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The year was 2005, the president was George W. Bush, and the Congress was getting started
on yet another of America’s government’s group projects.
This time, DC’s oldest social club had decided it was about time Americans started using
more coins—like, the circle things.
Specifically, they wanted people to start using more dollar coins and fewer dollar bills.
The anti-bill bill they introduced swiftly made its way through Congress and then, a
few days before Christmas 2005, it landed on the big W’s desk who signed it shortly
after.
This bill instructed the US mint to start making billions of these dollar coins.
The new coins would either be stamped with the image of one of the 39 former presidents
who were deceased at the time, one of their 35 first spouses, or some other liberty-evoking
imagery for the four presidents without spouses during their terms.
Now, this bill had some decent points—at least four per page—like how larger value
coins are useful for paying at parking meters, buses, vending machines, and more, but they’re
less good for use at certain evening establishments.
The previous issuance of quarters with the fifty states on them also did a good job of
teaching their names to kids, and the thought was that these dollar coins could do the same.
Of course, there are probably more useful things coins could teach American kids—like
how to write a student loan application—but this was sure a good start.
Coins are also slightly cheaper for the government.
While bills are individually cheaper to produce, coins last far longer and therefore stay in
circulation longer, so, if the US switched entirely to $1 coins, it would save the country
close to $5 billion over 30 years.
Just imagine all the amazing things the US government could do with that kind of money.
For all those reasons, this bill stipulated for an aggressive introduction of these coins
into US circulation.
As part of this, every US government anything was required to set themselves up to accept
and distribute these dollar coins.
The big implication of that was that any vending machine in any federal building, Smithsonian
museum, national park, Amtrak train, aircraft carrier, F-22 fighter jet, US space station
module, RQ-4 Global Hawk drone, anything government had to be set up to accept and distribute
these coins.
This is also part of the reason why, in the years after their introduction, you would
often see vending machines in these places giving back dollar coins—the government
just really wanted people to use these coins.
It was classic government—just shoving their extra special coins down our throats
The problem, though, was that the public didn’t like them—no matter if they were in their
throats or not.
People just didn’t like carrying around a bunch of heavy dollar coins rather than
compact, light, and extra cool dollar bills.
As both the coins and bills were still in circulation, most chose to use the bills.
Therefore, to make it even easier for the general public to get these coins, a new program
was set up.
Basically, from the website of the US Mint, you could order one dollar coins for one dollar
each—shipping included.
Their enormous, catastrophic, and costly mistake, though, was that they accepted credit cards.
You see, whenever a vendor accepts credit cards, they’ll end up paying a fee to the
credit card company—whether it be Visa, Mastercard, American Express, or the one where
you have to discover the three stores that accept it.
These fees range between 1.5% and 3.5% and are one of the two major ways credit card
companies make money—the other being interest payments.
Of course, to persuade you to use their credit cards over debit cards, these companies usually
give points which you typically can transfer to airline frequent flyer programs.
These points each tend to have an effective value of between one and two cents.
By now, you probably see the problem.
By spending one dollar to get these coins, people would get the coin, worth one dollar,
and the credit card point, worth one to two cents.
Therefore, for every dollar they spent they were getting, essentially, up to one dollar
and two cents.
It just made sense.
It was literally a free money machine.
Once people caught onto this, the orders for these coins exploded to over 88 million in
2009.
Now, this was not necessarily an easy way to earn your frequent flyer points.
At the time, if you wanted to fly the now-dead US Airways to Europe in business class, you’d
have to shell up 100,000 points.
That would mean you would have to buy 100,000 gold coins, which would weigh, in total, about
1,800 pounds or 800 kilograms.
Upon receiving these, you would then have to take them to the bank and redeposit them
into your account.
This didn’t stop many, though, with one man reportedly having ordered 2.4 million
of them—weighing a collective 43,000 pounds or 20,000 kilograms.
Now, you’d be reasonable to think that this was a great success for the government—they
got the coins out to the general public like they wanted to—but the problem was that
they actually didn’t.
Sure, they shipped them to the general public, but then these people all just went and deposited
them right into their banks.
Therefore, there were just millions of these laying around.
What’s more, for each coin they sent out, it cost the government a couple cents.
Eventually, they caught onto this scheme and started limiting purchases to 1,000 coins
every 10 days, but that could still get you a cool 36,500 points per year.
After these restrictions went into place, orders dropped dramatically and, eventually,
the government pulled the plug on the program in mid-2011.
As for the success of the overall mission of switching the country over to $1 coins?
Well, to answer that, just ask any American when the last time they used one of these
coins was.
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