Calendar No. 1042

95TH esoonES SENATE No. 91RT

THE SUSAN B. ANTHONY DOLLAR tWT OF 1978

REPORT

OF THE COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

TO ACCOMPANY S, 3036 together with ADDITIONAL VIEWS

AUGUST 16, 1978.-Ordered to be printed

U.S. GOVERNMENT PRINTING OFFICE 29-010 WASHINGTON: 1978 COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIR WILLIAM PROXMIRE, Wisconsin, Chairman JOHN SPARKMAN, Alabama EDWARD W. BROOKE, Masachusewt HMW=SON A. WtLLIAMS, It., New leter JOHN TOWIR, Texas THOMAS 3. McINTYRE, New Hampshire JAKE GARN, Utah ALAN CRANSTON, Coltenfl , JOIN HF Z 11, Pennsylvania ADLAI R. STEVENSON, Illinois RICHARD 0. LUGAR, Indiana ROBERT MOR0AN, North Croliga 4RRIBON ,bSi MITT, New Mezleo DONALD W. R*EGLE, It., Michigan PAUL S. SARBANES, Maryland fNmNm A. Mcan, St2ff Director zinzm u S. Buc.zy, Minority taff Dfrecto Msn.lo R. MAvzR, staff Autstant PAUL FRflDSDNlb&, Mlwtu Poaston $O f Member (11) Calendar No. 1042 95rH CONGMSS SENATE REPORT 2d Se8saon fTNo. 95-1120

THE SUSAN B. ANTHONY DOLLAR COIN ACT OF 1978

AUGUST 16, 1978.-Ordered to be printed

Mr. PROXMIRE, from the Committee on Banking, Housing and Urban Affairs, submitted the following REPORT

[To accompany S. 3036] ThelCommittee on Banking, Housing, and Urban Affairs, to which was referred the bill (S. 3036) to amend the Coinage Act of 1965 to change the size, weight, and design of the $1 coin, and for other purposes, having considered the same, reports favorably thereon with amendments and recommends that the bill as amended do pass.

HISTORY OF THE LEGISLATION S. 3036 to authorize a new dollar coin was introduced in the Senate on .May 3, 1978, by Senator William Proxmire, chairman of the Com- mittee on Banking, Housing and Urban Affairs, and cosponsored by Senators Williams, Cranston, McIntyre, Morgan, Riegle, and Lugar of the committee. With the exception of section 3 requiring the likeness of Susan B. Anthony to appear on the face of the new coin, S. 3036 is identical to the administration's legislative recommendation sub- mitted to the Congress on April 17, 1978. The design proposed in the administration's draft bill called for a stylized liberty head on the face of the coin and a soaring eagle design on its reverse side. A hearing was held on July 17, 1978, to receive testimony from Hon. Mary Rose Oakar, Patricia Schroeder, and Jim Leach of the U.S. House of Representatives; Ms. Stella B. Hackel, Director, Bureau of the Mint; and representatives of the banking, retail, and vending machine industries. The committee met in open markup session on August 1, 1978, and unanimously approved S. 3036, with two amendments which are herewith reported. (1)

S.R. 1120 NATURE AND PU1POB3 Oi THE LEGISLATION 303 3thQtef the mini and iuance of a new circul ti dollar coin which would be sightTy larger than a quarter and approxi. mately one-third the weight of our present dollar coin. The legislation would also, for the first time in our history, provide for the likeness of an American woman to appear on the face of the corn. The committee unanimously agreed to an amendment by Senator Marn to contiuue the Apole Eleven del' on the reverse side of the coin. This design presently appears on the current dollar coin and is emblematic of the symbolic eagle of the Apollo Eleven landing on the moon. The committee also unanimously agreed to a technical amend- ment, recommended by the adlaitistratwoD, to cheage the size of the new coin from 8.5 grams to 8.1 grams. This change is to accommodate some of the leading coin equipment manufacturers who advised the Secretary of the Treasury that a slightly lower weight coin would facilitate high-speed coin handling.

LEGISLATIVE BACKGROUND The current dollar coin, the cupr&.nlekel clad dollar, was first au- thorized by the Congress in 1970 as replacement for the 90 percent standard silver dollar, which, even though not minted after 1935, was a statutory part of the Nation's coinage ystem. In the Coinage Act of 1965, which eliminated silver from the dime aind quarter, the Con- gress imposed a o-year moratorium on the production of standard silver dollars. In 1970 the Congress repealed the Department's statu- tor authority to mint and issue the standard silver dollar and author- ized a base metal dollar coin having essentially the same size as the silver dollar. Thus, the present dollar coin has a diameter of 1.5 inches and weighs 22.68 grams.

