Each week I look at the news from the week in order to highlight something interesting. With the holiday season upon us, I was hoping to find something nice to write about. Instead, Kitco’s story about the increasing sales of silver and a marketplace that is now moving is more concerning than positive.
Precious metals are the investment of last resort. While some portfolios will diversify into metals for a safe haven, metals become active when there is uncertainty in the market. The trade wars between the United States and China have caused market players to reduce their risk by investing in silver.
Although most prefer gold, silver has been the metal of choice for the Chinese for hundreds of years. It has been the benchmark of their trade and the basis for their monetary system prior to all countries moving off precious metals standards. It was the basis of trade that the United States thought would be resolved by creating the Trade Dollar coin in 1873.
The rise in silver sales from the U.S. Mint is good in that it will increase seigniorage. It is not so good in that it indicates there is the potential for the markets to change course. Markets hate uncertainty and this could be their answer to the uncertainty brewing in trade between China and the United States.
And now the news…
November 28, 2018
Currencies / Fiat Currency The first gold coins appeared around 560 B.C. Over time it became a practice to store larger amounts of gold in warehouses. → Read more at marketoracle.co.uk
November 29, 2018
These days, you can't buy much with 5¢ – including the cost of making one. That's right, the cost of producing a 5¢ piece is about 5.059¢, and this is about the cheapest it's been in recent years. In 2015, the cost of producing a 5¢ piece hit a high of 7¢ due to the fluctuating cost of nickel and copper. → Read more at smh.com.au
November 29, 2018
Inmates in a Bulgarian prison were in for a shock when they stumbled across an enormous hoard of silver coins from the Ottoman Empire. The incredible haul was discovered alongside two broken treasure pots in a prison in the Bulgarian city of Pleven. → Read more at mirror.co.uk
December 2, 2018
The National Bank of Romania (BNR) has put into circulation, for numismatic purposes, a commemorative collector banknote with face value of lei 100 dedicated to the anniversary of 100 years since the Great Union on December 1, 1918. → Read more at romania-insider.com
December 3, 2018
Correcton:The U.S. Mint provided incorrect information on its website Monday morning, misstating the number of ounces sold in December. In an update of its sales data the U.S. → Read more at kitco.com
December 4, 2018
Rare gold coins and a golden earring have been discovered in the ancient Mediterranean port of Caesarea in northern Israel—possibly left and never recovered as Crusaders conquered the area 900 years ago. → Read more at phys.org
December 6, 2018
It was 150 years ago this month when one of Nevada's most treasured artifacts first arrived in Carson City. → Read more at carsonnow.org
December 6, 2018
Lianna Spurrier has the tooth fairy to thank for a hobby that transformed into sudden job opportunities. → Read more at thetrailblazeronline.net
December 8, 2018
This article first appeared in the Nevada Appeal on July 20, 2014. Abe Curry received papers on July 16, 1866, approving the start of construction on the Carson Mint.On → Read more at nevadaappeal.com
I said that if we do not act that we would become victims!
A man came into my shop the other day. Like all new visitors, my assistant greeted him with her usual charm while he looked at the eclectic inventory in the showroom.
The man was different than others. On a slow morning, he lingered around the set of auction catalogs I have for sale while saying little to my assistant who felt uncomfortable with this man in the shop. Another customer came into the shop and my assistant took care of them while I watched this gentleman.
After a while, he came to me and, in a heavy accent I could not identify, asked if I was the store’s owner. He pulled out a few folded pieces of paper and showed me a sheet with the article “Coin jewelry is not legal everywhere” I wrote on this blog in April 2016.
He pointed to one of the pictures and asked if I knew anything about the coin. I asked why and he said he was interested in purchasing one. For some reason, I had a feeling that he might have had other interests in mind.
Resin ear rings made by InspiringFlowers using Roosevelt dimes
Hummingbird cut from a Trinidad and Tobago penny by SawArtist
1996 Half Dollar Ring by LuckyLiberty
Examples of the coin jewelry from the orignal post
I explained to that I do not carry a lot of jewelry since it is not a specialty of my business. When I do have jewelry in stock it does not sell well. He opened the paper and asked if I knew anything about the jewelry on the page.
