The US’ Terrible Mistake of Selling $1 Coins for $1

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for two months at skl.sh/hai25. The year was 2005, the president was George
W. Bush, and the Congress was getting started on yet another of America’s government’s
group projects. This time, DC’s oldest social club had decided
it was about time Americans started using more coins—like, the circle things. Specifically, they wanted people to start
using more dollar coins and fewer dollar bills. The anti-bill bill they introduced swiftly
made its way through Congress and then, a few days before Christmas 2005, it landed
on the big W’s desk who signed it shortly after.

This bill instructed the US mint to start
making billions of these dollar coins. The new coins would either be stamped with
the image of one of the 39 former presidents who were deceased at the time, one of their
35 first spouses, or some other liberty-evoking imagery for the four presidents without spouses
during their terms. Now, this bill had some decent points—at
least four per page—like how larger value coins are useful for paying at parking meters,
buses, vending machines, and more, but they’re less good for use at certain evening establishments. The previous issuance of quarters with the
fifty states on them also did a good job of teaching their names to kids, and the thought
was that these dollar coins could do the same. Of course, there are probably more useful
things coins could teach American kids—like how to write a student loan application—but
this was sure a good start.

Coins are also slightly cheaper for the government. While bills are individually cheaper to produce,
coins last far longer and therefore stay in circulation longer, so, if the US switched
entirely to $1 coins, it would save the country close to $5 billion over 30 years. Just imagine all the amazing things the US
government could do with that kind of money. For all those reasons, this bill stipulated
for an aggressive introduction of these coins into US circulation. As part of this, every US government anything
was required to set themselves up to accept and distribute these dollar coins.

The big implication of that was that any vending
machine in any federal building, Smithsonian museum, national park, Amtrak train, aircraft
carrier, F-22 fighter jet, US space station module, RQ-4 Global Hawk drone, anything government
had to be set up to accept and distribute these coins. This is also part of the reason why, in the
years after their introduction, you would often see vending machines in these places
giving back dollar coins—the government just really wanted people to use these coins. It was classic government—just shoving their
extra special coins down our throats The problem, though, was that the public didn’t
like them—no matter if they were in their throats or not.

People just didn’t like carrying around
a bunch of heavy dollar coins rather than compact, light, and extra cool dollar bills. As both the coins and bills were still in
circulation, most chose to use the bills. Therefore, to make it even easier for the
general public to get these coins, a new program was set up. Basically, from the website of the US Mint,
you could order one dollar coins for one dollar each—shipping included. Their enormous, catastrophic, and costly mistake,
though, was that they accepted credit cards. You see, whenever a vendor accepts credit
cards, they’ll end up paying a fee to the credit card company—whether it be Visa,
Mastercard, American Express, or the one where you have to discover the three stores that
accept it. These fees range between 1.5% and 3.5% and
are one of the two major ways credit card companies make money—the other being interest
payments. Of course, to persuade you to use their credit
cards over debit cards, these companies usually give points which you typically can transfer
to airline frequent flyer programs. These points each tend to have an effective
value of between one and two cents.

By now, you probably see the problem. By spending one dollar to get these coins,
people would get the coin, worth one dollar, and the credit card point, worth one to two
cents. Therefore, for every dollar they spent they
were getting, essentially, up to one dollar and two cents. It just made sense. It was literally a free money machine. Once people caught onto this, the orders for
these coins exploded to over 88 million in 2009. Now, this was not necessarily an easy way
to earn your frequent flyer points. At the time, if you wanted to fly the now-dead
US Airways to Europe in business class, you’d have to shell up 100,000 points. That would mean you would have to buy 100,000
gold coins, which would weigh, in total, about 1,800 pounds or 800 kilograms. Upon receiving these, you would then have
to take them to the bank and redeposit them into your account.

This didn’t stop many, though, with one
man reportedly having ordered 2.4 million of them—weighing a collective 43,000 pounds
or 20,000 kilograms. Now, you’d be reasonable to think that this
was a great success for the government—they got the coins out to the general public like
they wanted to—but the problem was that they actually didn’t. Sure, they shipped them to the general public,
but then these people all just went and deposited them right into their banks. Therefore, there were just millions of these
laying around. What’s more, for each coin they sent out,
it cost the government a couple cents. Eventually, they caught onto this scheme and
started limiting purchases to 1,000 coins every 10 days, but that could still get you
a cool 36,500 points per year. After these restrictions went into place,
orders dropped dramatically and, eventually, the government pulled the plug on the program
in mid-2011. As for the success of the overall mission
of switching the country over to $1 coins? Well, to answer that, just ask any American
when the last time they used one of these coins was.

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