The stated primary mission of the United States Mint is to manufacture and distribute circulating coins, precious metals, collectible coins, and national medals to meet the needs of the United States. The Mint must carry out this mission in adherence with the laws established by Congress and the requirements set forth under the authority of the Secretary of the Treasury. In recent years, the various laws and requirements, the rising cost of base metals, and shifts in demand from circulation have left five out of six circulating denominations in an unusual state.
The cent and nickel each cost more than their face value to produce and distribute. The quarter dollar is in the midst of a lengthy circulating commemorative program, although unfortunately the coins are nowhere to be found within circulation. The half dollar continues to be minted but is not issued for circulation. The $1 coins are issued in five different designs, while at the same time paper $1 bills are issued for the same denomination. After recent developments at least four of the $1 coin designs will no longer be issued for circulation.
This article will examine the legal requirements, specifications, cost to manufacture, senigiorage generation, and production for each of the circulating coin denominations.
The one cent coin currently features a portrait of Abraham Lincoln on the obverse and the Union Shield on the reverse. By law, the coins are required to have a diameter of 0.75 inch and a composition of copper and zinc. Currently, the coin are struck in copper plated zinc with a net composition of 97.5% zinc and 2.5% copper. The current value of the metal included is is 0.4956 cents. (All metal values from Coinflation.)
Based on the figures included in the US Mint’s most recently issued annual report for the fiscal year ending September 30, 2010, it cost 1.79 cents to produce and distribute each cent. This cost has exceeded one cent for the past five years, resulting in negative seigniorage, or a net cost to produce and distribute the cent. From 2006 to 2010, the production and distribution of the cent has generated a loss of $127.8 million.
| Producing and Distributing the Cent | ||
| Fiscal Year | US Mint Cost | Seigniorage (millions) |
| 2006 | 0.0121 | ($18.30) |
| 2007 | 0.0167 | ($40.10) |
| 2008 | 0.0142 | ($22.20) |
| 2009 | 0.0162 | ($19.80) |
| 2010 | 0.0179 | ($27.40) |
| Total | ($127.80) | |
For the current year through November 30, 2011, the US Mint has struck 4.63 billion cents for circulation. This exceeds the prior year total of 4.01 billion.
The five cent coin, or nickel, currently features a portrait of Thomas Jefferson on the obverse and his Monticello home on the reverse. By law, the coins are required to have a diameter of 0.835 inch and weight of 5 grams. The composition is required to be an alloy of 75% copper and 25% nickel. The current metal value included in each coin is 4.93 cents. There have been lengthy periods of time when the metal value of the nickel has exceeded its face value.
Based on the figures from the US Mint’s latest annual report, it cost 9.22 cents to produce and distribute each nickel. The cost has exceeded the face value from 2006 to 2010, generating a loss of $115.3 million.
| Producing and Distributing the Nickel | ||
| Fiscal Year | US Mint Cost | Seigniorage (millions) |
| 2006 | 0.0597 | ($14.60) |
| 2007 | 0.0953 | ($58.50) |
| 2008 | 0.0883 | ($24.80) |
| 2009 | 0.0603 | ($2.20) |
| 2010 | 0.0922 | ($15.20) |
| Total | ($115.30) | |
For the current year through November 30, 2011, the US Mint has produced 938.16 million nickels for circulation. This is up sharply from the 2010 annual total of 490.56 million.
The ten cent coin or dime features a portrait of Franklin D. Roosevelt on the obverse and a torch with sprigs of olive and oak to each side on the reverse. By law, the coins are required to have a diameter of 0.705 inch and weight of 2.268 grams. These coins are smaller and lighter than the lower denomination nickel since before 1965, the dime was struck in 90% silver. Currently, the composition consists of two identical outer layers that are an alloy of 75% copper and 25% nickel with an inner core of copper. The net composition is 91.67% copper and 8.33% nickel.
