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.