merge in 1983 to form the Combined Organizations of Numismatic Error Collectors of America (CONECA).
Finding Errors and Varieties
Today you can find error coins at your local coin store or by contacting a dealer specializing in errors and varieties. CONECA members will tell you that the thrill of finding errors is in the hunt. Error collectors use magnifying loupes, a good light source, and a lot of patience to examine coins to find something out of the ordinary. While there are some errors that are as visible as the 1955 DDO Lincoln Cent, others can be as subtle as outline of a small crack in the die, imperfections caused by two dies striking because the machine did not place a blank planchet properly between the dies, or the wrong die was used to strike the coin.
Errors can be found on any type of coin from any era. The error collecting community became excited when the processing of the new Presidential Dollars did not include the edge lettering; the edge letters were not aligned properly or doubled. While the U.S. Mint has improved the minting process, error collectors continue to find errors every time new coins are issued.
Starting an Error Collection
Anyone who wants to start searching for errors and varieties might want to buy a copy of Strike It Rich With Pocket Change by Brian Allen and Ken Potter published by Krause Publications (e-reader versions available). Now in its third edition, Strike it Rich will show you what to look for when you examine the coins in your pocket. According to the authors, a collector found a double die cast 1969 Lincoln cent in a roll of coins. When it was auctioned in 2008, it sold for $126,500.
Another great resource is Cherrypicker’s Guide by Bill Fivas and J.T. Stanton published by Whitman Publications. The fifth edition published in 2008 has more pictures, better descriptions, and a more complete resource with additional prices realized from various auction sources. A new edition is due later this year and should be available in e-reader formats.
Do not forget the resources of CONECA, which could be found on their website at conecaonline.org.
The 1955 DDO Lincoln Cent Today
As a coin desired by all types of collectors, a mid-grade coin you could have bought for $1 in 1960 is worth around $1,500 today. It is a coin that has held its value even during the current economic downturn but has not seen significant appreciation in the last ten years. Collectors will be happy the one they own will maintain its value. Investors should look to the highest graded coins that are designated as Red (full mint luster) or Red-Brown (some light copper oxidation) for better future returns.
May 24, 2011 | celebration, cents
NumisSociety, an online grass-roots community of numismatists, announced that the community is advocating a “National Spend a 1918 Lincoln Cent Day” on Memorial Day, May 30, 2011.
NumisSociety members were inspired by a story written by Dave Harper in Numismatic News. Harper writes about a letter he received from Army SGT Jarrett Briscoe who is stationed in Kuwait. In the letter, SGT Briscoe sent Harper a 1918 Lincoln Cent he received in change after a transaction with a local. Astonished to find a coin that old and so far away from home, SGT Briscoe asked Harper to “return it home” by putting it back into circulation in the United States.
It was a touching story that inspired the members of the NumisSociety. NumisSociety community members decided to join together to make this a truly memorable Memorial Day. In honor of SGT Briscoe and all members of our Armed Forces present and past, they want as many people to spend a 1918 Lincoln Cent in all 50 United States.
If you are interested, sign up at the NumisSocieity website and let them know (here) what state you will spend a 1918 Lincoln Cent on Memorial Day.
This is such a great idea, that I dug through my excess inventory and found a coin that I will spend on that day (after I remove it from its 2×2). It is the least I can do to be part of this effort to honor those who served and continue to serve on behalf of this country.
Feb 22, 2011 | cents, coins, pocket change
After a week that included surgery (I’m fine… just healing), there are two issues that dominated my Inbox: my commentary about the CCAC Blueprint Report and more on electronic publishing. I will discuss these at another time following research I am doing.
In the mean time, I am happy to report that I found 2011 coins in change. As I was searching my wife’s change looking for something interesting, I found three 2011 Lincoln Cents! These three very bright, red, well struck examples with Victor David Brenner’s portrait of Abraham Lincoln, our 16th president, and the Union Shield designed by Lyndall Bass and engraved by Joseph Menna.
This is the first time in a few years that I have seen new coins this early in the year. What would really make this more exciting if these were Denver minted coins. Hopefully, we can find these in the D.C. area soon!
Nov 7, 2010 | cents, charity, video
The Coin Collector’s Blog is a proud supporter of Common Cents®, an educational, not-for-profit organization, which specializes in creating and managing service-learning programs for young people. Their most popular and best known program is the . It is largest child philanthropy program in the United States.
This past fiscal year, Common Cents reported that “hundreds of thousands of students who participated in the Penny Harvest program last year, collecting and giving away $756,273.19 to charities.” For those who think the lowly copper-coated zinc cent is worthless, that is over 75 million coins collected by students in Metropolitan New York City, the New York Capital Region, Ohio, Florida, and Seattle to benefit causes around the world. In addition to charitable giving, the many of the students involved in the Penny Harvest participated in “service-learning projects, such as block clean-ups and literacy programs.”