Based on the US Mint’s most recent annual report, it cost 4.56 cents to produce and distribute each dime. The production of dimes for the most recent fiscal year generated seigniorage of $60.5 million.
For the current year through November 30, 2011 the US Mint’s production of dimes for circulation has reached 1.43 billion. This already exceeds the prior year’s annual production of 1.1 billion.
The twenty five cent coin or quarter dollar features a portrait of George Washington on the obverse and five different reverse designs per year representing national parks or sites. The rotating reverse designs are issued as part of the America the Beautiful Quarters Program, which is scheduled to run from 2010 to 2020. Although these are intended to be circulating commemorative coins, obtaining the coins through the channels of circulation has been difficult due to minimal production levels.
When the program was conceived, the US Mint had just completed the hugely successful 50 State Quarters Program. At least part of the impetus for creating the new program was the potential to earn increased seigniorage from another lengthy program. So far, ten different designs have been dutifully issued under the program, however the mintages have been at a fraction of the levels of the previous State Quarters.
To date, the US Mint has struck 738.2 million America the Beautiful Quaters for circulation over the course of two years and ten different designs. This amount still does not reach the circulation production level for the first coin of the State Quarters Program featuring Delaware, which had production of 774.82 million. Over the first ten designs of the State Quarters series, production was 10.9 billion.
| ATB Quarters Production | State Quarter Production | |||
| 2010 Hot Springs | 69,600,000 | 1999 Delaware | 774,824,000 | |
| 2010 Yellowstone | 68,400,000 | 1999 Pennsylvania | 707,332,000 | |
| 2010 Yosemite | 70,000,000 | 1999 Georgia | 662,228,000 | |
| 2010 Grand Canyon | 70,200,000 | 1999 Georgia | 939,932,000 | |
| 2010 Mount Hood | 68,800,000 | 1999 Connecticut | 1,346,624,000 | |
| 2011 Gettysburg | 61,200,000 | 2000 Massachusetts | 1,163,784,000 | |
| 2011 Glacier | 61,600,000 | 2000 Maryland | 1,234,732,000 | |
| 2011 Olympic | 61,000,000 | 2000 South Carolina | 1,308,784,000 | |
| 2011 Vicksburg | 64,200,000 | 2000 New Hampshire | 1,169,016,000 | |
| 2011 Chickasaw | 143,200,000 | 2000 Virginia | 1,594,616,000 | |
| Total 2010-2011 | 738,200,000 | Total 1999-2000 | 10,901,872,000 | |
The quarter dollar has a diameter of 0.955 inch under law and a weight of 5.67 grams. The composition consists of two outer layers of 75% copper and 25% nickel with an inner core of copper. The overall composition is 91.67% copper and 8.33% nickel. The metal value of the quarter is 4.57 cents, and the US Mint’s cost to produce and distribute the quarter based on the most recent annual report is 9.56 cents each.
The total seigniorage earned from the quarter in the most recent fiscal year was 31.0 million. This is down from 132.2 million for the 2009 fiscal year and down from 354.1 million for the 2008 fiscal year.
The half dollar features a portrait of John F. Kennedy on the obverse and the Presidential Seal on the reverse. By law, the coins have diameter of 1.205 inches and weight of 11.34 grams. The composition is the same as the dime and quarter, with outer layers of 75% copper and 25% nickel over a core of pure copper. The net composition is 91.67% copper and 8.33% nickel. The metal value of the half dollar is 9.14 cents.
The United States Mint does not provide the cost to produce and distribute the half dollar. Since 2002, the coins have not been distributed through circulation channels, but rather only the minimal number of coins necessary to meet demand from collectors hasbeen produced.
During the 2010 calendar year, there were 3.5 million circulation strike half dollars produced. For the current year to date, production is indicated as 3.45 million. These coins are sold to collectors at a premium to face value. The numismatic revenue earned from the sale of half dollars to collectors is not broken out by the United States Mint. Currently, the US Mint sells two roll sets containing $20 face value in coins for $34.95 or 200-coin bags containing $100 face value in coins for $134.95.
