Fix America’s cash!

With Canada’s recent announcement to stop producing their 1-cent coins, there has been lots of talk of if and when the United States will follow suit. Here’s my not-so-humble opinion.

I have long believed that the hundredth of a dollar has become obsolete, no longer really meaningful in daily commerce. I think customers and merchants alike would be happy enough with the tenth of a dollar, one dime, to become the new lowest subunit of a dollar. Prices would become $4.9 instead of $4.90. (The United States used to have a one-thousandth of a cent, one mil, that has only seen sporadic use in American history. Why it persists at gas stations generations after it died everywhere else is beyond me. $3.479 per gallon…. really?)

The death of “cent” as subunit would of course kill the penny and nickel. But it leaves the quarter dollar in an awkward spot. In a world without nickels, you couldn’t offer up three quarters to pay for a $0.7 item and expect change back. As cash, quarters would only be useful in pairs. What should we do with our former workhorse denomination?

My wife points out that the quarter is still the default coin of choice for coin-operated machines like gumball machines, parking meters, car washes, and laundromats. Eliminating the quarter would put those machine owners in the bind of either relying on an obsolete coin or to make expensive upgrades to their machines. I’ll revisit this concern after presenting my proposal.

The new lowest coin would be the dime, of course. It’s small but still potent enough to bother with. We’ve minted 78.4 billion dimes since 1965, and that should be enough to get us by while the Mint increases supply to match increasing demand. Leave well enough alone.

Instead of the quarter, the next coin would be the half dollar. While most of us have never seen a half dollar in years, if not decades, we have lots of them… over 2.7 billion minted since 1971. Those halves are sitting around unused, collecting dust while the quarter does all the work. Let’s got those halves to good use. For values under a dollar, the dime and the half dollar will suffice. 2.7 billion halves won’t be enough for commerce in the long term, but it would be enough for the interim, especially while we use up our standing supply of quarters until the Mint can match half dollar output to consumer demand.

For those of you who think that the half dollar is too heavy, one half dollar weighs the exact same as the coins it would replace, two quarters, at 11.34 grams. Any currently-running commemorative design series for the quarter would transition to the half dollar instead.

The next coin up is the dollar coin. We treat dollar bills like spare change anyway, and a single $1 note is kinda useless all by itself. Meanwhile, we have billions of brass dollar coins sitting in Federal Reserve vaults waiting for consumer demand to materialize, which never has. While the vending machine industry has supported the dollar coin, and while mass transit systems have begun dispensing them in ticket machines, the dollar coin has failed to catch on in America because the dollar bill continues its zombie existence. End production of the dollar bill, and all those Sacageawea and Presidential dollar coins will be used and accepted. And with the quarter gone, there will be no more mistaking a dollar coin for a quarter anymore.

But I hear your cry…. “coins are too heavy”… “I want my folding money”…. “paper is more convenient”. Well fine, for those of you who insist on paper money, I offer as a $1 bill substitute the $2 bill. It’s more convenient than two $1 bills, and again, like the half dollar and dollar coins, we have a standing supply of them that aren’t being used. If you’re carrying two dollar coins in your loaded pockets, then you have enough to trade up for a $2 bill, and your heavy coin burden is over. You shouldn’t have to carry more than a single $1 at a time. Similarly, you wouldn’t have to worry about carrying more than one half dollar at a time, either. Having a readily available $2 bill will reduce the number of dollar coins you get back in change, too.

I think we should have a $2 coin like Canada, the UK, the Eurozone, and Australia do, but I’m not going to push my luck here. America has never had a $2 denomination of coin, no standing supply to take advantage of. $2 coins would have to be made from scratch, and that would take time and money. But we have a $2 bill we can start using tomorrow…. right now. But we should wisely expect that we will need a $2 coin in the future, and ought to be thinking about it now.

There’s another benefit to using the $2 bill. It preserves the jobs and workloads of all those employees who make the current $1 bill at the Bureau of Engraving and Printing. They would simply switch from printing $1s to printing $2s. Their jobs are safe, and Crane Paper Company can keep selling the BEP their special paper too, thus preserving Crane’s precious government contract. $1 makers keep their jobs… Crane keeps their business, and we are saved from using too many heavy coins. It’s a win for everyone involved.

I see no need to change the lineup of current paper bills $5 and up. $5s, $10s, and $20s have been convenient and sufficient for everyday commerce for decades. We still have $50s and $100s, but those don’t get used much. Most of us would rather charge an expense that large, and most merchants are skeptical of bills over $20 already. If they stopped making $50s and $100 tomorrow, I probably wouldn’t notice. Would you?

And in a flash, America would have a modern and updated cash system composed of three denominations of coins and six denominations of bills. That’s simpler than the four (or six) coins we have now, so merchants would have extra room in their register drawers. We have enough coins on hand to start this scheme right away, without having to manufacture and stockpile new denominations of cash in advance. We’d have three easy to distinguish coins, and a “new” $2 bill to replace the $1 bill.

Kill the penny. Kill the nickel. Kill the quarter. Revive the half dollar. Replace the $1 bill with a $1 coin. Revive the $2 bill. Problem solved.

Oh yeah, I almost forgot… quarters for coin-op machines. Been to Chuck E. Cheese lately, or anywhere else that uses proprietary tokens? There’s usually a machine somewhere in there that can take a bill and turn it into a number of tokens for you to use on the premises. Why can’t laundromats and car washes do this with quarters? The quarter dollar would live on like a casino chip, constantly circulating but never leaving the few places that will honor them. The quarter is and will always be worth $0.25, even after the rest of commerce moves to the half dollar. Those who still need quarters will be able to find them and use them. Meanwhile, banks will probably end up with a supply of quarters to meet the demands of parking meter users for some time to come.

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One Response to “Fix America’s cash!”

  1. James Wolfe Says:

    i like you story an agree, keep up the good work

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