I explained that the article he is holding is from a blog post I made explaining how some countries have restrictions regarding the usage of their coins for jewelry. When he pressed for more information I said that it was noted in the posting that the images came from Etsy and I do not know any of the sellers. Their goods were used as an example for the posting.
It felt like I was being interrogated. I asked if he was a member of law enforcement or any other government investigative agency, he mumbled something I did not like. I asked him to leave. My assistant had called the police.
The police arrived and escorted the man out of the shop and questioned him before letting him drive away in his own vehicle. I noted the license plate. The officer came inside and said that this will be handled elsewhere and that I was not to report it any further.
About a week later, I was visited by someone representing a federal agency and a member of federal law enforcement who wanted to question me about the incident. After they produced proper identification, we went into my office to discuss the matter.
I was told that the man who came into my shop was an agent for an unnamed foreign government. This government has been visiting collectible stores and shows to intimidate people into “returning cultural items” from that country. The country that this person represents considers this legal even though it violates my Fifth Amendment right of due process.
Apparently, the person that visited my shop is responsible for the “confiscation” of items from more than a dozen antiques and collectibles shops in the mid-Atlantic region.
It is not the first time we have heard the foreign governments have tried to go around the United States’ right of due process by trying to confiscate coins under the guise that they are “national treasures.” In 2013, I wrote “Why you should care about restrictions on collecting ancient coins” sounding an alarm for people to act.
People did not act or act strongly enough. It has allowed a foreign government to pervert the 1970 UNESCO Convention’s intent to steal legally obtained inventory from United States businesses they claim are national treasures.
In the next few weeks, I will be writing a short position paper to present to the American Numismatic Association in order to get them to work to protect collectors. It is time that the ANA and other numismatic organizations work together to protect the hobby and stop kowtowing to every country who wants to retroactively make a claim against United States business because a foreign government said so.
Coin collecting, whether it would be enjoyment or profit, received a black eye this week as Iran executed Vhid Mazloumin, the man nicknamed the “Sultan of Coins.” Mazloumin and his accomplice, Mohammad Ismail Ghasemi, were hanged in Tehran on the charge of manipulating the coin and currency market in charges that included smuggling.
Vahid Mazloumin is seen appearing in court for the first time on charges of manipulating the currency market. He was later sentenced to death, in Tehran, Iran. September 8, 2018.Tasnim News Agency /Handout via REUTERS (via ChannelNews Asia)
The charges stem from a new round of sanction by the United States that has Iranians hoarding gold and looking for other safe investments. To serve that market, Mazloumin and his associates began to trade in gold coins and bullion.
Up until the sanctions, Iran did not have many restrictions on the trading of gold and other bullion but found itself in another financial crisis. The Iranian central bank is reporting a reduction of reserves and those with the means to purchase gold have been doing so at a rate higher than in the past.
According to many reports, Mazloumin was caught with non-Iranian coins and bullion including bars made by Swiss and German companies. Amongst the charges included trading in gold American Eagle coins and Krugerrands. As part of this defense, Mazloumin claimed that the coins were imported before the ban.
What is troublesome is that the collecting and investing communities have been silent on the execution of someone whose actions were made retroactively illegal by a panicking government. It is a more extreme version of blaming the collector for the financial crisis, such as the United States did in 1964 over silver coinage.
Although someone will inevitably ask if condemnation will do anything, just remember how an industry condemned the actions in Turkey and the United States over actions against journalists. Communities that do not stand up for itself run the risk of allowing governments to run roughshod over them at their convenience.
Therefore, I CONDEMN IN THE STRONGEST POSSIBLE TERMS THE STATE-SPONSORED MURDER OF A COIN DEALER IN IRAN!
I urge the rest of the numismatic and investment industries to join me before someone comes for you!