The $1 coins are currently produced under two separate programs, yielding five different designs per year. The Presidential Dollar Program features the portraits former Presidents on the obverse with an image of the Statue of Liberty on the reverse of each coin. Four different coins are released each year. The Native American Dollar Program features a portrait of Sacagawea and child on the obverse and an annually rotating reverse design representing the contributions and accomplishments of Native Americans.
By law, the Presidential Dollar Program is required to continue at a rate of four different designs per year until all former Presidents who have been deceased for at least two years have been honored. Recently, the Treasury Department has indicated that production of the series for circulation will be suspended, and the coins will only be produced in the limited number needed to fulfill demand from collectors.
There is a legal requirement for the Federal Reserve Banks to make each design for the Presidential Dollar series available to depository institutions in unmixed quantities during an introductory period. The recent actions of the Treasury Department will make it impossible for Reserve Banks to fulfill this legal requirement.
The Treasury Department did not indicate any changes to the Native American Dollar Program, which does not have an ending date specified under law. There is a requirement for at least 20% of all dollar coins minted and issued each year to be Native American Dollars.
Both series of dollar coins are required to have a diameter of 1.043 inches, a golden color, distinctive edge, and tactile and visual features that make the coins readily discernible. Currently, the coins have an outer layer consisting of 77% copper, 12% zinc, 7% manganese, and 4% nickel, bonded to a core of pure copper. The net composition is 88.5% copper, 6% zinc, 3.5% manganese, and 2% nickel. The metal value of the coin is 5.61 cents.
According to the US Mint’s most recent annual report, it cost 31.57 cents to produce and distribute each dollar coin. It should be noted that 16.59 cents consists of “costs of goods sold”, 14.69 cents consists of “sales, general & administrative”, and 0.29 cents consists of “distribution to FRB”. The denomination carries a disproportionately large amount of administrative costs compared to other denominations.
For the 2010 fiscal year, the dollar coin generated $282.8 million in seigniorage. On an overall basis, this denomination accounted for 94% of the seigniorage generated across all circulating denominations. The shipment of dollar coins also accounted for 69.7% of the US Mint’s total seigniorage and net income.
| US Mint Net Income and Seigniorage FY 2010 (millions) | |
| $1 Coin Circulating Seigniorage | 282.8 |
| Other Circulating Coin Seigniorage | 18 |
| Bullion Program Net Income | 55.2 |
| Numismatic Program Net Income | 49.8 |
| Total | 405.8 |
For the current year through November 30, 2011, the US Mint has produced 297.36 million Presidential Dollars and 77.56 million Native American Dollars for circulation. In the previous year, the total annual production was 321.44 million Presidential Dollars and 80.78 million Native American Dollars.
With the exception of the dime and half dollar, all American coins produced for the last 10 years or so were intended to capitalize on the needs of coin collectors. The mint never had any intention of converting to dollar coins by eliminating the dollar bill. The US Mint took its cue from the USPS which produces millions of stamps which are never placed on envelopes but only in collectors’ albums. As long as the Mint and the USPS “profit” from such strategies we will never see an end to the useless penny, nickel, dime, or half dollar, as well as the 50 or so commemoratives the USPS puts out every year.
The weight of the quarter is wrong. It weighs 5.67 grams, one half the weight of the 11.34 gram half dollar.
lol. Did you read the article Jason? For the last 10 years half dollars have been produced for collectors only, none have been produced for circulation. Otherwise, you do make a good point. The mint was originally created to produce coins for circulation but these days they focus much of their efforts on producing coins for collectors.
The U.S. dollar has lost over 95% of its purchasing power over the last 100 years, most of that since 1960. This means that a dollar in 2011 can buy about as much as a nickel did 100 years ago.
