Presidential Dollar Production for Circulation Suspended

The United States Mint will immediately suspend production of Presidential Dollars for circulation. The announcement was made today by Vice President Biden and Treasury Secretary Geithner.

Under existing law, the Treasury Secretary has the authority to “mint and issue coins… in amounts the Secretary decides are necessary to meet the needs of the United States.” The surplus of 1.4 billion dollar coins already produced and in storage at Federal Reserve Banks is expected to fulfill demand from circulation for more than a decade.

During the year, there had been six bills introduced in Congress which sought to limit, modify, or abolish the Presidential Dollar Program. Apparently, legislative action was not necessary, as the Secretary of the Treasury had the authority to suspend production all along.

The reason why such a suspension did not seem possible was the requirement under the Presidential $1 Coin Act for Federal Reserve Banks to make quantities of each new design available to depository institutions in unmixed quantities during an introductory period. This requirement caused the Reserve Banks to place orders for each new design with the United States Mint, which in turn based production on these orders. With production for circulation now suspended, Federal Reserve Banks will not be able to fulfill their legal requirement to make new designs available during an introductory period. The implication of this unknown.

The Presidential Dollar Program will continue in limited fashion. The United States Mint will strike only the number of coins necessary to meet the demand from collectors. Information from the Treasury Department cited the legal requirement to continue the program consistent with the Presidential $1 Coin Act.

At this time and based on the available information, here are some thoughts on the implications for the future:

It seems that the Presidential Dollars will be produced and issued in a fashion similar to the previous Sacagawea Dollar series from 2002 to 2008, and the Kennedy Half Dollars from 2002 to present. During the mentioned years, these coins were not issued for circulation, but only available from the United States Mint in numismatic rolls and/or bags, and within annual sets or collector sets. Production per issue ranged from a low of 1.82 million to a high of 4.9 million.

The cost of continuing a basic set or roll collection of Presidential Dollars will increase for some collectors. Whereas before, it was possible to acquire each release at face value from banks, now the only source may be the United States Mint’s numismatic programs. The 25-coin rolls are priced at $39.95 each. The annual uncirculated coin set containing one of each design from the Philadelphia and Denver Mints (8 coins) is priced at $19.95.

There does not seem to be any direct impact on the other Presidential Dollar numismatic products. The US Mint may still continue to issue the Presidential Dollar Proof Sets, Fist Day Coin Covers, and Coin & Medal Sets.

While the announcement only refers to the Presidential Dollars, the production of Native American Dollars will likely be diminished. Under existing law, 20% of all dollar coins produced during each calendar year must be Native American Dollars. This requirement has generally set the production level for the series since its inception. With dramatically lower Presidential Dollar production, Native American Dollar production will also likely decline.

There seems to be no impact to the First Spouse Gold Coin Program. The issuance of these coins is in conjunction with each release of the Presidential Dollar Program. Since the issuance of Presidential Dollars will continue in limited fashion, so should the First Spouse Coins.

The US Mint’s reported “seigniorage and net income” will almost certainly experience a sharp decline. In the fiscal year ending September 30, 2010, shipments of $1 coins accounted for $282.8 million in seigniorage, or 94% of the seigniorage generated across all circulating denominations. The seigniorage generated from the shipment of $1 coins accounted for  69.7% of the US Mint’s total seigniorage and net income.

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Comments

  1. Mike McTague says

    They’ll be back in 10 years when the US dollar is worth about 1 Yen. They will be the new penny.

  2. Outis says

    My preference would be to phase out paper bills instead. So this makes me mad, but I understand why they are doing it.

    I was collecting the coins from the bank and would get a few rolls each time a new coin came out. I received free collector cardboard each year from the Mint and my child really enjoyed completing the set each year. I’m guessing that won’t continue now so am disappointed.

    I actually like using the dollar coins, so do I run out and purchase a bunch of rolls from my bank now? Will rolls still be available from the bank (of the older issues)?

  3. MQracing says

    @ Michael Z.

    Off topic here but I would like your view\insight\opinion on the MOH and ARMY coins… especially the proof and unc gold versions. Are these record small mintages? What’s your crystal ball say about these in terms of future value?

    They go off sale at the mint in just a few days (Dec 16). I’m debating whether to buy a set or not.