And now the news…
November 12, 2018
Coins from 1930s donated during "Fill the Boot" fundraiser. → Read more at spectrumlocalnews.com
November 12, 2018
DHAKA, Nov. 12 (Xinhua) — Shelves and cases in the money museum in Dhaka, capital of Bangladesh, are filled to the brim with coins and currencies from the barter era to modern times, with the displays attracting many visitors. → Read more at xinhuanet.com
November 12, 2018
A local fire department wants the public's help in making the Holidays special for members of The Armed Forces. → Read more at fourstateshomepage.com
November 14, 2018
These coins both endangered and saved Optatius Buyssens's life, as he fought as a soldier during World War One → Read more at bbc.com
November 14, 2018
SARATOGA SPRINGS, N.Y. – BOCES Career & Technical Education culinary students hosted a recent Kiwanis Club luncheon where prominent numismatist Anthony Swiatek discussed old coins and currency, which might be worth a great deal more than their owners realize. → Read more at saratogian.com
November 14, 2018
Iran has executed two men convicted of manipulating coin and currency markets. Vahid Mazloumin and Mohammad Ismail Ghasemi were hanged on Wednesday after they were found guilty of manipulating coin and hard currency markets through illegal and unauthorized deals, Iranian Students’ News Agency (ISNA) reported. → Read more at newsweek.com
November 14, 2018
On November 14 the national Bank put into circulation four commemorative coins of irregular shape. This reports the press service of the regulator on the official page in Facebook, writes the Chronicle.info with reference to epravda.com.ua. → Read more at bobrtimes.com
There are times when good people with good intentions do or say something that perpetuates narratives that are more harmful than they think.
On Friday, November 9, I received the regular mail from Numismatic News with the usual section for questions that editor Dave Harper uses for community input. This week’s question was “Is collecting Standing Liberty quarters mandatory for successful hobbyists?”
Does owning this short snorter autographed by John Glenn and his family make me a successful or unsuccessful collector?
The question appears to have been inspired by the article, “Dateless quarter inspired collector” by Ginger Raspus. The article was about how she was inspired to collect Standing Liberty Quarters after finding a dateless version pulled from change. The article then goes on about to describe the series. There was nothing in Ginger’s story that suggested anyone else collect these coins. She was reporting on her experience.
The problem with Dave’s question is a problem with the people who appear to have significant say in this industry. Their problem is that they say, suggest, or infer that if you don’t collect coins or their particular favorite, you are not a “real collector.”
Or in this case, a successful collector.
What defines a successful collector?
Is a successful collector one that fills up a particular folder or album of coins in a series designed by the publisher?
Is a successful collector one that creates a top-ranked registry set?
Is a successful collector defined by whether their collection meets artificial criteria set by an arcane definition of industry norms?
The problem is that these criteria that create these definitions of industry norms are those some consider the elders of the industry, many of who started collecting before most collectors were born. Other definitions of norms are created by the dealers whose input are more self-serving than encouraging.
There is nothing wrong with dealers earning a living. In recent years I have turned away from the convenience of online auctions except if the auction is sponsored by a dealer. I want the dealers to succeed, but not at the expense of chasing away potential collectors.
A successful collector is someone who creates a collecting goal based on a personal interest and works to achieve that goal. That goal does not have to include buying published folders or albums and filling holes—but if that gives you pleasure, by all means, go for it!
Although worn almost smooth, does owning this 1789 Draped Bust Large Cent count for anything?
Someone came into my shop to search the basket of foreign coins I keep on the counter. After a few moments I provided her with a box to place the coins she looked at while digging through the basket. I asked her why she was looking so carefully at the coins and she said that she was looking for coins from the countries her parents and grandparents were from and the years they were born.
After a while, she finshed looking and wanted to pay for the coins she picked. I looked at the coins and found a 1938 Spanish 25-centimos and 1961 Columbian 5-centavos coins. With a smile, she explained that her father was born in Columbia and his father, her grandfather, was from Spain.
When she said that she did not know what coins where minted and when I showed her en.mumista.com, my favorite website for looking up foreign coins. We searched for the countries and years of her family to show her what was available.
The next time she returned to my shop she carried a list of coins with check marks next to some of them. We then talked about how to store the coins and what to use as albums so that she can keep the coins nicely.