NEED FOR THE LEGISLATION The present dollar coin has no significant future role in our coinage system because of its cumbersome size and the availability of accept- able substitutes. Since 1971, when the Bureau of the Mint first issued the present dollar coin, public demand has averaged less than 1 per- cent of the total coinage outflow from the Bureau to the Federal Re- serve banks. According to projections of demand, there will be no significant increase in requirements for this denomination in the fore- seeable future. The decision to change the size of the coin was originally recommended by the previous administration, after an independent review of our coinage system. The basic rationale for a small dollar coin is to increase the flexi- bility of consumer transactions and offer potential cost savings to the U.S. Government. The increased use of vending machines to save labor costs, and the higher prices for items which consumers are al- ready accustomed to purchasing from machines, are expected to pur- suade the public that the convenience of using vending machines out- weighs any inconvenience of carrying an additional corn denomination. Moreover, the experience of other countries, notably West Germany with its 2 deutsche mark (U.S. $0.99), demonstrates that large denomination coins in the same range as the new dollar coin can circu- late and can find use in vending applications. S.R. 1120 The committee has been informed that large scale production of automated machines which would accept dollar coins could be ac- comliahed in 18 to 24 months after legislation is enacted, Consider- ing the time required for production of new automated machines and the likely initial reluctance on the part of the banks, retailers and con- sumers to the use of the new coin, the Treasury estimates that it would probably take 3 or 4 years after the passage of legislation to achieve widespread circulation.

GOVERNMENT COST SAVINGS The current coin costs about 8 cents each to produce compared to the cost for the Anthony coin which would be 3 cents each. This is a savings of greater than 60 percent pet coin compared to the existing coin, Based on the Miat's current production volume of 90 million Eisenhower coins, the Anthony coin would save $4.5 million per year. With increased production generated by success- ful circulation, the savings would multiply. In addition to the savings arising from displacing the high-oost Eisenhower coin with the lower cost Anthony coin, additional savings would accrue to the Treasury and the Federal Reserve to the extent the Anthony coin displaces dollar bills currently held by the public. It costs 1.8 cents to manufacture a dollar bill compared to the 3 cents estimated for the Anthony coin, However, a dollar bill has an average life of only 18 months compared to an estimated 15 years for the An- thony coin. Because of the longer life of the coin, significant savings would be realized if the public substituted coins for bills. If 20 percent of the $2.4 billion in dollar bills outstanding were displaced by the Anthony coins, Treasury estimates annual production cost savings of $4.8 million and the Federal Reserve estimates annual savings in handling costs of 50.8 million for a total annual savings of $5.6 million. These savings, when combined with the $4.5 million savings on the Eisenhower coin, could ultimately exceed 510 million a year.

RATIONALE BEHIfD THE ANTHONY DESIGN President Lincoln was the first individual to be commemorated on a U.S. circulating coin. Prior to this, a stylized liberty design had been predominant on our coinage until the early part of this century when the decision was Made to celebrate Lincoln's centennial by placing his 1iage on the penny. Since then, with one exception, only Presidents have been selected to appear on our circulating corns. Our present circulating coinage system is as follows: Eisenhower, dollar coin; Kennedy, half dollar; Washington, quarter; Roosevelti dime; Jefferson, nickel; and Lincoln, penny. Benjamin Franklin, who holds a quite unique position in our history, appeared on the half dollar for a time. The administration did not choose to select an actual American woman to be honored on its new coin, because it did not wish to depart from already established precedent. Indeed, the suggestion was made by the administration that its recommended return to the traditional female-liberty concept after all these years represented a suitable symbol for more than one-half of the American electorate.

S.R. 1120 The committee did not concur with the administration's recom- mendation and chose to approve the likeness of Susan B. Anthony to appear on the face of the coin. It is the committee's opinion that Susan B. Anthony, like Benjamin Franklin, holds a unique place in our Nation's history and her commemoration on the new coin is con- sistent with already established precedent. It was the 19th amendment to the U.S. Constitution-known as the Anthony amendment, which gave women the right to vote-that fundamental act of political life without which all other rights are meaningless.

