Once again, Congress has begun hearings on a measure to produce a new $1 coin into the American monetary system. Some may wonder why such an effort is being made after the 1979-80 debacle of the Susan B. Anthony dollar. The reason is economics - there are all kinds of good financial arguments for and very few against having such a coin.
The U.S. General Accounting Office estimates that the government could save $318 million a year by replacing a dollar bill with a coin. A bill costs 2.6 cents to print but lasts an average of only 17 months. A $1 coin would cost 6 cents to make, but would last up to 30 years.There are lessons to be learned from the failure of the Anthony dollar. It looked too much like a quarter and was easily confused as such. The proposed new coin would feel different and would be gold colored as a result of using a copper alloy. The coin simply would appear considerably more expensive and much like the new Canadian dollar coin, unlikely to be confused with a quarter.
In addition to the production savings, the new coin would be easier to use in vending machines. At present, a vending machine that accepts bills costs between $400 and $600, an expense passed on to consumers. By contrast, a dollar coin mechanism costs only $40.
Today's $1 bill has the purchasing power of the quarter of the 1950s. Nearly every Western country has a coin with more purchasing power than the quarter. Canada phased in its new dollar coin in 1989. It has proved very popular.
However, the measure being studied in Congress has one flaw. It does not provide for the simultaneous withdrawal of dollar bills - something that other nations have done in similar circumstances.
Some argue that dollar coins would be too heavy to replace paper. But dollar coins, in many instances, would mean less need to carry quarters. For those who prefer paper, there is always the $2 bill. It does not circulate now because retailers don't have room for them in cash drawers. In the absence of $1 bills, $2 bills could quickly take their place.
In most cases elsewhere, the initial change to a coin has met with public resistance just because it is different. But once the public uses the coin - one that doesn't have the problems of the Anthony dollar - and discovers the convenience, resistance drops sharply.
With all that can be gained from a new dollar and nothing but old habits standing in the way, Congress should approve the new coin. The $318 million that would be saved each year can certainly be put to better uses.