    Thanks if your able to provide any feedback.

  4. Two Cents says

    An ominous statement put out today by Deputy Secretary of the Treasury Neal S. Wolin said, “Prices and shipping costs for future $1 Coins will be announced in the near future and will be set at a level that ensures that they do not result in a cost to taxpayers.” Will this lead to higher prices for rolls and bags of circulation strikes and increased shipping costs? (The current shipping fee is $4.95 per order, no matter how large or heavy the parcel.)

    See the full announcement at this link (no spaces):

    http://www.treasury.gov/connect/blog/Pages/Reducing-the-Surplus-Dollar-Coin-Inventory-Saving-Taxpayer-Dollars.aspx

  5. says

    Anyone else notice that the mainstream news sources are saying this will save taxpayers $50 million/year? How are they getting this? I know the Mint doesn’t operate with taxpayer funds, and I thought the Federal Reserve costs for storage came from all the money they make doing whatever they do. So how is this saving taxpayers $50 million/year?

  6. ByeByeDollars says

    Over the next decade huge hoards of Presidential dollars of these first designs will be forced into the market depressing prices. So better spend or sell all the Presidential dollars you have while they are worth this much, with mintages going to drop these current ones will only be worth face value going forward.

  7. Louis says

    Stuart,
    I have asked the Mint to clarify the same point you raised. I have the same view you do. It seems the taxpayer will actually lose not save money because of the lost seignorage.

  8. Clair Hardesty says

    The real waste is the continued production of $1 bills. Its a shame that congress (the opposite of progress) never had the guts to put an end to $1 notes. That simple act would have eliminated most of the arguments from business, the primary one being the lack of a place to put the coins in the register (which as far as I can tell is a bogus claim anyway). It wouldn’t take long for the $1 bill slot to be empty once notes were no longer being printed and the coins could go there.

  9. fosnock says

    Stuart-

    Some 2.4 billion dollar coins have been minted since the start of the program in 2007, costing taxpayers about $720 million. The government has made about $680 million in profit by selling some 1.4 billion dollar coins to the public since the program began. The benefit to the government only comes from the profit it makes by manufacturing each coin for 30 cents and selling it to the public for a dollar. Per Michael Z, “money in excess of anticipated needs is transferred to the Treasury General Fund. For the 2010 fiscal year, the Mint transferred $388 million, compared to $475 million in the prior year.” This its a tax payer loss because of the loss of profit.

    The same can be said of the Fed, because when the Fed and its banks generate profits, they must turn them over to the Treasury Department via weekly payments.So if they are paying for storage that means less profits that go back to the Treasury Department.

  10. simon says

    The Mint should have released these as collector specialties. I have used these coins in regular coffee shop purchases to parking meters. I would have to disagree with elimination of the $1 bill. My argument is simply this – walk into any fast food restaurant and make a purchase with cash. The dollar bill is an important staple component of this multitude of national transactions, and fast food restaurants are almost always packed at meal times. The best bet would be to increase the non degradable fiber content (hint : carbon nanotubes) of the $1 bill to make it more resilient to wear.

    Here is the washpost take on this affair:

    http://www.washingtonpost.com/blogs/federal-eye/post/production-of-commemorative-coins-scrapped-to-save-money/2011/12/13/gIQAXqE8rO_blog.html

  11. Michael says

    If they announced the end of paper dollars and increased production of $1 coins, the headlines would have also cited taxpayer savings.

    The source of the savings from the suspension of $1 coins is related to the production costs to make the coins. Also, the estimated $3.65 million to transport and store existing coins if the surplus grows.

    The source of the savings if $1 bills are cut would be the long term savings achieved since dollar coins last longer in circulation than paper. The GAO says this amount would be $5.5 billion over 30 years.

  12. fosnock says

    Louis – They never lost seigniorage as they were sitting in a vault. In order to get seigniorage they had to circulate. Basically the mint took a 30 cent loss for each coin that did not circulate, instead of a 70 cent profit

  13. Michael says

    No, that’s not correct. As soon as the dollar coins are shipped to Reserve Banks, the US Mint recognizes the seigniorage. It doesn’t make a difference if the coins remain at the Reserve Banks or don’t circulate.