OTHER PROVISIONS OF THE BILL To honor and commemorate President Eisenhower, the Treasury would continue to mint 40 percent silver-clad dollars, in the current 1.5 inch diameter size, bearing the Eisenhower-Apollo 11 design. These silver-clad dollars, which were first authorized in 1970, are not a part of our circulating coinage, but are sold directly by the Treasury to collectors and the general public in proof and uncirculated quality. The legislation would also authorize the Secretary of the Treasury to continue the production and issuance of the current $1 coin for cir- culation throughout 1978. This provision would assure an orderly transition from the current dollar to the new dollar coin proposed in S. 3036. SECTION-BY-SECTION ANALYSIS Section 1 requires that the bill be known as the Susan B. Anthony Dollar Coin Act of 1978. Section 2 would amend existing law, section 101 (c) (1) of the Coinage Act of 1965, as amended (31 U.S.C., 391(c)(1), to provide for new specifications for the cupro-nickel clad dollar coin. The current statu- to provsin provides that the dollar shall be 1.500 inches in diameter and weigh 22.68 grams. This section would reduce the size of the dollar coin to 1.043 inches in diameter and to 8.1 grams in weight. Section 3 of the bill requires that the face of the coin bear the likeness of Susan B. Anthony, and the reverse side continue the Apollo 11 statu- tory design which presently appears on the current cupro-nickel clad dollar coin. Section 4 would amend existing law in order to enable the Secre- tary to continue the current Eisenhower-Apollo 11 statutory design on the 40 percent silver-clad special dollars made for collectors. Section 5 would authorize the Secretary to continue minting the current cupro-nickel clad dollars for circulation throughout 1978.

REGULATORY IMPACT STATEMENT The committee has been advised that, should the new Anthony coin replace dollar bills in circulation, additional handling costs may be incurred by the banking and retailing industry although precise esti- mates are not obtainable. On the other hand, a representative of the vending machine industry has testified that cost savings would be realized by the industry because of the high cost of dollar changing equipment and the greater security and reliability of coin-operated machinery.

S.R. 1120 The Treasury has concluded that the legislation would have no ap- preciable inflationary impact on the price of products sold through win-operated vending machines due to the competitive nature of the industry. The Treasury also estimates the legislation could have a itemsdeflationary through effect vending to. the machines,extent that thereby it permits increasing the sale theof hgher degree cost of competition involved in the sale of such products. The committee does not anticipate the legislation will have any of paperwork imposed on effect onersonal privacy or on the amount

CORDON RULE Tn the opinion of the committee, it is necessary to dispense with the requirements of subsection 4 of rule XXIX of the Standing Rules of wththe Senate this report. in order to expedite the business of the Senate in connection COST OF THE LEGISLATION Pursuant to section 252(a)(1) of the Legislative Reorganization Act of 1970, as amended, the Committee accepts as its own estimate of the cost of carrying out the legislation the blowing cost estimates as prepared by the Congressional Budget Office.

U.S. CONGRESS, CONGRESSIONAL BUDGET OnrICxn, Washington, D.C., August 11,198. H:on.Caiman, WILLIAM Committee PROXMIRE, on Banking, Houing, and Urban Aftairs, U.S. Snate , WaAeingt, D.C .

BudgetDmAR~ Act MR. of CHAIRMAN: 1974, the CongressionalPursuant to sectionBudget 403 Office of thehas Congressional prepared the attaied cost estimate for S. 3036, the Susan B. Anthony Dollar Coin ActShould of 1978. the committee so desire, we would be pleased to provide further details on the attached cost estimate. Sincerely, ALICE M. ELYLIN, Director.

CONGRESSIONAL BUDGET OFFICE COST ESTATE

AUGUST 11, 1978. 2.1. Bill number:title: Susan S. 3036.B. Anthony Dollar Coin Act of 1978. 3. Bill status: As ordered reported by the Senate Committee on Banking,4. Bill purpose:Housing, TheDurposeand Urban ofAffairs, this legisation August 1,is 1978.to costethe cur- rent obverse sid e ofe dollar con from a likeness of ht D. Eisenhower to Susan B. Anthony, The bill would also alter e size and weight of the coin, making its size and weight between those of a quarter and a half dollar.

S.R. 1120 I,COST ESTIMATE Wiscalyem; inStiowof dollf,

1979 10D0 1981 1982 9 g fae#Mrd*ft sublui" of fo outs for -- 3.1 4 ;8 4.3 Display ent of $1notds ...... -. 4 () .6 1.2 2.0 Tbt Wr,. 2.3 & I .I 5.0 6.3