I do not know if she will be able to find all of the coins on her list but I know that she found examples of all the coins that she identified as being in circulation in 1961 Columbia because she brought in the album she created to show me.
I would call my new friend a successful collector.
The monthly numismatic legislation review was purposely delayed to bring you this important message:
GO OUT AND VOTE!
Every two years, all 435 seats in the House of Representatives and one-third of the Senate seats are open to election. These people are supposed to represent you in Congress. They are supposed to represent your interests. How do you want to be represented?
After the fall of Saddam Hussein, the people of Iraq had an election where multiple people were on the ballot. In the United States, we celebrated for them by showing pictures of people with purple ink-stained, fingers, the sign that they voted.
Voting is more important for your local elections. State, district, county, and municipal elections are the ones that have more impact on your lives. They impact the schools, your local roads, small businesses including your local coin dealer, trash pickup, maintenance of your local parks, and nearly everything surrounding your daily lives.
Don’t forget about the ballot initiatives. This is your chance to have a significant say in the policies that your government will have to abide by. Here in Maryland, there is a ballot initiative to create a “lock box” (where have we heard that one before?) for the state profits on gambling revenue so that it would go directly to fund education. This initiative was proposed based on lessons learned where a significant portion of the settlement from the tobacco companies that was supposed to go to healthcare initiatives was transferred to the general treasury to pay for everything else.
Does your state have ballot initiatives? Do you know what they say? How are you going to vote on them when you get to the polls?
Do you know who the candidates are? Do you agree with their position or will you be voting for them because they claim they party as you do? Do you know which incumbent actually did their job and thought about you or did they change because a deep pocket donor asked them to?
It is a cliche to claim that this is the most important election ever. It is always the most important election ever because it is the one happening right now. It is important because you must have your say in how you want your government to work for you. It is your government.
GO OUT AND VOTE!
Legislatively, Congress was in recess for October while members who are seeking re-election when home to campaign. The only changes to numismatic-related legislation were the number of co-sponsors on bills currently in committee.
If history is a lesson, we will see progress on some of these bills during the lame-duck session.
Sometimes I wonder if the Citizens Coinage Advisory Committee and U.S. Commission of Fine Arts is actually paying attentiong to the designs they are selecting. While they have rejected some interesting designs, they seem to accept other designs without really thinking.
Reverse of the Apollo 11 50th Anniversary Commemorative Coin
It looks like these two groups that are supposed to be the gatekeepers of the design of U.S. coinage did not fully think through their design selection for the Apollo 11 Commemorative Coin program.
When the line art images were sent out, the design did not immediately remind me of a bootprint on the surface of the moon. Actually, it reminded me of something that many of us have placed our bootprint on a little closer to the ground.
Obverse design of the Apollo 11 50th Anniversary Commemorative Coin program
A Dubia Roach (Blaptica dubia)
I understand that with the resignation of Kareem Abdul-Jabbar from the CCAC that this august body may be lacking the appropriate point of reference that Abdul-Jabbar and I have to make the tie between the bootprint and an insect that could probably survive on the moon (he was born Lew Alcindor in New York City). Then again, the CCAC is the same organization, albeit, with different members, that gave us some of the worst designs in modern coinage.
For the 50th anniversary of one of the greatest achievements of the 20th century, all the CCAC could come up with is a bootprint?
A regular reader was upset about the appearance of hypocrisy at the World’s Fair of Money
. On one hand there was a lot of talk about counterfeit collectibles from China. On the other hand, there was a lot of hoopla over the Panda with special designs and privy marks honoring the World’s Fair of Money. In this episode of “LOOK BACK,” I update what I wrote in February 2014
about China and counterfeits.
A persistent question that follows stories about counterfeiting is why do most of the counterfeits come from China and how do they get away with doing this? Unfortunately, the answer lies in differences in our laws, politics, and cultures that may not be as easily resolved as people would like.
Front of a counterfeit 2012-dated American Eagle $50 denomination one-ounce gold bullion coin. (Photo courtesy of Numismatic Guaranty Corporation.)