  14. djarmold says

    What will happen to businesses vending machines giving dollar coins for change….. as in the car washes and various other coin op business?? Some have invested thousands of dollars for these machines..

  15. Michael says

    @MQracing

    I will have a new sales report up on CoinUpdate.com shortly, and a post here tomorrow on focusing on the commems.

  16. Michael says

    djarmold- The Federal Reserve Banks will be able to distribute $1 coins from their existing surplus. To the extent the coins are used for circulation currently, there shouldn’t really be a disruption.

  17. MarkInFlorida says

    I’ve been getting rolls from my bank. I sure won’t pay 39.95 from the Mint, so I guess I’ll cash these in. Buying silver now that it is dipping is probably better anyway. They should have stopped making paper dollars.

  18. fosnock says

    Thanks Michael, I thought they had to circulate…but I think the loss to the Fed profits would be real, which would mean less money to the Treasury. I’m sure they could just print up the extra profits if they wanted too but…

  19. J A says

    Yipee! The problem was not in the decision to create the presidential dollars as I love to use them myself. The problem was regulating the sheer number of them that are created.

    Seeing that they were being returned to the vaults and the public was not asking so much for them should have been the key indicator to stop the presses and allow the existing ones to circulate.

    Though I am undecided on what this means for the existing bank rolls already in collector hands. You would think that they would be worth more because they will no longer be available from banks.

    On the other hand, will the inventory from the vaults actually make it back into the market enough to lower those prices??

    If people were not asking for these rolls before which landed them in the vaults in the first place, who now is going to be clamoring for them that they will be discontinued??

    It seems to me they are destined to wind up back in the same vault if they are used at all.

  20. Bill says

    Today, I received my 25th anniversary 5 coin silver A25 sets and they look great.

    I never thought I was in the running to get them but here they are, all four sets.

    I ordered two sets on the web site and to make sure, I ordered another two by phone. Now all I have to do is pay for them.

    Bill

  21. GatorTrekE says

    I’m not debating that too many Presidential dollars have been produced given the number in storage but I’m puzzled as to who has the final say on production and distribution of these coins. I’m not sure how the Presidential $1 Coin Act for Federal Reserve Banks requiring them “to make quantities of each new design available to depository institutions in unmixed quantities during an introductory period” squares with “Under existing law, the Treasury Secretary has the authority to mint and issue coins… in amounts the Secretary decides are necessary to meet the needs of the United States.” It seems to me the two statements contradict each other.

    If the Treasury truly had the authority to cease production of these all along as circulating coins and failed to do so despite the ever increasing inventory, I would normally conclude they were negligent in their duties. The fact they haven’t done so to date leads me to believe that until today they beleived the congressional mandate superceded the Treasury authority. That is why some in Congress felt the need to address the issue in a congressional manner rather than just instructing Treasury to halt production.

    It will be interesting to see how this plays out. Either way, I’ve been saving rolls of each president as my local bank acquires them and I’ve been fine with this but I’m not likely to pay a premium to acquire rolls from the mint just to continue this collection. There are too many other numismatic priorities.

  22. Pete S. says

    This whole thing started with NPR Planet Money’s Robert Benincasa and ABC News’ Jonathan Karl publishing reports on the $1 coin stuffing the Fed to the gills.

    What I want to know is, when are NPR and ABC going to going to focus on the obvious next targets, i.e., the penny and the nickel?

    Apparently it costs nearly 3 cents to make a circulating penny and 11 cents to make a circulating nickel. That’s a loss of nearly 2 cents per penny and 6 cents per nickel the Mint makes and sends to the Fed.

    Those are the coins the Mint makes the most of. Hence this is costing the government millions in losses for pennies and nickels. When will Congress untie the Mint’s hands and let them make coins out of cheaper materials?

    Or when will Congress allow the penny to be discontinued entirely?

