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Why the U.S. Should Get Rid of the $1 Bill

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Paper Dollar bill"Psst! Hey, buddy -- want to earn a dollar? How about 5.5 billion of 'em?"

According to the nonpartisan Government Accountability Office, if America gets rid of its $1 bill and replaces it with a dollar coin, the U.S. will save $5.5 billion on printing costs over the next 30 years.

Do the math. Putting a dollar coin in your pocket could save us $183.3 million a year. That's enough money to:
  • Buy two extra Lockheed Martin F-35 fighter jets a year.
  • Build a bridge most of the way to nowhere.
  • Ppay for every item of furniture sold by Ethan Allen last quarter.
  • Buy every man, woman, and child in America a can of Coca-Cola.
  • Or pay about seven hours' worth of interest on our national debt.
Perhaps most poetic of all, the simple act of switching to a dollar coin would save enough money to give a dollar to every American, once every other year.

laundry dayIt All Comes Down to Laundry Day

It sounds like magic -- free money. But where does it come from, and is it really true that the simple act of "changing" over from dollar bills to dollar coins can save $183.3 million a year?

Actually, yes, it is true. Just think about that dollar bill you forgot was in your pocket when you tossed it into the washing machine.

As currencies go, dollars are pretty flimsy things. Over time and through continued folding, spindling, and mutilation, that Federal Reserve note that began as a nice, crisp bill printed by the Treasury eventually devolves into a pathetic rag. Such damaged dollars are routinely vacuumed up at local savings banks, deposited in bags, and sent to a central processing facility for shredding -- to be replaced with more crisp, newly printed dollar bills.

Lather, rinse, and repeat enough, and the cost of printing all these dollar bills -- and of transporting them in armored trucks, of shredding them, and printing more -- adds up to a hefty bill for the U.S. taxpayer.

In contrast, a metal dollar coin, once minted, can stay in circulation, undamaged and perfectly useful, for decades... or until someone drops it down a storm drain. Specifically, the GAO estimates that the average lifespan of a dollar coin is 17 times that of a printed dollar bill.

The Math Behind Making Money

Printing dollar bills involves heavy reliance on a single commodity used to manufacture the notes -- cotton. When cotton prices spiked in 2010, that pushed up the cost of printing a dollar bill to 9.6 cents (in a more normal year, such as 2008, the cost is closer to 6 cents to print a dollar bill).

In contrast, the minting of coin-based dollars gives the government some flexibility in choosing the metals to mix and match to form the alloys that go into the coin. During WWII, for example, when copper became a strategic asset, the U.S. minted steel pennies for several years. In part due to this flexibility, the cost of minting a dollar coin in 2011 dropped to a mere 18 cents -- barely half what it cost to mint the same coin in 2010.

Result: We can mint a dollar coin for two to three times the cost of printing a dollar bill, but the coin will survive in circulation for about 10 times as long as the note.

Making Change

As you can imagine, the savings from such a switch add up pretty quick -- to $183.3 million a year. And yet a lot of folks still rebel instinctively at the idea of ditching the dollar bill. They tout its portability, the way it slips so easily into and (in our consumption driven society, more often) out of the wallet. They complain that dollar coins are too heavy, and too jingly in the pocket. They just don't like the darn things.

To me, though, these objections just don't carry any weight. So let me put this plainly, in terms any American taxpayer can understand: Would you rather switch to dollar coins, or would you rather have your taxes increased by $183.3 million to pay the price of nostalgia?

Well? Which is it? Sound off below.

True story: As a young child, Motley Fool contributor Rich Smith raided his coin collection of silver dollars to fund his addiction to Goetze's Caramel Creams. He regrets it to this day. The Motley Fool owns shares of Coca-Cola. Motley Fool newsletter services have recommended buying shares of Coca-Cola.






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Munzen

The story contains one factual error - during WWII cents (pennies) were made out of steel for only one year, 1943, not "several" years.

In reply to those who claim the coin looks too much like a quarter, have you actually _seen_ any of the gold-colored $1 coins or are you remembering the (admittedly stupid) Anthony dollar from 30 years ago? The coin is the same color and diameter as the Canadian Loonie and I've never met a Canadian who had any trouble distinguishing their quarters and dollars. Are you saying Americans are less adaptable than our northern neighbors?

As far as weight and acceptability are concerned, why not produce a more modern $2 bill? Then the two can take up the sacred $1 slot in cash registers and no one will ever get more than one $1 coin in change. Plus no one seems bothered by carrying fistfuls of quarters for vending machines and parking meters, but 4 quarters weigh 23 gm while the equivalent $1 coin is just 8 gm.

The entire rest of the industrialized world replaced their bills with coins* and civilization didn't crumble. Have we in the US become so isolated and rigid that we'd be flummoxed by a simple coin?