I Less than $6.6fmitIIon.- The costs of this bill fall within bndgdt function 800. 6. Basis of estimate: For purposes of this estimate, an enactment date of October I, 19%,'has been assumed. The estimated savi that would be incurred as a result of pro- ducing the smaller, ig ter coins were calculated by first estimating the number of coins that would be produced over the projection period (assuming no displacement of $1 notes). This was done by increasing the current number produced by the ptojected rate of increase in ONP for fiscal years 1979 through 193. The Treasury Department estimates that the production costs of the new coin will be 3 cents each in fiscal year 1978, 5 ectts less than the Eisenhower coin. These two production costs were also inflated, and then applied to the num- ber of coins to be pr6dfted in each year to derive the difference in total cost between the two coins. Tuolfng costs in the first year for the new coin s estiated t& be 50,000. Since the new coin will be smaller and lighter than the Eisenhower coin and more eontvenient td haAdle, and since inflation is likely to increase the cost of goods for which coins are required (such as items sold in vending machines), making the costs closer to $1, it is reason- able to assumie that the use e the dlla coin may increase slightly over time, thereby decreasing the demand for $1 fotes. The amount o( displaement has been assumed to be 1 percent of $1 notes in cir- culation in the first year, increasing by an additional 1 percent each year, The estimated savings (or costs, as in the first year) as a result of displacement were calculated by first estimating how many dollars wil in in the, system each Sear (using the GNP inflator), and then applying the displacement rates to these figures. Based on Treasury Department and Federal Reserve data, it currently costs 1.8 cents to manufacture the $1 note and handling charges are $2.19 per thousand. Again, th new tim woukd cost approximately 3 cents to produce, and would have a handling cost of 51 cents per thousand. These costs have been inflated over the projection period. This process results in a net grin ower time, because dms have to be replaced much less fre- quently than note and have a lower handling cost. (The average life a $1 note is 18 months: the life of the coin is appruzmately 15 years.) 7. Estit te comparison: None. 8. Previous CBO estimate: None. 9. Estimate prepared by Kathy Weiss. 10. Estimate approved by James L. Blum, Assistant Director for Budget Analysis.

S.R. 1120 ADDITIONAL VIEWS OF SENATORS GARN, TOWER, HEINZ, AND SCHMITT Few would quarrel with the desirability of honoring e4 female his- torical perpuge o4 on American coin. Nor is the choice of Susan B. Anthony, tho greoA fighter for women's suffrage, being opened to ques- tion. There seams, however, to be a prior question, which we fear may not have Non ncvrded the thorough debate and study which it de- serves. That question is whether it is necessary or desirable to mint a new size and weight dollar coin at this time. Would the American public be willing to accept and use a new size and weight dollar coin? Certainly, it will be smaller and lighter. The expectation of the Treasury is that the convenience afforded by these new dimensions and mass will lead to wide acceptance and use by the American public. But, given the extremely low rates of usage of the half-dollar and silver dollar coins, one would have hoped that the Treasury would have studied this question with a good deal more thoroughness than it has. At the hearings, Stella B. Hackel, Director of the Bureau of the Mint, admitted that there had been neither survey research nor mar- keting research of any kind done in preparation for the Treasury's introduction of the new dollar coin. She argued that such studies would probably p rove fruitless, since the proposed coin would be entirely new in size and mass. We find that argument unconvincing. Perhaps such studies would be inconclusive, but they certainly would be informative. Experts in survey research argue that one can have a great deal of confidence in a sample of as few as 3,000 people as long as the sample is selected in a scientifically representative manner. With regard to marketing research, certainly no major U.S. corporation would consider bringing out a new product without first sampling and testing the market as to need and receptivity of the consumer. Yet the U.S. Treasury seems to be about to embark on this major redesign of the coinage, the first one in 44 years, on the basis-so Director Hackel informed the committee-of information gleaned from unsolicited letters and informal discussions between members of the Treasury Department and representatives of bankers, retailers, vending machine operators, and the general public. At the hearings, representatives of the banking community, the retailers, and the vending machine operators expressed a willingness to cooperate with the Government to make the new Anthony dollar coin a success. But, Mr. Vincent B. Burke, of the American Bankers Association noted that the handling of the new coin would entail costly new equipment or modification of old equipment for all con- cerned with the daily handling of money. This gives bankers and retailers a vested interest in the success of the new coin. However, he went on to affirm: "We must voice our concern about any effort to reduce costs in the public sector and shift them to the private sector." We share that concern. (7) S.R. 1120 The Treasury estimates that the total savings which would accrue from a mere 20 percent replacement of dollar bills by the new dollar coin would exceed $10 million per year. This, of course, is based on the demand and usage of $480 million worth of Anthony dollar corns per year, more than a fivefold increase from the current demand for the Eisenhower dollar coin. We sincerely hope that such demand is realized. If not, we fear that bankers, retailers, vending machine operators, and the general public will pay the price for a costly experiment. Jan GARN. JoHN TOWER. H. JOHN HEINZ III. HARRISON SCHMITT. 0

S.& 1120