I became interested in Common Cents when the Penny Harvest Field was set up in Rockefeller Center and featured on NBC Nightly News in 2007. Although I was unable to visit New York City to see this in person, it was quite a site on television. A year later after reading their annual report and talking with a teacher who was involved with the Penny Harvest, I made Common Cents the Official Charity of the Coin Collector’s Blog.
To better understand how lives can be touched not only by those receiving the help but by those working to provide the help, I found this video of Savion, a student from P.S. 163 Alfred E. Smith School, a multi-cultural school located on Manhattan’s upper west side.
As we approach the holiday season, I am asking my readers to please consider helping Common Cents with a donation to help them continue with the Penny Harvest. Also, if you live in an area where the Penny Harvest is not located, please consider getting involved and maybe start a Penny Harvest to your area. In fact, sign up for their mailing list and when you answer question 3 at the bottom of the page, click on at least one of the first three options and see if we can get the Penny Harvest working in more locations!
Charity is good for the soul!
Charity supported by children is not only good for the soul but a sign of a positive future for this nation.
Please support Common Cents and the Penny Harvest.
Videos courtesy of Common Cents.
Sep 11, 2010 | BEP, cents, commentary, Federal Reserve, legal, US Mint
It looks like the pundits have run wild with the malarky that gins up crowds for an issue that should not be an issue. This one was started by John Green, someone with the credibility of a camera who posts videos for something he and his partner calls Vlog Brothers. Apparently, the vlog (video blog) is about whatever comes to their minds whether it is right or not.
In Green’s latest screed posted on YouTube he ruminates about how the “penny” is worthless and the U.S. Mint should not be producing them. In the comments to the video, he claims that he read two articles, one from The Washington Post and another from Consumer Affairs, about the alleged opportunity costs of the coin. In fact, The Washington Post article is an opinion piece and has limited value in the argument. What Green did not say is that both articles are over four years old. Apparently, he could not find anything more recent or factual.
I found the video on the The New York Times block of Stephen J. Dubner, a co-author of the Freakonomics books and journalist who like some of his other The New York Times brethren has issues with facts (e.g., Duke lacrosse case).
Starting with the grossly obvious: The United States Mint does not strike “pennies.” The coin is one cent and not a penny. The penny is the lowest denomination of the current British monetary system. Back when Alexander Hamilton devised the U.S. monetary system, the lowest British denomination was the Farthing, ¼ penny. Rather, Hamilton called the coins “cents” to distinguish the United States coins from the British coins.
But the name of the coin is a basic issue. The real measure of the alleged journalist’s muster is if he could look beyond the salacious drivel to discover the truth that may actually cause real thought and consideration from the public. If Green and Dubner would do their homework they will know that:
NO TAX DOLLARS ARE USED IN THE MANUFACTURE OF COINS AND FEDERAL RESERVE NOTES IN THE UNITED STATES!
“Wait,” you might interrupt. “Aren’t these government agencies that are funded by congress?”
Yes, both the U.S. Mint and the Bureau of Engraving and Printing are bureaus under the Department of the Treasury whose budgets are approved by congress. However, the money that congress allocates to these bureaus are NOT taken from the general fund.
Both the U.S. Mint and the BEP are profit making bureaus. After manufacturing the money, it is sold at face value to the Federal Reserve for distribution to member banks and then to the public. The difference between the face value of the money and the cost to manufacture the money is the profit—called seigniorage. Even though the one cent and five cent coins cost more to manufacture than their face value, the U.S. Mint continues to generate profit from the sale of all coins sold to the Federal Reserve in addition to the sales of bullion and collectible coins.
According to the 2009 U.S. Mint Annual Report (covering Fiscal Year 2009: October 2008–September 2009), they earned $98.1 million in seigniorage. That is a profit of $98.1 million in a down economy!
When the U.S. Mint is paid by the Federal Reserve for the coins, a collector purchases collectibles directly from the U.S. Mint, or a bullion dealer buys bullion coins, the seigniorage is deposited into a special account called the United States Mint Public Enterprise Fund (PEF) as required by law (see 31 U.S.C. §5136). As sales are deposited in the PEF, the law requires that the U.S. Mint use the money in the PEF for budgetary reasons like to manufacture coins, maintain facilities, pay employees, etc. No tax money is deposited in the Public Enterprise Fund and the PEF is managed like all general accounts by the Treasury Department. In fact, excess profit is required to be deposited in the Treasury general fund.
There is a similar fund for the Bureau of Engraving and Printing (see 31 U.S.C. §5142).
If the money that the U.S. Mint uses for all its operations is withdrawn from the PEF and if the PEF does not contain any tax receipts, then how does it hurt taxpayers if the U.S. Mint continues to manufacture one and five cent coins?
