Sacagawea returned to America last month. Actually, a new golden dollar coin bearing the image of Sacagawea, began circulating last month. It premiered to rave reviews! This new coin features the profile of Sacagawea, the Shoshone woman who served as a guide for the Lewis and Clark expedition in 1804-1806.
In this lesson you will:
- Describe the golden dollar coin.
- Compare the golden dollar to the Susan B. Anthony silver dollar.
- List the advantages that coins have over paper money.
- Calculate the profit to the US Treasury on golden dollars.
The Golden Dollar Coin
See "The Golden Dollar Coin" at www.usmint.gov/mint_programs/golden_dollar_coin/index.cfm?action=sacDesign .
Here you will find a number of facts related to the new golden dollar coin. One of the most surprising of these facts is that the coin contains no gold!
What is the primary chemical element used in the composition of the golden dollar?
Does the golden dollar have smooth or rough edges?
- What other distinguishing features does the golden dollar have?
Click on the link "Compare it to the Susan B. Anthony Dollar" at this web site or simply go to www.usmint.gov/mint_programs/golden_dollar_coin/index.cfm?action=sacFAQ .
How does the new golden dollar compare to the previously issued Susan B. Anthony dollar?
The smooth edge of the new golden dollar is similar to the nickel's edge. This is a departure from the practices the U.S. Mint has traditionally used in designing coins. The U.S. Mint, the government agency in charge of manufacturing coins, medals, and coin-based products, typically uses a reeded (or grooved) edge in the design of higher-denomination coins. Try to guess why some coins have grooved edges and others don't.
See "Why do some coins have grooves on the edge? And why are they there?" at www.usmint.gov/about_the_mint/fun_facts/index.cfm?action=fun_facts10 .
Did you guess correctly? Some coins have grooved edges because once upon a time, coins contained precious metals. Some people were tempted to shave some of the gold or silver off of the coin in order to recover some of these precious metals. Minting coins with reeded edges made it more difficult for people to do this.
Many years ago, our money consisted of coins that were made of real gold. These coins could be used to pay for goods and services or could be sold for their gold content. Some people tried to shave some of the gold off of their coins while still using the coin to make payment. By doing this, they would collect valuable gold shavings and receive full value for their coins in exchange. The U.S. Mint discouraged this practice by making coins with grooved edges. Since the mineral content of current U.S. coins is worth less than the coins' face value, people no longer shave the edges off of their coins.
Activity: A Blind Touch Test
You can all recognize coins by sight, but can you differentiate coins by touch? Your teacher is going to put a set of coins in a bowl and ask you to identify them. What is the catch? You are going to be blindfolded. One of the criticisms of the Susan B. Anthony dollar is that it feels (and even looks) like a quarter. The U.S. Mint has conducted tests on the feel of the new golden dollar. They claim that it is distinguishable from other coins by feel alone. This will be useful for you if you ever find yourself fumbling around in your pockets for correct change on a dark night!
How did you do in distinguishing among the different coins?
Which was more easily identified, the new golden dollar coin or the old Susan B. Anthony dollar coin?
Why Using Coins Make Sense
Talk with some of your classmates to brainstorm a list of advantages that coins have over papaer money. There are many potential consumer benefits to using the golden dollar coin instead of paper money. Coins are more easily inserted into machines. Whether you are buying soda pop, stamps, or a sandwich from a machine, coins are almost always easier to use as payment. This has the added advantage of reducing the amount of time that it takes to complete a transaction. In addition, coins cannot be torn or burned.
The U.S. Mint thinks that using the golden dollar coin will increase business sales revenues. This is because consumers tend to part with coins more readily than bills, they are prone to use coins for impulse spending on vended products. Larger-denomination coins also contribute to selling a greater volume of higher-priced items.
The new coin can also reduce business costs. This is because money-handling costs are expected to be lower. In addition, there will be fewer costs associated with having to repair vending machine bill acceptors.
Why does the U.S. Mint think that using the golden dollar coin will increase business sales revenues?
How can the new coin reduce business costs?
The U.S. Treasury will receive a huge benefit from the issuance of the new coin. This is because the coin costs the U.S. Mint less to make than its face value. Thus, for every additional golden dollar placed in circulation, the U.S. Treasury "makes money" (note that the U.S. Mint returns its earnings to the Treasury department). How does this work? When a person, a bank, a business, the Federal Reserve, etc. submits an order to the U.S. mint for the new golden dollar, they must pay a full dollar for the dollar they are receiving. Since the U.S. Mint is receiving one dollar for something that costs less than a dollar to produce, this transaction is very profitable.
Read "U.S. Mint Says Public is Embracing New 'Golden Dollar' Coin" at www.usmint.gov/pressroom/index.cfm?action=press_release&id=121&formBool=AND&formYear=2000&group=4 .
How many golden dollars does the U.S. Mint expect will be placed in circulation by the end of the year?
It will cost 12 cents to produce each golden dollar coin.
What is the "profit" on each golden dollar that is circulated?
Suppose that 1.2 billion new golden dollars will be placed into circulation by the end of 2000. What will the total "profit" be from this operation?
It costs 3.5 cents to produce a one dollar bill. Since the golden dollar coin costs more than three times to make than a dollar bill, can you think of why the government believes the golden dollar coin is less expensive than the dollar bill to use for low denomination transactions?
In January 1999, the U.S. Mint introduced its "50 States Quarters" program by circulating new quarters designed to honor the unique history and traditions in each state. The program will honor five states each year, until a new quarter has been introduced for each state by the end of 2008. In the next part of this series on understanding U.S. money, we will explore some of the interesting economic developments that have occurred since the onset the "50 States Quarters" program. Look for the upcoming EconomicsMinute lesson, "How Much is this Quarter Worth?"