Reproduced here for fair use and discussion purposes. My comments first, and the article is below.
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On December 4th I republished an article by Kevin Freking which described the government's desire to replace paper $1 bills with a coin. Supposedly it was to save the government $4.4 billion over 30 years, mostly because the coins last so much longer.
But today's article by Joann Loviglio discusses the fact that coins are too expensive to produce. The article also references some of the same information as the December 4th article, so apparently the two reporters are using the same source information. This makes me wonder if these reporters receive a press release and simply regurgitate its contents.
What both articles seem to agree on is that currency is expensive to produce, and certain changes are needed in order to save the government money. Of course, the amounts involved are peanuts compared to the trillions of dollars of debt.
The last thing I want to address is a quote from the article attributed to Dick Peterson, the Mint's acting director: "We produce 6 billion pennies a year. Our customers want them.” Sir, we are not your customers. We are not engaging in a business transaction with the government. The government has constitutional authority to create currency, and it is one of the ways private parties transaction business between themselves. You are not a party to those transactions, you merely facilitate them.
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By JOANN LOVIGLIOAssociated Press PHILADELPHIA — When it comes to making coins, the Mint isn’t getting its two cents worth. In some cases, it doesn’t even get half of that. A penny costs more than two cents and a nickel costs more than 11 cents to make and distribute. The quandary is how to make coins more cheaply without sparing our change’s quality and durability, or altering size and appearance.
A 400-page report presented last week to Congress outlines nearly two years of trials conducted at the Mint in Philadelphia, where a variety of metal recipes were put through their paces in the massive facility’s high-speed coinmakingmachinery.
Evaluations of 29 different alloys concluded that none met the ideal list of attributes. The Treasury Department concluded that additional study was needed before it could endorse any changes.
“We want to let the data take us where it takes us,” Dick Peterson, the Mint’s acting director, said Wednesday. More test runs with different alloys are likely in the coming year, he said.
The government has been looking for ways to shave the millions it spends every year to make bills and coins. Congressional auditors recently suggested doing away with dollar bills entirely and replacing them with dollar coins, which they concluded could save taxpayers some $4.4 billion over three decades. Canada is dropping its penny as part of an austerity budget. To test possible new metal combinations, the U.S. Mint struck penny-, nickel- and quarter-sized coins with “nonsense dies” — images that don’t exist on legal tender (a bonneted Martha Washington is a favorite subject) but are similar in depth and design to real currency. Test stampings were examined for color, finish, resistance to wear and corrosion, hardness and magnetic properties. That last item might be the trickiest, as coin-operated equipment such as vending machines and parking meters detect counterfeits not just by size and weight but by each coin’s specific magnetic signature. Except for pennies, all current U.S. circulating coins have the electromagnetic properties of copper, the report said.
A slight reduction in the nickel content of our quarters, dimes and nickels would bring some cost savings while keeping the magnetic characteristics the same. Making more substantial changes, like switching to steel or other alloys with different magnetic properties, could mean big savings to the government but at a big cost to coin-op businesses, Peterson said.
The vending industry estimates it would cost between $700 million and $3.5 billion to recalibrate machines to recognize coins with an additional magnetic signature. The Mint’s researchers reached a lower but still pricey estimate of $380 million to $630 million.
Another challenge for the Mint is the rising cost of copper (used in all U.S. coins) and nickel (used in all except pennies).
Only four of the 80 metals on the periodic table — aluminum, iron (used to make steel), zinc and lead — cost less than copper and nickel, the report stated. Lead isn’t an option because of its potential health hazards.
“Pricing of steel, aluminum and zinc are pretty close to each other ... there are promising alternatives for the nickel, dime and quarter,” Peterson said. “There wouldn’t be any advantage to shift the composition of the penny, so we offset that cost with (savings from) other denominations.”
Pennies may not be cost-efficient, but they won’t be getting pinched as long as they’re in demand.
“We produce 6 billion pennies a year,” Peterson said. “Our customers want them.”
Concurrent Technologies Corp., a Pennsylvania-based scientific research and development company, is working with the Mint on the alternative materials study under a $1.5 million contract awarded in 2011.
The Philadelphia mint, established in 1792, is the country’s oldest and largest. Circulating coins are made there and in Denver.
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