Every coin minted by the U.S. Mint is legal tender and are legally an instrument of the government. Although the Trade dollar was demonetized in 1876, it was remonetized as part of the Coinage Act of 1965 making it legal tender (31 U.S.C. § 5103) for trade in the United States. This means that it is legal to spend an 1873 Trade Dollar for $1 of goods and services even though the coin is worth more than its face value.
To protect its currency, the United States has anti-counterfeiting laws that makes it illegal to counterfeit the nation’s money and use in commerce. For collectible coins and currency congress passed and has since updated the the Hobby Protection Act (15 U.S.C. § 2101 et. seq.). These laws protect the money supply when it is a collectible and not an instrument of commerce.
In the United States, laws are cumulative. Once passed, they remain the law until repealed or declared unconstitutional by the courts. This is not the way in many other countries. In many countries, when a new government takes power they are given the authority to rewrite the laws. It is expected to happen within authoritarian governments but it is common in many parliamentary democracies.
The People’s Republic of China has been run by the Communist Party since 1949. Their rules and laws have changed significantly when the Communist Party came into power. One of their first rules was to demonetize the money produced by the Republic of Chin and issued renminbi, the “people’s currency.”
Since then, it has been the practice of the chairman of the Communist Party to demonetize non-current issues of coins and currency as part of their economic control policies. Based on the current Chinese economic system, all coins struck since 1955, the first issued under the current government, are legal tender. Currency printed since 1999, the fifth series is the only legal tender notes. Any other coin or currency note has been demonetized.
Under Chinese anti-counterfeiting laws, it is illegal to duplicate any legal tender coin or currency note for any reason. However, since coinage from previous regimes is no longer legal tender, it is legal to strike coins with those designs. Chinese laws do not recognize the collection of these coins as a market to protect.
Buying and selling coins as an object is a matter of commerce between individuals and not something that requires protection under Chinese law. While the Chinese buyer can use the obsolete coin as an object of barter, bartering does not hold the same legal status as paying with legal tender currency. Basically, once coins are demonetized, just about anything goes.
An example of a Morgan Dollar cut in half to match a date with a mintmark to have the coin appear something it is not. Coin was in a counterfeit PCGS slab and caught by one of their graders.
Chinese law does not recognize the perpetual legal tender status of every coin issued. Chinese law also recognizes that counterfeiting current issues of other countries is also illegal because someone could try to use the coin in commerce where it is legal to use foreign currency. This means that in China, it would be illegal to reproduce a presidential dollar or Washington quarter, but producing Morgan dollars or a set of 1921 Walking Liberty half-dollars is legal in China because these are coins no longer issued in the United States.
When China is asked to assist the United States to stop the counterfeiting of coins, China does not recognize that its people are doing anything wrong. The coins are no longer being made, they are not in circulation, and their laws allow people to make copies of these coins. The only laws that China has regarding collectibles are laws protecting antiquities and cultural properties. This means that you cannot duplicate a Ming Dynasty vase and try to pass it off as real but it is legal to reproduce a Rembrandt masterpiece since he is not Chinese and his work was not made in China.
A trade attorney that was originally consulted for this article confirmed that when it comes to these issues, Chinese law is very protectionist. The claim is that they follow their laws consistently regardless of outside circumstances and they refuse to make exceptions citing the complication with enforcing their laws in a country with a population of more than 1.3 billion people.
Making the problem more difficult, copying and counterfeiting of grading service holders are also not covered by Chinese law because they are not made by government entities. The grading services would have to fight the counterfeiters using Chinese patent and copyright law. A patent attorney confirmed that not only would this not stop the problem, but foreign challenges to alleged patent and copyright violations are rarely successful in Chinese courts.
PCGS representatives showed Congressmen counterfeit U.S. coins in counterfeit PCGS holders during their recent meetings in Washington, DC. (Photo courtesy of PCGS.)
The Chinese government has no incentive to help the United States or any other country fight counterfeiting in what is perceived by the Chinese as a small market problem. To put the resources necessary into what looks like a petty crime for selling inexpensive, non-circulating duplicate coins that are within Chinese law to manufacture is considered not worth their resources.
While there is anecdotal evidence that the Chinese government knows about the counterfeit trades and some officials informally support the efforts because they get kickbacks, official Chinese policy denies there is a problem.