(*) They also measure in multiples of 10 instead of 12, 16, 5280, whatever, but that's another matter

November 17 2012 at 9:28 PM Report abuse rate up rate down Reply
Joseph Xavier

As an American who has lived in Switzerland for a year and with the EU and the Euro nearby, I've lived in a society that doesn't have the "$1" bill. In the Euro, the smallest note is a 5 euro, currently worth about $6.50. In Switzerland we have the Franc (CHF); the smallest note is 10CHF (also available in 20, 50, 100, 200 and 1000). The 10CHF note is worth about $11.

Most of you are aware of the euro coins, 1c, 2c, 5c, 10c, 20c, 50c, 1 EUR and 2 EUR. So, not only does the euro have base denomination but also a 2 euro as a coin.

In Switzerland, their coins are 5c, 10c, 20c, 50c, 1 CHF, 2 CHF and 5 CHF. You'll probably notice two things -- no 1c coin, and a 5 CHF coin (worth $5.50).

Taking the previous poster's query about receiving $8.41 back as a $5 bill plus three $1 coins and some change... how about receiving 8.40 CHF back as change? That's a 5 CHF coin, a 2 CHF coin, a 1 CHF coin and two 20c coins. Think it's all just a bunch of change and you didn't get anything back? Nope, you learn that the 5CHF coin is valuable. In fact, any amount under 10CHF you would expect to only get back change.

And what about it being too heavy in your pocket? Guys, really, it's a few grams for a coin. You weigh about 100,000 grams, do you think you notice the effect? I'm more inconvenienced by how five one dollar bills makes my wallet thicker. In fact, I bought a small leather purse for change that I keep in my other pocket. No jingling, no falling out, it just doesn't weigh much at all. I actually can keep about 30-40 CHF in there without it being noticeable, if I make good use of the 5 CHF coin. (The 2 CHF, 1 CHF, and 0.5CHF all have a constant weight/value ratio so 2 CHF weighs as much as one 2CHF coin, two 1CHF coins, or four 0.50CHF coins, which are the size of a dime yet worth $0.55).

So, here's the scenario as I see it:
The US is increasingly becoming a cashless society, relying more and more on debit and credit cards. Which is great for Visa, et al. But their profits are coming from our purchases, and from retailers sales. So, the retailer must charge more to keep their profits where they want. In a truly cashless society brokered by these companies, we the people lose. We pay more than we should just to line these company's pockets.

Europe has a much higher usage of cash. Checks are basically unheard of (I've seen one in the last year). The Swiss have ATMs which dispense bills generally no smaller than 50 CHF, with the 100 CHF the most common. That's right, you walk up to a Swiss ATM it will ask if you would like 100, 200, 300, 400, 500 or 1000CHF. Those are its default options. What do I get at BoA? $20, $40, $60, $80, $100. Stores have no problems making change from a 100CHF note or even 200CHF.

If the US wants people to use cash, we need to offer it in usable amounts. Make the $50 and $100 more common. Put those in ATMs, not $20s. Kill the $1 bill and learn to use the $1 coin.

May 10 2012 at 6:48 PM Report abuse rate up rate down Reply
DollarCoinNotWanted

As a retail customer, I have NEVER been offered a dollar coin or a paper two-dollar bill as part of my change. Until retailers and bank tellers get in on the act of offering these, they will never catch on. Some banks have signage indicating they have dollar coins available, but I doubt they give them out unless specifically requested. Un-informed retail clerks often believe that dollar coins and paper two-dollar bills are not valid payment instruments.

I worked for years for a large multi-state vending machine company that tried over and over to promote the dollar coin by repeatedly filling change dispener machines with dollar coins instead of quarters. Our vending customers were always unahppy about it and I don't think it translated into increased revenue as company management had hoped. Many vending companies have tried to use the dollar coin and likely all have failed to gain acceptance.

As a small merchant, I tried for over three years to give out dollar coins and paper two-dollar bills as change. The reaction from customers was almost NEVER positive and many would request "normal" change. Plus, I always had to fight with my local bank to stock paper two-dollar bills. Too many people think two dollar bills are RARE when they definitely are NOT.

My questions to people who say to simply stop producing paper dollars are these --

When was the last time YOU actually carried a dollar coin in your pocket?
How many times have you requested dollar coins or paper two-dollar bills from your local bank?
Do you know any merchants who give out dollar coins as change?
What would you tell retail clerks who question the validity of your money if you tried to pay with a handful of "fake golden tokens"?
Have you ever tried to verify a sum like $ 8.41 with dollar coins? Yes, that's one 5 dollar bill, three one dollar coins, one quarter, one dime, one nickel, one penny. Doesn't it look like you were just cheated out of three bucks since all you got back was a Five and some coins??

Let's get real. For most cash transactions, the paper dollar is best and the dollar coin is a novelty item. Since when does the USA care what the rest of the world does?? We thumb our noses at the metric system and the celcius thermometer and we do the same with dollar coins.

Lastly, I questioin the validity of any monetary cost savings figures regarding paper dollars versus coin dollars. I doubt any of these figures take into account the huge storage costs we are ALREADY incurring as a result of warehousing about 30 years worth of already minted dollar coins.

