Have coins become nearly irrelevant to the modern economy?
Less than two years ago I became a grandfather for the first time. Being a lifelong coin collector, I did what most of us would do on such an occasion and bought my grandson a birth year proof set. I wish someone had done that for me when I was born, but there were no numismatists in my family, and I had to buy one myself years later (I won’t say which year it is, but the cent has a Wheat reverse).
This familiar tradition is one that’s dear to many adults in our hobby, and I suspect that it has created more than a few youthful collectors over the years. Nevertheless, I can’t help believing that the value of this simple action has diminished recently and may have no impact at all on the generation that my grandson represents. It’s becoming increasingly likely that he will never handle coins at all in the normal course of making purchases, thus severing this common bond that has been a part of life for nearly every American of the past 200 years.
There’s plenty of evidence around us that coins have become nearly irrelevant to the modern economy. Debit cards are being used routinely for even minor purchases that until recently would have been paid in cash. Such transactions would have concluded with the dispensing of several coins in change, but this scenario is becoming evermore rare. There are several reasons for this, the convenience of debit cards being the primary one. In an age of direct payroll deposits to one’s checking account, the obtaining of cash requires an additional step that many persons are reluctant to undertake, even with the relative convenience of ATMs. Another factor, one which particularly threatens the future of our hobby, is that cash transactions typically result in the receipt of a handful of coins which are worth very little individually or collectively. People simply don’t want to be bothered with coins that do not have enough purchasing power to justify carrying.
This is not the case in most countries, as any world traveler has discovered. Though debit cards are now common throughout the globe, coins still play a useful role. These countries achieve utility in their coinage by routinely removing their lower denominations ravaged by inflation while simultaneously replacing their lesser paper currency with coins of the same value. Thus, coins remain within a range of usefulness that reflects the steady march of inflation. The USA has consistently failed to do this, and the obvious result is that our coinage is mostly worthless to anyone but a numismatist.
While the US Mint commissions costly studies into replacement compositions for the cent and nickel, both of which have for some years cost more than their face value to produce, completely lost in the debate is the simple fact that neither coin is worth saving. Inflation has rendered them both completely worthless, and the dime will likely be a denomination of no importance long before the other two coins are finally retired. Of all our current coins, only the quarter dollar is considered useful by the public, yet no one in Congress has the sense to recognize this fact and call for the entirely new system of coinage that is so desperately needed. The sad result of this neglect is that the public has simply lost all respect for coined money as a measure of value and an instrument of trade.
Whenever the question of reform is broached, powerful lobbying interests step in to discredit any of the prophets. The metals industry wants no elimination of the cent and five-cent piece, but only new contracts for useless replacement coins that won’t circulate. The supplier of paper wants no elimination of the one-dollar note, a move which would solve the much publicized overstock of dollar coins. The members of Congress who represent the districts in which these industries are located want nothing that threatens jobs and votes. And so our broken coinage system will wither and die through a combination of greed and government inertia.
The diminishing importance of coins in the lives of Americans has already had a visible effect on the ongoing series of circulating commemorative quarters. There was quite a bit of hoopla when the 50 States Quarters program debuted in 1999 but, as for the current America the Beautiful series, not so much. The stagnant economy has brought the release of new coins to a near standstill, making it difficult to obtain new issues in the normal course of circulation. Most sit idle in vaults, awaiting demand that may never come.
A bigger problem, however, is that Americans are simply not as interested in coins as either collectibles or money. Kids were seen as a large target audience for the quarter dollar programs launched in 1999, but very few who have been born since that time are aware of coins on any level. Those who are cognizant of the changing coin designs are almost certainly the children of established coin collectors, but even then it’s an uphill battle to sustain their interest. Due to our government’s shortsighted policies regarding the nation’s circulating coinage, I envision having to explain to my grandson one day what coins were and why they were so much a part of life when I was a child his age.
David W. Lange's column, “USA Coin Album,” appears monthly in the Numismatist, the official publication of the American Numismatic Association.