Within the omnibus spending bill recently passed by Congress is the obscured Division E, Title I, Section 117, which prevents the U.S. Treasury Department from redesigning the one dollar bill. Despite the mostly cosmetic alterations to the $5, $10, $20, and $50 bills—color changes, added watermarks, etc.—the design of the one dollar bill has remained unchanged for over 50 years.
Keeping the Dollar
Bills are typically updated to prevent counterfeits, so why hasn’t George Washington received the same consideration? Well it comes down to preservation. To clarify, this is no matter of the country’s economic security, national heritage or even symbolic integrity. No, this is about sustaining one of the country’s most beloved institutions—the vending machine industry.
The vending industry has lobbied against changing the dollar because it would force them to undergo the costly process of updating their machines to recognize the new bills.
In 2008, the National Automatic Merchandising Association (NAMA) estimated that on any given workday, 20 million Americans will use their 7 million machines. (It should be noted that the total number of vending machines in the country has dropped to 4.6 million as of 2014.)
Due to its low face value the one dollar bill is less prone to counterfeiting than other denominations, a claim NAMA touts as a perfect reason to leave the bill as-is. Apparently, Congress finds this to be a compelling argument. In the early 2000s, NAMA succeeded in preventing the Bush administration from changing the bill.
So why does this matter?
The decision sticks a fork in efforts to replace the $1 note with a viable $1 coin. The Treasury Department actually does mint a one-dollar coin, the Presidential dollars, but their use has been next-to-nothing.
Similar to its efforts to stop any redesign to the $1 bill, the vending machine lobby also ensured (in the recent past) that virtually all snack and soda machines would not have to undergo costly adjustments to accept the coins, eliminating perhaps the largest source of demand for a one-dollar coin.
Evaluation of Lobbyists’ Argument
Interestingly enough, the United Kingdom has engaged in a similar conversation with its vending industry. In fact, the current pound coin was introduced in 1983, specifically to accommodate the growing number of vending machines.
Despite the pound coin’s low denomination, though, many have tried and succeeded in counterfeiting it. Today, nearly three percent of the pound coins in circulation are counterfeit.
Concerted efforts have allowed authorities to confiscate two million of the faked coins annually. With an estimated £47 million ($70,218,940) worth of phony coins still in circulation, however, Her Majesty’s Treasury will need to implement new measures to ensure the security of their currency.
In 2017, the Royal Mint will introduce an updated pound coin, a 12-sided coin, reminiscent of the threepenny bit (minted in 1937 and pulled out of circulation in 1971 following decimalisation). The new coin will be made in two colors, and will be bimetallic. The Treasury asserts it will be the “the hardest coin to fake in the world.”
According to Newsbeat, vending machines will be able to take the new coins after a simple software upgrade. Of course, we do not know for sure exactly what makes the U.K.’s vending machines so much more adaptable than ours—but we can probably assume that it is nothing.
The above illustration disproves the argument that vending machines will require “costly adjustments” to accept new currencies. The question remains, however, if the U.K. government can ignore the unfounded protestations of its closefisted lobbyists, why can’t our government do the same?
It’s a sad day, when the lobbies have more control over our monetary policy than the institutions tasked with doing so.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.