  23. simon says

    I may be in the minority but I see this as a positive development for collectors. The Mint will have more time to spend on better designs, higher quality strikes, and more collector variety. They may even bring back the FRACTIONAL buffaloes, fractional gold (perhaps silver) eagles, fractional platinums, in addition to the palladium UHRs, the long awaited NASA commem set, more specially minted coin sets, etc…

  24. Matt L. DeTectre says

    They got it wrong as usual. They should have eliminated those nasty germ infested one dolla bills. Yes, there are germs on a coin but there is less square footage on 20 one dolla coins than 20 one dolla bills. I’m okay with keepin’ the twenty dolla bills and higher. Personally, I don’t care for the dolla coins as collectables but thats just me.

  25. Shutter says

    I would have to disagree with elimination of the $1 bill. My argument is simply this – walk into any fast food restaurant and make a purchase with cash. The dollar bill is an important staple component of this multitude of national transactions, and fast food restaurants are almost always packed at meal times.

    That’s just silly. Sure people are used to $1 notes, but before that they used coins exclusively for thousands of years. They adjusted before and will adjust again. UK has lived without £1 notes for decades, yet countless teenagers are still employed at McDonalds. Canada has done the same thing, yet Canadians figured out how to make change.

  26. vaughnster says

    simon says:

    December 13, 2011 at 7:48 pm

    “I may be in the minority but I see this as a positive development for collectors. The Mint will have more time to spend on better designs, higher quality strikes, and more collector variety. They may even bring back the FRACTIONAL buffaloes, fractional gold (perhaps silver) eagles, fractional platinums, in addition to the palladium UHRs, the long awaited NASA commem set, more specially minted coin sets, etc…”

    I wouldn’t be so sure about any of that.

  27. jeremy says

    It great a that they will make 4 presidential 1 coin designs for collectors.they dont need bills to stop the designs.the public is not use the dollars coin & they dont care who is on the coin.so it best to make the coin for collectors.
    i dont want the mint to stop making 4 presidential 1 coin designs per year.

  28. Sam says

    So what is the consensus? Keep the rolls I have? Don’t really see a down side, they will always be worth face value.

  29. Dolores says

    My only problem with the president dollar is that they turn so ugly. Absolutely beautiful when new and downhill when in circulation. I loved giving them to children for b-days and special occasions when the coin was shiny and new – they seemed so impressed with the gold coins. I’ve collected these coins for my grandson and now that collection will be short lived. A real gold coin to commemorate the presidents would have been nicer with very low mintages. I’ll keep the rolls I have hoping they appreciate in value – time will tell. Just my two cents.

  30. Val says

    I bet the dealers will suck up whatever bank inventory there is, then advertise the coins as “rare” to the public at marked-up prices, using the Treasury announcement that “production will end immediately.” They will tell the public it’s their last chance to get the coins before they disappear forever.

  31. Shelby says

    Why wouldn’t they just eliminate the $1 bill, produce more $2 bills and keep the $1 coins in circulation? They would only have to produce about half as many $2 bills, the $1 coins would have a significantly longer life span and making change isn’t an issue, at worst you only get one $1 coin back on any transaction. By doing this you could do the same as most people do with the penny now, give them a $1 coin when your off the odd dollar and you would never get one back. Seems pretty simple to me and it would save on production costs in the long run.

  32. Brad says

    Regarding Mint re-pricing, the average and pm fix dictated a one-tier decrease. However, will anything stop the current bleeding? If it were the other way around, the Mint would completely suspend numismatic gold coin sales until the price stabilized or an upward adjustment could be made at the usual time. With the spot price falling, it’s likely no suspension will take place.

    However, just in case the Mint DID choose to suspend sales due to the rapidly FALLING prices, it would be best to place an order for your gold comemmoratives TODAY after the one-tier price drop. Otherwise, sales just might end up concluding today instead of Friday. Wouldn’t THAT be a kick in the pants? No “last minute” orders would be possible due to product suspensions because of market volitility!

  33. PaulM says

    Michael:
    Does the mint change their prices on the gold and silver prices on Thursdays? I was thinking of buying some of the gold commems, and the spot price is down significantly.
    Anyone know if this is true?

  34. Michael says

    The Mint reduced prices earlier today. Since they use the weekly average, prices are based on $1650-$1699.99 gold.

