US 1 Dollar Coins: My Evaluation of the GAO’s Proposal

by JT McGee

Amid a national discussion about how the United States should tackle a growing budget deficit, some believe it’s time to drop the paper dollar. Replacing the US one-dollar bill with a coin of equal value would save the government some $5.5 billion over the next thirty years, or roughly $183 million per year, according to a new report from the GAO.

In order to see how that affects the budget, I’ve created this chart:
GAO savings from $1 coins not bills

I am not one to reject a money-saving idea just because it doesn’t save “enough money.” When you need to cut back, you need to cut back; I don’t really care how it is done–and nothing should be left off the table because it saves “only $183 million per year.” Still, this is “only $183 million per year” and it will be a hard fought for $183 million.

In the past, Americans have been coin haters. The GAO contends that this is because government is giving us too much choice; either we use dollar coins (Sacagawea or Susan B Anthony coins, for example) or the quintessential Washington $1 bill. The report suggests that in order to get over this coin-hate, the government should stop giving us a choice. One unit coins in the UK and Canada were not popular until the alternative (the paper note) was eliminated. Three years later the public accepted the coins as a viable alternative.

Coins are Too Flippin’ Heavy!


Stan Collender at Capital Gains and Games wrote a post about his experience in working to promote the Sacagawea US $1 coin. He said the coin was popular with users but not with businesses because ordering a literal ton of coins isn’t nearly as attractive as ordering maybe a pound of notes. I hadn’t even begun to consider that. And without the power of the retail cash register, consumers won’t spend much time using the dollar coin. That is unless they’re frequent fliers at the Post Office.

Because visualizing area is difficult, and because I needed to open a new checking account, I took the time to make a stop at my friendly credit union. While I was there, I withdrew $100 in $1 bills and $100 in $1 coins to see how I felt about the size/weight issue.

What a stack!

For science!

$100 in $1 bills wallet

Wallet + Coins = Back Problems

Don't really want to sit on $1 coins

One coin roll was a mix’n match…24 of one president, then 1 Sacagawea coin. I’m guessing a collector just wanted one, but had to take 25

lone old dollar coin amid newer presidential coins

They’re fun to play with, if nothing else.

at least the $1 coins are fun

Believe it or not, $100 in $1 bills does not stand up on its own; however, bourbon works excellently as a dollar holder-upper.

bourbon + $200

Anyway, the dollar bills weigh 100 grams, whereas the coins weigh 810 grams. Huge difference. Roughly 3.5 ounces vs 28 ounces.

If I were the GAO, I’d want coins. If I were a retailer, I would want paper dollars. If I were a Brink’s delivery man who had to deliver dollars, I’d want paper dollars. As a taxpayer who is concerned about government spending, I want us to tackle Social Security. Err, I’m really agnostic to the whole thing.

Two other supporters and dissenters, according to Capital Gains and Games:

  1. Vending companies favored the switch to dollar coins, but only if they received a $50 subsidy for converting their machines
  2. The company that sells paper to the Treasury hated the idea, as you can imagine.

Too many people care about dollars; I’ll think smaller.

Changing the US Nickel

Given that structural problems persist in making the change to dollar coins, I think there are far better savings to be found elsewhere, with less stupidity and debate over what we use for money. Actually, I can think of a very easy way to save money right now with coins—let’s overhaul the nickel!

According to coinflation.com, each nickel has a melt value of 7.4 cents each, meaning that we quite literally spend 7.4 cents to make 5 cents, and that does not include all the etching, sketching, machining, and actual production of the nickels themselves. Each year, some 1 billion nickels are produced at a cost of $74 million per year in nickel and copper. Why not use something cheaper? How about aluminum?

Introducing the Aluminickel! How much would it cost to make a nickel with aluminum? About half a cent. Actually, we’ve tried making an aluminum penny before in 1974, but several special interests said, “No go.” Among one of the most whacky reasons was aluminum’s low radiodensity which means that it won’t show up on an X-ray when your stupid child/dog/cat/significant other eats it. Bummer.

So why not a zinckel? The current US Penny weighs 2.5 grams and is comprised primarily of zinc, with some copper thrown in for good measure. The penny has volume of 360 cubic mm compared to 688 cubic mm for the nickel. So to make a zinckel of the same weight of a penny would require 91% more materials. At a cost of .63 cents to make a current US penny, the zinckel would cost only 1.2 cents each, for a savings of 6.2 cents per nickel.

If the new nickel costs just 1.2 cents to make, we could shave roughly 6.2 cents per nickel, or $62 million per year! No hard work, no politicking, just pure and simple mathematics.

Changing the composition of the US Nickel makes sense because:

  • No one company supplies all the world’s zinc and copper, but apparently only one company supplies paper to make dollars.
  • The size, shape, nor design of nickels need to change
  • No one cares about nickels
  • We could save $62 million per year by switching to zinckels
  • According to the 33rd slide in this story-telling thing from the US Mint, Nickel requires the most heat (energy) to be used in coins. You with me environmentalists?

Sure, $62 million is not $183 million, but there are far fewer interests at stake. As for the initial investment to make the transition? Recall the current nickel supplies, melt them down, sell the metals and buy cheaper materials, then get to work!

So, where’s my Zinckel?

Tell the US Mint!

The US Mint is accepting input until April 4, 2011 about using new metals in coins. Perfect timing. If you want to give them a piece of your mind, you can do so with the following contact information:

E-mail: coinmaterials@usmint.treas.gov
Fax: (202) 756-6500
Mail: New Coin Materials Comments
Mail Stop: Manufacturing 6 North
United States Mint
801 Ninth Street, N.W.
Washington D.C. 20220

If you want to send them an email, I made you a super-friendly contact form that goes right to the US Treasury email above:
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{ 6 comments… read them below or add one }

Mat March 10, 2011 at 11:44

This is a great proposal. I sent it to the mint through the form.

Reply

Sarah March 10, 2011 at 11:45

I heard about getting rid of the penny to save money. It seems like a good idea, but I wonder if prices would round up or down to the nickel. Seems to be bad for the consumer.

You’re right we could definitely just change the nickel composition and save a lot of money.

Reply

JT McGee March 11, 2011 at 11:53

@Mat – Thanks for stopping by. I hope they take your suggestion. 😉

@Sarah – Getting rid of the penny would be interesting. I’d like to see a study on that.

Reply

101 Centavos March 12, 2011 at 06:34

I like your quote: “The report suggests that in order to get over this coin-hate, the government should stop giving us a choice” Sure, why bother giving people what they want?
Personally, I like pennies and nickels as they are. Sad reality is, as our unit of currency steadily loses monetary value, the smaller coins lose their practical value as well.

(I got confused and sent the first part of this comment as an email to the mint. Too early in the morning and not enough coffee)

Reply

JT McGee March 12, 2011 at 12:59

Ha, I did that too. The Mint is going to enjoy all these blog comments in their inbox. 😛 Each message has a link to this site, so I’ll look for .gov traffic.

All things considered, changes to the money isn’t exactly a budget solver. Still, I think the proposals are interesting. I’ve been spending through those $1 coins, and I’m not sure I’m a fan yet.

Reply

JP September 26, 2011 at 12:27

I’m all for the dollar coin, I use them everywhere I go. Lets save some money already and make the switch.

Reply

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