A lot has been written about the nature of the relationship between the United States and China since President Richard Nixon’s trip to China in 1972. Neither side trusts each other nor does neither side believe each other. Today, the United States decries the Chinese for buying too much of our debt, allegations of spying, industrial espionage, and cyber crimes. The Chinese say that the United States is trying to bully the world and that these naysayers are making up the stories to scare the world into following them. The United States talks about civil rights violations within the Chinese border and the Chinese government tells the United States to mind its own business.
The greater opening of markets between the country and the increase in popularity of bullion coins has made the Chinese Panda a popular coin amongst collectors and investors. Those of us who buy these coins know that even with the production increases since 2010 new issues continue to command a premium greater than other bullion coins.
While the Chinese are happy to sell coins and be the factory to the United States, there remains an underlying tone of political and commercial hostility between the nations. A trade attorney said that the Chinese would rather keep the relationship to business between the countries that the United States should stay out of China’s domestic policy. It was explained that the Chinese central government was upset over how the United States passed judgment over companies in their high tech electronic manufacturing sector because these companies are doing better and are safer than other Chinese manufacturers. To the Chinese government, it is not a problem if a few workers die for whatever reason. There is an ample supply from the population to keep the plants running.
These are the values of the Chinese government. Whether you agree with them or not, Communist Party officials will resent anyone telling them how to manage their domestic affairs. They want advice about how to treat their citizens as much as the United States wants similar advice from China.
There is no incentive for China to stop the manufacture of counterfeit collectible coins.
It is not against Chinese law for these people to manufacture coins that are no longer in production. Chinese people who are manufacturing these coins are working in China and many employ other people. It means there are fewer people relying on assistance the Chinese government provides. Since they now have incomes, it provides revenues for the tax coffers.
When a United States trade representatives negotiate with their Chinese counterparts, it gives the Chinese a chance to lecture the United States how they resolved the counterfeiting issues which leads to a discussion on currency handling and management, which is a sore subject in the United States since the United States questions Chinese monetary policies.
A portion of the exhibit of confiscated counterfeits on special loan from the Department of Homeland Security displayed at the 2018 World’s Fair of Money® by ICTA/ACTF.
Finally, it gives China a measure of moral superiority against the United States. After all, China figured out a way to prevent the impact of counterfeiting of older currency, why can’t the United States do the same?
China has no incentive to help the United States to solve a problem that they perceive does not exist. It is up to the United States to resolve these issues. This is why the industry promoted the Collectible Coin Protection Act (Public Law No: 113-288) so that law enforcement has an additional tool to use to help prosecute handlers of counterfeit coins in the United States.
You can read the original article here
On Monday, the U.S. Mint announced that on September 3, they will begin accepting applications for the Artistic Infusion Program. Judging by the last round of artwork submitted to the Citizens Coinage Advisory Committee to review for the new American Innovation $1 Coin, they need the help.
For those who did not read the stories, the U.S. Mint submitted a design for the obverse that is supposed to be “a likeness of the Statue of Liberty extending to the rim of the coin and large enough to provide a dramatic representation of Liberty,” similar to the reverse of the Presidential $1 coins. According to reports, the U.S. Mint claimed that they could not work on a better design because of time constraints.
Time constraints are a legitimate issue. The bill was signed into law on July 20, 2018, leaving the U.S. Mint less than six months until the program begins in 2019. However, that does not mean that the program has to begin on January 2. In fact, the law does not specify at what point during the year that the coins are to be produced.
They also could have anticipated their responsibility. Once the bill was passed by the Senate on June 20, it was only a matter of time that the difference between the House and Senate versions were resolved before being signed by the president. It was not a surprise. They had two months to come up with something prior to the CCAC meeting.
Although U.S. Mint Director David Ryder has not been on the job long, he has to take responsibility for not providing the leadership necessary to impress on the artists and whoever directed them not to try to take the easy way out. If they have not learned by now, most of the CCAC members take their jobs much more seriously than previous committees (this is a good thing) and are very outspoken in a very constructive manner.