The penny is a zombie coin which lost all practical value years ago, a parasite which now costs more to use than it is worth. The nickel and dime are not far behind. The quarter is still heavily used but has so little purchasing power that it now takes several of them to make even small purchases. The half dollar stopped circulating years ago, possibly because it is too big and bulky and has never worked in vending machines.
The mint is aware of these facts just as much as everyone else, maybe even more. With coins losing most of their puchasing power and electronic transactions quickly replacing cash & coins for even small transactions, coins (and the U.S. mint) are quickly becoming obsolete. With their traditional role of providing coins for circulation threatened, the mint may see silver coins and commemeratives as a lifeline for continued existence.
Extensive research was done prior to the 1982 change in the one cent coin composition. There is no usable metal cheaper than zinc and the post-1982 one cent coin is almost all zinc. The one cent needs to be retired and replaced by rounding cash transactions only to the nearest five cents. The five cent coin needs to change composition to have less copper and nickel and more zinc. The fifty cent coin needs to be eliminated and the dollar bill needs to be eliminated. We have already minted many of the dollar coins that would be needed to transition away from the dollar bill.
Coins are determined by laws controlled by Congress. The mint effectively has to follow the law in minting the coins it mints. If Congress doesn’t like losing money on individual denominations, they can pass laws to fix the problem. I blame Congress for not tackling coinage reform. The platform I outlined above is the correct set of coinage reform initiatives. Write Congress and make it happen. There are hundreds of millions of dollars a year that could easily be saved.
The U.S. Mint is completely blameless for anything regarding circulating coinage. The responsibility for correcting the loss of taxpayer (yes, taxpayer!) money is the result of inaction by the U.S. Congress and the Secretary of the Treasury who oversees the Mint. The situation regarding the cent and nickel has gone on ever since 2006 when the Treasury decided to make a public law prohibiting the melting of pre-1982 cents and all nickels for bullion, under the pretense that it would create havoc with a rapid drop in the availability of the cent for circulation! A denomination that banks don’t want because it is too costly to handle and store, and many people throw in the trash! In 2006, in testimony given to support the ban on melting, there was mention (but no imperative) for the Mint to seek alternative metals/plastics for the cent and nickel. Five years later…. STILL NO RESOLUTION OF THE ISSUES! Meanwhile, a whole lot of copper cents remain hoarded and useless to American industry. No doubt, there are Washington lobbyists for zinc, copper, and nickel to perpetuate the cent and the nickel composition AND the paper contractor for the dollar bills. I hope Vice President Biden could did a bit further beyond a suspension of the Presidential dollars.By the way, if it weren’t for the numismatic items, one mint could be shut down (Philadelphia) and all circulating coinage be produced in Denver for distribution. The need for coins was a 20th century requirement and mintage figures for circulating coins lessens every year. The Mint’s most conspicuous business is to be the world’s largest coin dealer.
Seems to me that regardless of the penny and nickel, the other coins being produced are leading to the mint having a huge profit year after year. Why is there any issue with this at all???? Rounding to the nearest nickel and eliminating the penny is just insane. Every business in America will round up and we all know it. This would lead to billions, perhaps tens or even hundreds of billions more out of our pockets all to save 127 million. No one else sees a problem with spending billions to save millions????????
In all the discussion, I find no mention of the undeniable fact that we have debased our coinage contrary to the intentions of our forefathers who declared silver and gold to be the metals that our coins should be made of. In 1965, we destroyed virtually any chance of having a decent currency by debasing it with the elimination of silver and the reduction of silver in the half dollar which only went on for another five years.
Now we want to talk about “other” metals and paper and electronic 1’s and 0’s. In the years since 1971, the value of our dollar has fallen by a factor of 5. Yet Silver coins from 1964 and before actually have a value that buys MORE than what they did back then.
The problem is not the Penny and NIckle costing more, it’s a problem that our dollar is worth-less each and every day. Since 1965 our coins for the most part have been markers in the currency casino, worthless outside of the casino and at the mercy of the casino for value.
