January 15, 2013 – The United States has considered eliminating its “penny” or 1-cent coin for years. Due to raw material costs the US Mint is also looking at alternatives for its higher denomination coins as well. There are politics involved, but putting politics aside a recent study illustrates just how important diligence is when any change to coinage is being considered.
Concurrent Technologies Corporation of Johnstown, Pennsylvania was consulted regarding this burning question. All denominations were considered in the study. Existing 1-cent coins, which are currently composed of copper-plated zinc, were subjected to torture tests. Consideration including the capability of production, color shifts (discoloration), corrosion, electromagnetic properties, hardness, and wear were given to possible substitute metals for any coin denominations.
Regarding the lowly cent the CTC study concluded, “Copper-plated zinc remains the most viable material option for the 1-cent coin.” This was reported to the US Mint that in turn reported the findings to US Congress on December 13, 2012.
The CTC study may have been conclusive as far as CTC was concerned, but it wasn’t as far as the US Mint or its congressional masters were concerned. (US Congress rather than the US Mint determines what changes will or will not take place.)
US Mint Deputy Director Richard Peterson didn’t appear to take the report at its face value, telling Congress: “We’ve got some promising alternatives out there,” referring to 29 different metal compositions that were each tested twice. “Should we integrate and build electroplating facilities in the mint? How many companies can compete for the business of supplying planchets or raw materials?” Addressing the cent directly Peterson said, “The Federal Reserve still purchased 5.8 billion cents in fiscal 2012, which is 63.8 percent of our circulating coin production. So, clearly, somebody wants pennies. And if our customer wants pennies our job is to make them.”
Why bother to spend the time and money to have studies done if you’ve already made up your mind that if you don’t get the results you want you’ll ignore the study? The one thing truly worth valuing that Peterson said is his comment, “Technology doesn’t change quickly for stamping out little circles.” Another comment Peterson recently made worth repeating is that “The vending machine industry is the heart and soul of this discussion.”
In each case of the US coinage disasters just cited any recommendations from outside groups were ignored or those pushing their own agendas blatantly ignored history. It doesn’t take much effort find recent examples where planning oversights have been costly to mints and governments somewhere in the world. In December 2012 Brazil recalled an estimated 40,000 50-centavos coins struck by accident as 5-centavos coins. The coins were already delivered to banks at the time the error was discovered. Banks were told if they returned the error coins they would be reimbursed later. Being aware of the premium collectors will pay for these coins the chances of all of the coins being recovered is unrealistic. Not only was quality control lacking in production, but a policy through which returned coins will be reimbursed at some later date rather than immediately is a recipe for noncompliance.
People visiting Abu Dhabi have recently learned the new 1-dirham coin doesn’t work in parking meters, a clear failure to coordinate the introduction of the coin with the vending machine industry. In 2006 it was discovered the Philippines 1-peso coin valued at about eight fils (There are 100 fils in one dirham.) could be substituted for same coin. It was later learned the Australia 10 cents, Oman 50 baisa, Pakistan 5 rupee, and the Morocca 1 dirham were also cheap substitutes for the Abu Dhabi 1-dirham coin.
This article is not meant to simply deride mints and governments for oversights regarding recent changes in their coinage. It is meant to point out some of the recent oversights that have resulted in problems that might have been avoided with more thorough planning. No mint or government can see every possible problem that might arise from changes in their coins, but it can’t be overstressed that as US Mint Deputy Director Peterson said, the technology (and planning) of stamping out “little circles” doesn’t change quickly. I will add to his statement that the thought process shouldn’t change quickly either. As many potential logistical problems as possible need to be addressed.