For Immediate Release June 18, 1997

The One Dollar Coin Act

by Barry Poulson

Congress is about to debate the One Dollar Coin Act, legislation that would replace the dollar bill with a dollar coin. We have tried several experiments in our recent past, namely the Eisenhower dollar and the Susan B. Anthony dollar, both of which were costly failures. Millions of theses dollar coins were minted at great expense, only to sit and gather dust in the vaults of the U.S. mint. Given these past failures, the question begs: why replace the dollar bill with a dollar coin?

The Congressional Budget Office estimates that use of the dollar coin will save the government about $20 to $50 million dollars a year – or about 7 percent per American. But this assumes that Americans will actually use the new dollar coins as a substitute for dollar bills. If that assumption does not hold, the new dollar coins will pile up in the vaults of the U.S. Mint just like the previous dollar coins. Is there any reason to expect that Americans will be more receptive to this new dollar coin?

Public opinion polls show that a large majority of Americans continue to oppose replacing the dollar bill with a dollar coin. It is not hard to understand this preference. Coins are cumbersome, inconvenient, and for those of us who have difficulty keeping track of our change, coins tend to get lost. The proposed dollar coins would be larger and of a different alloy than other coins so they would be harder to lose, but still inconvenient to carry. For most of us, dollar coins make poor substitutes for the dollar bills that we accumulate in our billfolds and purses. We are also finding better substitutes for both coins and bills through debit cards and electronic banking.

Congress is well aware of the preferences of Americans for dollar bills, debit cards, and electronic banking. The strategy, therefore, is to remove dollar bills from circulation so that we will be forced to use the new dollar coins. But this strategy raises an important issue: Even if the government succeeds in substituting the dollar coin for the dollar bill, is this form of coercion worth the effort.

There are times when government coercion is appropriate in maximizing social welfare. Most of us stop at stop signs voluntarily; and we levy fines on people who don’t. We know that the benefits of obeying this law are worth the effort. But, the government should be cautious when coercing Americans into accepting an unpopular law when there is no overriding social objective to be achieved.

A good analogy is the early attempts to impose the metric system in this country. After several failed attempts, the government understood that Americans will adopt the metric system when they perceive the benefits outweigh the costs. Now the metric system is used extensively in the scientific and business community because it is a universal language that promotes communication among scientists throughout the world. But most Americans find their old system of measurement more convenient. Over time, through education and exposure to international competition, the metric system is being adopted through voluntary choice.

Like the metric system, the monetary system should evolve in response to consumer preferences for paper currency, coins, credit cards, and electronic monies. Americans should not be coerced into accepting dollar coins in place of dollar bills to save money the government a few million dollars. Once Americans perceive that this is not a voluntary choice, this latest experiment with the dollar coin will backfire at great cost to taxpayers, consumers, and businesses.

Barry Poulson is a Senior Fellow at the Independence Institute a free-market think-tank located in Golden, Colorado

This article, from the Independence Institute staff, fellows and research network, is offered for your use at no charge. Independence Feature Syndicate articles are published for educational purposes only, and the authors speak for themselves. Nothing written here is to be construed as necessarily representing the views of the Independence Institute or as an attempt to influence any election or legislative action.
Please send comments to Editorial Coordinator, Independence Institute, 14142 Denver West Pkwy., suite 185, Golden, CO 80401 Phone 303-279-6536 (fax) 303-279-4176 (email) webmngr@i2i.org

Parent Information Center (report cards on Colorado schools); Criminal Justice  & Second Amendment, Education, Environment, Immigration, Personal Freedom Center, Politics & Government, Stevinson Center on Local Government, Transportation, Waco. Op-ed archive. Columns by Linda Gorman; Columns by Dave Kopel; Hot Topics this week. Great Books page. Publications catalogue.

Shop your favorite sites while supporting
 the Independence Institute!

Copyright© 2000 Independence Institute