  35. Shutter says

    There appear to be two side to this debate. One side screams that the $1 note is a waste. The other whines that the presidential $1 coin is a waste. In truth, they are both right. Today $1 is worth about 1/4 of what it was in mid 70′s. You can”t buy much with it. It’s primarily used as change. OTOH, we don’t need 5 different $1 coins to circulate every year. One would have been enough. $1 coins cost a little more than bills, but coins last a whole lot longer. I routinely see nickels in decent shape from the 50′s. How many 50-60 bills do you see?

    The only advantage of the bills is that it makes more money for Crane & Co in Mass.

  36. Two Cents says

    Now we know the reason why the Mint imposed the $12.50 fulfillment charge on the Direct Ship Program. In his press release regarding the suspension of the Presidential $1 circulation coins, Deputy Secretary of the Treasury Neal S. Wolin said, “shipping costs … will be set at a level that ensures that they do not result in a cost to taxpayers.” The Mint cannot sell the $1 coins at face value and absorb the shipping and handling costs at the same time.

    With the suspension of the $1 coins for general circulation, it appears that the Direct Ship Program will be discontinued as the reason for its existence is now moot.

    However, I am a little concerned about the wording of Wolin’s announcement. I wonder if the current $4.95 S & H fee for all other products will also be changed to reflect actual cost. The flat fee covers the entire order, no matter how large or heavy the parcel. I’m sure that the $4.95 does not cover the 1-2 day delivery service of FedEx and UPS, nor covers the 2-5 day Priority Mail service of the USPS.

    If Wolin is true to his word, either the delivery service time will be cut back drastically, or shipping charges will go up dramatically (or maybe even both). Another alternative is to keep the $4.95 fee and raise the prices of the products.

  37. simon says

    2c : ” I’m sure that the $4.95 does not cover the 1-2 day delivery service of FedEx and UPS, nor covers the 2-5 day Priority Mail service of the USPS ”

    Factually $4.95 is more than sufficient and covers even overnight – express mail in most (sub-lb) cases. The USMint shipment volume is huge and they get the ultra low business rate which is miniscule compared to that for an individual single use customer. I deal with this quite a bit.

  38. Two Cents says

    Simon, glad to hear that.

    I’m more worried about the USPS rates. The Mint always uses Priority Mail service for shipments to Hawaii where I live, and the $4.95 fee doesn’t cover the actual cost. The Mint’s fulfillment center uses one of their standardized mailing boxes, and even small items arrive in bigger than necessary boxes.

  39. tall coins says

    the dollar coins should be removed from the mint’s uncirculated and proof sets.
    It is upsurd that I need to buy 5 throw-away coins if I want a proof one cent, nickel, dime, or half dollar.
    Let these coins be gone. I do not and will not ever collect them.

  40. phillip helslander says

    Problem was they did not circulate, most banks did not have them, and you never knew when they would be available at the bank. Anyway, I preferred to pay $40 plus shipping rather than $25, didn’t you?

  41. IndenturedServant says

    A recent survey conducted by Lincoln Park Strategies shows that 76% of Americans are opposed to the idea of replacing the $1 bill bill with a $1 coin. Seventy seven percent of both Dems and Repubs oppose the idea as do 73% of independents. Questions 14-26 pertain specifically to the paper vs coin issue.
    Full survey is here: http://www.americansforgeorge.org/Websites/americansforgeorge/images/Data/111018-Lincoln-Park_Poll-Results.pdf

    It would not surprise me to learn that other surveys indicate the opposite is true. In talking with friends, family and co-workers, about 50 people, I only found two who would prefer a $1 coin. Surveying coin collectors or gathering opinions from coin related forums would certainly be biased in favor of coins. Personally, I oppose $1 coins unless they implement coins with silver content which is not likely.

  42. GatorTrekE says

    I was thinking more about the production restrictions now being implemented on the Presidential dollars and wondered how the production will be affected by the law stating that Sacagawea dollars must make up 20% of the $1 coin production? If this law remains in affect, then the production limit for the Presidential coins at a minimum will be determined by the production numbers of the Sacagawea’s.

    Let’s take for example there are 100,000 Sacagawea’s produced to meet demand. Then by the 20% law, the mint must produce 400,000 Presidential coins so that the Sacagawea’s make up 20% of the overall production. I have no idea what the overall mintage of the Sacagawea’s are but it would seem to me this is an important number and may lead to a larger mintage of the Presidential dollars than desired so as to meet the legal requirements of the law based on the demand for the Sacagawea coins.