If the Federal Reserve wants to do something actually USEFUL and BENEFICIAL -- they should start making our paper currency more usable by blind people (embossed raised printing with texture and/or other visual clues such as paper modifications for each denomination).

I will gladly accept dollar coins if offered to me. I have yet to see that day.

February 21 2012 at 7:22 AM Report abuse rate up rate down Reply
THE BOSS MAN

Get rid of the paper dollar and mint the coins. People will learn to use the coins only if the paper dollar is eliminated like Canada did. Since the US gave us the coin and the paper dollar option at the same time, no one used the coin. Also with using the dollar coin the value of our kids piggy bank will increase by putting dollar coins in them.

February 13 2012 at 2:54 PM Report abuse rate up rate down Reply
Tom Marty

Getting rid of One dollar bills and replacing them with coins is a good idea if it can save us that much money. When they save that much money it needs to go to pay down our debt. This country needs to get a leader that has the peoples wishes in mind and get rid of some of these groups that want to take GOD out of everything because others don'y want to see it every where. What about the rights of all of us that want to keep GOD and prayer in our lives. We are losing our Freedoms one by one!

February 11 2012 at 11:18 PM Report abuse rate up rate down Reply
1 reply to Tom Marty's comment
Munzen

The use of a dollar coin has NOTHING to do with religion. It's a piece of metal, not a prayer book.

November 17 2012 at 9:30 PM Report abuse rate up rate down Reply
candalou2

the dollar bill should stay and they can take the dollar coin and shove it

February 11 2012 at 10:11 PM Report abuse rate up rate down Reply
fishing

Are you out of your alledged mind? Maybe you're really stupid enough to be running for congress. I can see that you REALLY are a MOTLEY FOOL. You seem to have absolutely NO memory.
Have you ever heard of the Eisenhower Dollar? The U.S. minted over 673 MILLION of them that the American public refused to accept.
Not to worry. Next the bone heads had another brillian idea, To show the female voters of America that they wanted the female vote, they minted over 898 MILLION of the SUSAN B. ANTHONY dollars. Following Washington logic that if nobody wants what you've got -- MAKE MORE OF IT!
Of course, you may know what's comong next. SAME WASHINGTON LOGIC. The Sacagawea dollar !!!! This piece of brilliant Washington thinking resulted in the manufacture of over ONE BILLION of these rejected dollar coins. the actual mintage from 2000 to 2008 was 1.480 BILLION. Then the had a different stroke of Washington brilliance. We'll only change the back of the coin and THEN it will be accepted. So in 2009 they minted only about 71 million Sacagawea dollars with the back of the coin showwing a woman and 3 (THREE) corn stalks. By then they must have been so ashamed that the value of the dollar had diminished so much that they only put $1 on the reverse, maybe because no one would ever think that that piece of metal would ever buy a dollar's worth of goods. BUT, not to let anyone ever think that Washington would ever let go of a BAD idea, in 2010, they changed the reverse again. This time they were touting the " Great Law of Peace" with with what appears to be 5 arrows inside a wampum belt. Again, putting the punch presses to work, they cranked out 75 million of them. It is interesting that this seems to be the only time that I can find that the mint DID NOT PUT A DATE ON A MINTED COIN. Maybe they were to ashamed to tell the people that their product had to little pruchasing power.
I see from your article that you profess to be employed be the MOTLEY FOOL. I sincerely hope that it is NOT in an investment advisory capacity. I would be willing to wager that I have put more thought and research into my reply than you put (thought and research) into your article.I think I have seen that same drivel coming out of Washington in the past.

February 11 2012 at 10:11 PM Report abuse rate up rate down Reply
ajt1025

Get rid of the dollar bill and make coins they last longer and cost less to make. Its simple you will hear people gripe about it but in the long run we can start to cut cost. Then work on the congress and senate and cut the wastefull spending these pepole throw away each year. We must do something to start taking control of our debt. It will crush out country if we the people don't do something and soon.

February 11 2012 at 10:06 PM Report abuse rate up rate down Reply
Jim Schaaf

The dollar coin adds too much weight to a man's pants pocket. I have six one dollar bills in my wallet, less weight than one one dollar coin. The dollar coin is about the size of a quarter, a very expensive mistake when reaching for coins to pay a toll in an automatic toll lane. I say no to the dollar coin.

February 11 2012 at 9:47 PM Report abuse rate up rate down Reply
1 reply to Jim Schaaf's comment
Munzen

I'm confused.

You don't mind carrying 4 quarters, but a $1 coin that weighs only 33% as much is too heavy.
You claim it's easy to confuse a dollar with a quarter but you're fine with dimes and pennies being almost exactly the same size.

Something doesn't add up.

November 17 2012 at 9:32 PM Report abuse rate up rate down Reply
slayerpc

say bye bye to dollar bill validators on vending machines , i love the idea of coins instead

February 11 2012 at 9:34 PM Report abuse +1 rate up rate down Reply