Producing paper dollar bills is a more expensive proposition than ever, reports AOL News. That’s why Senators Richard Shelby, Robert Casey and Tom Harkin are continuing a battle that in one form or another has been fought since U.S. President Andrew Jackson held office in the 1830s. On behalf of the U.S. Government Accountability Office (GAO), the Senators are calling on Congress, the Federal Reserve and the Treasury to pull $1 notes from circulation and replace them outright with $1 coins.
Paper dollars to coins could save $5.5 billion over 30 years
Long-term projections regarding the impact of replacing paper $1 bills with $1 coins indicate that the U.S. government could save $5.5 billion over 30 years by switching. Considering the difference in average lifespan between modern bills and coins – 3.3 years versus 30 years – less currency would need to be produced. GAO studies also indicate that coins are cheaper to produce than paper bills.
Over 30 years, taxpayers would save $184 million annually
The GAO has lobbied for the changeover for 20 years, but success has been moderate at best. The Presidential $1 Coin Act of 2005 was intended to serve as a major transition in monetary policy, and Federal Reserve banks carry an inventory of 1.1 billion $1 coins as of Dec. 2010, writes the GAO in a related report.
Only 4.2 million $1 coins are in public circulation, including the discontinued Eisenhower, Susan B. Anthony and Sacagawea $1 coins and the current Presidential and Native American series. American Numismatic Society Executive Director Ute Wartenberg attributes this relative dearth to the populace’s conservative view toward the use of coinage. Coins are heavier than bills, and many wallets are not sufficient to tote them.
Cut off the greenbacks, cut the cotton
The U.S. must completely withdraw of $1 bills from circulation, so that the public doesn’t have the option, suggests Wartenberg. British and Canadian governments went a similar route in the 1980s when lowest-denomination notes were replaced, and many other nations followed suit or had made the change before. Yet Southern U.S. legislators have resisted plans of replacing paper dollar bills with dollar coins for fear of weakening the cotton industry, which supplies the U.S. Bureau of Engraving and Printing.
The battle of specie versus greenbacks
The fight to return to “hard money” has precedence in U.S. political history, from the time of President Thomas Jefferson to the Lincoln administration and beyond. Jefferson considered paper dollars to be “the instrument of the swindler and the cheat,” according to Robert Remini’s account in “Andrew Jackson and the Bank War.” The underlying reason for Jackson’s vehement distaste was that paper money, while legal tender in the government’s eyes, could be converted into precious metal – gold, in particular.
Once Lincoln attained the presidency (1861-1865), greenbacks became official thanks to the Legal Tender Act of 1862. A system of nationally chartered banks that report to a main central bank arose, and the U.S. was quickly flooded with paper money.