One person that should respond to this call for artists is current CCAC member Heidi Wastweet. An accomplished medalist and sculptor, her term with the CCAC is about to expire. She is well qualified since her work is phenomenal! You can see for yourself on her website. Imagine what an artist with her talent and knowing what the CCAC is looking for can add to the U.S. Mint.
Having never met Ms. Wastweet, I am not in a position to try to talk her into applying. However, if you are acquainted with her, please let her know that not only would it be of great service to the U.S. Mint but that she has at least one endorsement—for whatever that is worth!
There are so many great medals on Heidi Wastweet’s site it is difficult to select one to highlight. But I always seem to focus on this one called a Zombuck.
Following the introduction of the Presidential $1 Coin program and the discussion about replacing the Federal Reserve Note with a coin, I wrote an article
explaining how the situation will not change. Not much has changed in 10 years!
Whenever a proposal or law that creates a new dollar coin, there is always a discussion as to how to make the program more successful. In the past, the Gallup organization has polled the public on a few occasions asking about the potential acceptance of dollar coins.
Regardless of the questions asked, the only way to increase the circulation of the dollar coin is to stop printing the one-dollar Federal Reserve Note and begin to withhold it from circulation. It is a move that will force the people to use the coin as the population of the paper currency is reduced.
There are many emotional arguments on both sides of the issue. Whether one is for or against the printing of the one-dollar note, the US is one of the extreme few first-world countries issue its unit currency on paper. Looking beyond the emotional arguments, each side has dominant arguments to support their positions.
Those who want to eliminate the one-dollar note use at the cost of is production and the savings to the government as the dominant reasons. According to the Bureau of Engraving and Printing, 95-percent of all Federal Reserve Note printed for circulation are used to replace damaged and worn notes that are being taken out of circulation. Using BEP’s 2017 production report, 2,425,600,000 one-dollar notes were printed. With 95-percent being replacement notes, 2,304,320,000 notes were printed just to maintain circulation levels. With it costing 4.385-cents to produce one note of any denomination, the cost to just replace notes removed from circulation was $100,422,265.60 in 2017.
Rather than printing paper dollars, if the US Mint strikes coins the cost to replace those 2.4 billion notes would cost 21-cents per coin (according to the U.S. Mint’s 2014 Annual Report, the last documenting seigniorage for the dollar coin). The total production cost would be $483,907,200.
But do not let the 381-percent increase in cost fool you. For the real picture, the costs have to be predicted over time. According to the BEP and the Federal Reserve, the lifespan of a one-dollar Federal Reserve Note is 5.8 years. When the U.S. Mint makes plans for circulating coinage, they accept that the lifespan of a coin is 30-years. To help with the calculation, it will be assumed that the price of manufacturing coins and currency s will stay constant. In order to keep the $2.4 billion of one dollar notes in circulation for 30 years, it will cost the BEP $522.6 million dollars.
By comparison, since the U.S. Mint will be striking new coins for circulation and (theoretically) not replacement coins (not including the coins already in storage), the U.S. government would save about $117 million over 30 years. The following table illustrates these costs:
||Number of Replacement Notes
||Cost of Production for Replacements
||Cost of Replacements over 30 years
|Paper Dollar (2008)
|Paper Dollar (2018)
|Coin Dollar (2008)
|Coin Dollar (2018)
While this might be a compelling argument to stop printing one dollar notes, such a move has political ramifications for some powerful members of Congress. With over 1500 people working in the Eastern Currency Facility in downtown Washington, DC, they are represented by several leaders of both parties. When it comes to jobs in their districts, members of Congress will not allow anything that will reduce the production capacity of the Bureau of Engraving and Printing and where constituents could lose jobs.
Before Congress changes the law to stop the printing of the one-dollar note (31 U.S.C. §5115(a)(2)), the BEP will have to supplement production in order to protect jobs. The way this could be done would be to print foreign currency. However, it seems that the BEP is having problems selling their services to foreign governments.