    All o this may be negated by the fact that there are 4 separate Presidential issues relative to the 1 Sacagawea issue per annum but if for some reason the demand for Sacagawea’s is higher or much higher than the Presidential dollars, the 20% law could come into play and create a production issue not considered by the Treasury or the Mint today.

  43. Two Cents says

    To Gator TrekE,

    The 20% requirement is the minimum amount of Native American $1 coins that should be minted. The total NA mintage can be any percentage, so long as it does not go below 20% of the total $1 coin’s mintage. For example, if 100,000 Presidents are minted, then at least 25,000 NAs must be minted, but the number of NAs can go right up to 100,000 or even beyond. (From the sales reports of the Mint’s $1 rolls, the actual number of dollar coins will be in the millions.)

    Here is the wording of the Native American $1 Coin Act of 2008: “The number of $1 coins minted and issued in a year with the Sacagawea-design on the obverse shall be not less than 20 percent of the total number of $1 coins minted and issued in such year.’’

  44. says

    The first presidential dollar issue for 2012 is Chester Arthur. I would have gladly purchased a $25.00 roll at face value at my bank to continue the series, but there is no way I’ll spend the $39.95 premium from the mint for an obscure president. End of getting rolls for me, series over.

  45. VABEACHBUM says

    Don- You’re assuming that the cost of the collector rolls will remain at the already inflated $39.95. Keep in mind that the Mint has indicated:

    “Prices and shipping costs for future $1 Coins will be announced in the near future and will be set at a level that ensures that they do not result in a cost to taxpayers.”

    In layman’s terms, the Collector is going to pay – and pay even more. Capitalization, materials and production costs will now be distributed over thousands of coins vs millions of coins. While it may not take effect immediately with the Arthur coins, I fully expect the rolls to be repriced at $45 to $50 per roll some time in 2012.

    I am wondering if the Mint will drive the costs of these now, limited availability Presidential coins so high that they crush either the future interest in or demand for the coins and, in doing so, justify a request to legislate the end of the $1 Coin program. Or, given the autonomy of the Director and his authority to “produce coins to meet demand,” he could reach the point where there isn’t enough demand to support cost effective production. Probably won’t happen, but…

  46. John C says

    I disagree with you vabeachbum. I doubt the mint will raise the price of the already over inflated dollar rolls.They make plenty of profit on them. If anything I hope that they will sell bags of the dollar coins at a greater discount, similar to how they sell the half dollars.The mint will try to sell as many of these as possible and the best way to do that is offer some kind of bulk purchase at a discounted cost. I actually am happy that they are not going to make 70 million per design of them now. I think it will be well worth the premium they charge if you can buy them in bulk at a reasonable premium maybe something like 234 bucks for a 200 dollar coin bag. That’s how I would price it.

  47. merryxmasmrscrooge says

    President’s middle initials… I just thought of something… Why doesn’t the James Garfield presidential $1 read “James A. Garfield”? His house is near where I grew up and I always knew of him in the history books as such”. For that matter, the 2012s, Chester Arthur, shouldn’t it be minted Chester A. Arthur? For some reason without their middle initials, it seems too informal to me.
    The 2011 Andrew Johnson seems alright because he was always referred to as such in the history books. And the Ulysses S. Grant and Rutherford B. Hayes, have their middle initials, so it seems there is some inconsistency here. Just some thoughts. Am I wrong?

  48. Mike says

    im sad to see these go, i love using them for daily purchases . $1 bills have been completely eliminated from my wallet and have been replaced with the dollar coins and $2 bills that i request from my bank. both are funner to spend

  49. says

    It’s a fracking travesty that the Mint has sold Presidential dollars since 2007 and now will cease letting citizens buy them at banks and credit unions without having to pay the extortionist price charged by the ever-erring Mint. What should be abolished immediately is the AP program that favors 25 big-money coin stealers, who are allowed to buy coins the public cannot buy until the AP 25 have bought them, sold them after a tremendous markup to secondary dealers who then sell them to the public. Why is this law not under attack? It’s so frustrating it makes one want to join a para-military group and seek the overthrow of the government. Time for another Boston Tea Party.

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