More philosophically, it is “[the] primary mission of the United States Mint is to produce an adequate volume of circulating coinage for the nation to conduct its trade and commerce.” This is done by striking coins that are ordered by the Federal Reserve System for placing into commerce. If the Federal Reserve only orders coins they need to sell to member banks, then why is does Federal Reserve Currency and Coin Services order so many one cent coins? If they are useless and cannot buy much, why do they keep ordering more cents?
It is unfortunate that a journalist chose to support his fact deprived argument using an editorially questionable YouTube video.
Jul 18, 2010 | Canada, cents
Normand Czepial of Ripon, Quebec was not happy with the increase of his property taxes by nearly $4,000. When he went to pay his tax tax bill, Czepial filled a children’s pool with 213,625 pennies and carted them down to City Hall to protest the higher taxes.
Ripon Mayor Luc Desjardins refused the payment and was forced to tell Czepial to find another way to pay his tax bill. In Canada the Currency Act says “A payment in coins… is a legal tender for no more than… twenty-five cents if the denomination is one cent.” This meant that Czepial was 213,600 over the limit. He wrote a check to pay the property tax.
There have been stories in the United States of people paying with small denomination coins but in all cases, the coins were accepted as payment. Unlike Canada, United States laws does not limit the number of coins that could be used in a payment. While a private citizen could refuse to take the coins, governments cannot. It is not something I recommend doing. Government employees have cell phones with cameras and they can do until you as you have done unto them. Caveat emptor.
Feb 15, 2010 | cents, coins, US Mint, video
While the Washington, DC area continued to dig out of Snowmageddon II, US Mint held a ceremony on Friday, February 11, 2010 at the Abraham Lincoln Presidential Library and Museum to introduce the 2010 Lincoln Cent. The new coin features the new shield reverse as being emblematic of the “Preservation of the Union.” The shield is featured in many of the frescos painted by Constantino Brumidi throughout the US capitol. Brumidi was the Artist of the capitol during Abraham Lincoln’s presidency.
The obverse is a slightly modified bust of Lincoln designed by Victor David Brenner that has been used since the first Lincoln cent was released in 1909.
Although the launch of the 2010 Lincoln Cent went on as schedule, the sales and distribution in the Washington, DC area was postponed because of the weather conditions. No announcement was made as to if or when the sale will be rescheduled.
The following video has scenes from the launch in Springfield, Illinois and some B-Roll footage:
Here is the video from the State Journal-Register from Springfield, Illinois:
Feb 10, 2010 | bullion, cents, coins, economy, Federal Reserve, US Mint
After reading a few stories on how the president’s 2011 federal budget was proposing changes to coin composition. Many of these articles point out how the budget projects that changes could save the US Mint about $150 million per year after making over $777 million in circulating coins (business strikes) in fiscal year 2009. The US Mint’s Fiscal Year 2009 Annual Report says that the US Mint earned over $904 million in seigniorage from all sources.
While everyone is concentrating on the costs of changing coinage metals, there is a missing point: even if the US Mint was able obtain the copper covered zinc planchets for the cent at no cost, the US Mint will lose 0.62-cents per cent struck just for the labor and administrative costs.
In 2009, the US Mint shipped $777 million in circulating coins after shipping over $1.2 billion in 2008. The 40-percent reduction in production also was matched by a 40-percent reduction in the amount the US Mint spent on the metals. In other words, the increase in the costs of metals between 2008 and 2009 was minimal. However, the cost to produce the 40-percent fewer coins cost the US Mint 1.1-percent more in 2009! With presses sitting idle for long periods of time for the first time in many years, the US Mint paid $98.1 million in 2009 for striking few coins and costing $97 million in 2008.
The US Mint documents the costs in the Annual Report as Sales, General & Administrative (SGA). In the Annual Report the reported SGA from 2006 through 2009 has remained stable. Increases have roughly followed the rate of inflation. When looking at the SGA for individual coins, the US Mint spent $65.3 million to sell $459 million one-dollar coins to the Federal Reserve in 2009. In 2008, it cost $52.2 million to sell $475 million one-dollar coins.
The US Mint’s core responsibility is to manufacture the coins required by the Federal Reserve for commerce. In 2009, the seigniorage for business strikes was $427.8 million while making $32.7 million for bullion sales.
The problem is not the cost of the metals. The problem is the inefficiency of operations at the US Mint. “In FY 2009,” the US Mint’s FY2009 Annual Report reads, “the worsening economic environment challenged our ability to maintain efficient manufacturing operations but also presented opportunities for long-term efficiency gains.” Then where are the efficiencies? If the US Mint has an efficient manufacturing process, then why did it cost the US Mint 1.1-percent more in 2009 to producing 40-percent fewer coins than they did in 2008?
If the Obama Administration wants the US Mint to produce more in seigniorage, then the place to start is to immediately replace the political hack that is the current director. A replacement should be someone that has had a manufacturing background working in a regulated environment to lead the US Mint forward.
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