Although the Bureau of Engraving and Printing has experimented with polymer notes and other printing substrates, the Federal Reserve has said that it does not consider these alternatives viable for United States currency. However, the Federal Reserve and Bureau of Engraving and Printing has been testing rag-based paper from companies that can produce new anti-counterfeiting features.
If there was a change to the supplier of currency paper, that would raise concern by the Massachusetts congressional delegation whose constituents include Crane Currency, the subsidiary of Crane & Company. Crane has been the exclusive supplier of currency paper to BEP since 1879. Although BEP has tried to open the competition for purchasing currency paper (see GAO Report GAO-05-368 [PDF]), the cost of entry into the market has prevented other manufacturers from competing for the business. If BEP would stop printing over 2 million one dollar notes without replacing it with similar paper production, the Massachusetts-based company could lose significant business.
Regardless of the measures taken by the US Mint to increase the circulation of the one-dollar coin, public perception is that the one-dollar paper note is easier to use than the coin. Unless key congressional leaders agree that ending the printing of the one-dollar note is in the best interests of everyone, including their political careers, the political reality is that printing of the one-dollar note is here to stay until a significant event causes a change in policy.
The original post can be read here
NOTE: The title is NOT a typographical error. It is a commentary raised by the discussion, below.
With the flurry of legislative action last month, the only bill that I commented on was the American Innovation $1 Coin Act (Public Law No: 115-197) because it was the only one that is the law. The others were just introduced and may not be passed out of committee.
But that has not prevented speculation and discussion about the potential for these potential commemorative coins. Based on the email buzz, the two bills of interest are the Integration of Baseball Commemorative Coin Act (S. 3283 and H.R. 6469) and the Carson City Mint 150th Anniversary Commemorative Coin Act (H.R. 6221).
Regarding the Integration of Baseball Commemorative Coin Act, someone decided that the coins would be square and that has infested the numismatic media. This is not what the bill requires. In fact, the bill says that the “design on the common reverse of the coins minted under this Act shall depict a baseball diamond similar to those used by Major League Baseball.”
Reverse design of the 2014 Baseball Hall of Fame commemorative (Image courtesy of the U.S. Mint)
For those commentators who cannot read simple English, it says that the design “shall depict a baseball diamond.” Nowhere in that sentence does it say that the coins have to be shaped like the baseball diamond. A depiction and the shape of a coin are two different concepts.
Trying to understand where the idea that the coins would be square, a review of the official statement issued by Sens. Tim Scott (R-SC), Cory Booker (D-NJ), and Rep. Roger Williams (R-TX) as co-sponsors does not mention the shape of the coin.
What might have confused the issue was a report in The Hill that former Montreal Expos and Chicago Cubs legend Andre “The Hawk” Dawson talked about the coin minted in the shape of home plate. While Dawson was a great ballplayer and earned his place in the Baseball Hall of Fame, he is not a member of Congress and, apparently, did not read the bill.
The commentary about the shape does not take into consideration what the bill actually says. Aside from talking about it like it will be the law, it does not take into consideration that the bill is now in committee with less than 90-days to go until the mid-term elections. Without turning this into a political analysis blog post, there will be contention regardless of the outcome of the election. With the late introduction of this bill and the current political environment, the likelihood of this bill passing both chambers before the end of the session is highly unlikely.
A correspondent asked “Wouldn’t it be cool if the Carson City commemorative coins were struck in Carson City?” It does not matter if it is a good idea or not unless Congress changes the law, specifically 31 U.S. Code § 5131 that defines where the branches of the U.S. Mint are located, Carson City is not authorized to strike coins. Unless Carson City is added to that list, even temporarily, the U.S. Mint cannot strike any coins in Carson City. Further, the building that was once a branch mint is no longer owned by the Federal Government. Ownership was transferred to the State of Nevada that runs it as part of the Nevada State Museum.
Carson City Mint (1866)
Even though the first press used in Carson City is located in the museum, it may not meet the specifications that are required of the U.S. Mint to strike modern commemorative coins. And both the press and building are not owned by the United State government, a fact that would make those who provide oversight of the U.S. Mint’s operations a bit nervous.
While these “what if” questions might make good parlour or message board discussions, allegedly responsible industry journalists and pundits should know better.