I had an extra long walk today, plenty of time for my brain to think about stupid shit. One such thought came on the heels of an announcement by the Canadian government that it will be discontinuing production of its cent coin this Fall. This is of course leads to discussion about the future of the U.S. cent which, although has less than a cent's worth of metal in it (about ½¢ as of this writing), when shipping and distribution charges are figured in, each cent ultimately costs 2.41 cents resulting in about 1½ cents of negative seigniorage for each coin for the U.S. Mint. The Mint has been losing money producing and distributing the cent and nickel since 2006.
The basic reason the cent is still with us despite relentless inflation eroding its value and despite recommendations for its elimination going back to at least the 1970s is because of its depiction of President Lincoln. It's politics plain and simple. No Congressman or Senator wants to be known as the (wo)man who voted to eliminate Lincoln (never mind that he's still on the five dollar bill). It's the same reason President Washington was not removed from the America the Beautiful Quarter series in favor of President Theodore Roosevelt. I imagine that is also the rationale behind retaining the one dollar bill and that is, besides convenience, it would be a politically bad move to remove President Washington (never mind that he's still on the quarter).
The cent and dollar bill also have their supporters in two specific lobbies. The cent is now comprised primarily of the element zinc (97½% by weight with a layering of copper to retain its old appearance) and the dollar bill is produced in the greatest numbers of all the paper denominations (though in 2010, the $100 bill has held the top position). This gives the zinc lobby and the Crane Paper Company (the company which supplies the Bureau of Engraving and Printing with the paper our currency is made of) an incredible incentive to maintain the status quo as they profit handsomely from this arrangement.
Finally, the metallic composition of the nickel (75% copper and 25% nickel) exceeds its face value and that's before shipping and distribution costs are figured in. Only Congress can alter the composition of our nation's coins and until it finally gets around to doing so, the Mint is forced to make cents and nickels at a loss. Seigniorage from the dime, quarter, half-dollar, and dollar coin still keep Mint production and distribution costs profitable overall (thus giving Congress additional time to drag its feet in this matter), but the amounts have shrunk most years since 2006.
Now while I would much rather the Federal Reserve System work to deflate our currency in an effort to restore its value and return to having our coins depict personifications of Liberty rather than dead Presidents, I know that will never happen so how about this for a compromise? Something that should address all the problems above...
As of now, there is a dollar coin program in effect showcasing all the Presidents. Barring some horrific tragedy befalling Presidents George H.W. Bush, Bill Clinton, George W. Bush, and Barack Obama, the program is slated to end in 2016 with President Reagan (living people may not be depicted on circulating coinage). Let's use that as a starting point. Make 2016 the last year the cent and dollar bill will be produced. Starting in 2017, begin circulation of a new Lincoln Dollar using the current Victor D. Brenner portrait of Lincoln (look at any cent made since 1909). The reverse of the coin can either be a continuation of the current Union Shield or something else...but a Lincoln Dollar. This covers the bad politics of eliminating Lincoln. Although his cent will be gone, billions of dollar coins bearing his likeness will replace them annually.
Once the dollar coin is forcibly introduced into circulation and dollar bills slowly disappear, production of the $2 bill will increase substantially. Though production of the $2 bill will never reach levels attained by the $1 bill, its production will be in the hundreds of millions annually reducing losses to the Crane Paper Company. They won't be happy, but they will also know it could have been worse since a two dollar coin would be sensible in this inflation-ravaged age too.
Finally, alter the composition of the nickel to be cupro-nickel plated zinc. The nickel would still look like a nickel, but would be composed primarily of zinc now (it would also be lighter). This should appease the zinc lobby as well as create a nickel that costs less than five cents to produce and distribute.
Is that fair? Should I be writing my Congressman?
ADDENDUM: I have given thought to the $2 bill. It too may require some compromise. As you may have noticed, the $5-$100 bills have all been redesigned with large, off-center portraits but the $1 and $2 bills have not. I am thinking the loss of a Washington dollar may also cause agitation so perhaps it is time (in this scenario) to update the $2 bill in the style of the large off-center portraits that the remaining bills employ. This bill could also be one without color which, given the large amount of production the $2 bill would have in this scenario, may prove beneficial. This $2 bill, since it would be a revised note, could feature a large, off-center portrait of George Washington and the reverse of the note, instead of the Great Seal of the United States that the $1 bill features now, could feature a depiction of Mount Rushmore (replacing the Signing of the Declaration of Independence featured currently on the $2 bill). The reason for this being that not only was this suggested around the bicentennial, but also because fans of Thomas Jefferson may object to having his likeness removed from the $2 bill. Since Jefferson is on Mount Rushmore, this would be a way of keeping both these Presidents on the note.
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