Even the Silver Eagle is denominated as “1$” when it’s value has risen to more than $49 just this year. What is needed is a complete revamping of the currency with the return of silver and gold to make the currency again a store of value instead of cheap markers.
Our forefathers knew what money is, it’s time we re-discovered the truth.
Amen, Ed! Everyone is debating about the best ways to treat the symptoms of the disease of American money and coinage. However, the disease of fiat currency, money manufactured from air on demand, is truly killing this country and impoverishing the American citizen as it inflates to worthlessness.
It seems Ed is the only one with a logical post. Another thing I might add that no one seems to realize is that coin is not debt like all the paper fiat currency circulating. Coin is suppose to represent the value of it’s metal content.
John Blocher – You apparently have no understanding of the role of money in a society. Money serves as a universally accepted medium of exchange. In any given exchange, each party involved much receive an equivalent value in order for the transaction to occur. Since the U.S. coinage was debased in 1965, this equal exchange of value has been lost and those providing real goods in exchange for fiat dollars have been given the shaft. This is why the dollar has become a mere shell of its former self.
Rather than writing Congress requesting to further debase our currency, how about we encourage them to actually strenghten our currency? A reintroduction of silver into the coinage, along with a clamp down on the Fed’s dollar printing, would be an excellent place to start. The nickel is the only coin left that even has an intrinsic value close to its face value, and to encourage its destruction is asinine.
I completely agree to continue with the production of the penny & nickel. Profiting on the other coins is far out weighing the loss by these two coins. By loosing these two, we would loose far more since ALL businesses would round up. That could end up being a loss of hundreds of dollars per year for each man, woman and CHILD in America! A good exercise to prove this point would be for everyone to put their loose change in a jar at the end of the day. At the end of the year, count the change. Separate the pennies & nickels. See how much it is. It would be well over $100-200 I’d bet.
I’d like to see the $1 paper go away. The cost of the coin is higher up front, but cheaper in the long run. The US is the only country I’ve seen that still uses “paper” for its unit denomination. The only other alternative might be the indestructible plastic bills Australia uses.
Regarding the point that silver coins from 1964 and before actually have a value that buys MORE than what they did back then: While waiting in a Christmas shopping line, my wife complained about a candy bar costing $1.25, and so I asked my mom “what did a Snickers bar cost when you were in high school?” She said 20 cents. Then she added that that was a 2oz bar, not the king size 3.7oz bar we were discussing. So I calculated a pre-1964 Snickers price of 10 silver cents per ounce. The 2011 Snickers price (using $27.86 as spot), amazingly, is 2 silver cents per ounce of chocolate, caramel and peanuty goodness.
So I agree with the statement: “In the years since 1971, the value of our dollar has fallen by a factor of 5”.
Another thing to consider is that prior to 1965 virtually every coin cost more to mint and distribute than its face value. All gold coins and silver dollars contained their face value in precious metals and the fractional silver coins contained about 94 cents of silver per dollar face. In that light, I wonder why the fact that two of our current coins cost more than face to mint and distribute is an issue at all. In the 1800s, both gold and silver coins had to be made smaller to prevent profiteering from melting them when the value of their metal content exceeded face by enough to make the endeavor profitable. I can’t help but think that all the flak over our coins is just another diversion being used by congress to keep us from noticing that they are not tackling the really important issues. One hundred million dollars is one hundredth of one percent of one trillion dollars, and how much is our annual deficit? Absolutely nothing needs to be done about our coinage other than to get rid of the one dollar bill once and for all.
While the metal ‘value’ in coins changed significantly, 1965-1970, with the reduction of silver content in circulated coins, that’s not when US coins (money) became a token. Think of Silver Certificates and research the Coinage act of 1873. Totally agree with Clair’s points: Congress deflection, and killing the one dollar paper bill.