Why the U.S. Should Get Rid of the $1 Bill

Paper Dollar bill"Psst! Hey, buddy -- want to earn a dollar? How about 5.5 billion of 'em?"

According to the nonpartisan Government Accountability Office, if America gets rid of its $1 bill and replaces it with a dollar coin, the U.S. will save $5.5 billion on printing costs over the next 30 years.

Do the math. Putting a dollar coin in your pocket could save us $183.3 million a year. That's enough money to:
  • Buy two extra Lockheed Martin F-35 fighter jets a year.
  • Build a bridge most of the way to nowhere.
  • Ppay for every item of furniture sold by Ethan Allen last quarter.
  • Buy every man, woman, and child in America a can of Coca-Cola.
  • Or pay about seven hours' worth of interest on our national debt.
Perhaps most poetic of all, the simple act of switching to a dollar coin would save enough money to give a dollar to every American, once every other year.

laundry dayIt All Comes Down to Laundry Day

It sounds like magic -- free money. But where does it come from, and is it really true that the simple act of "changing" over from dollar bills to dollar coins can save $183.3 million a year?

Actually, yes, it is true. Just think about that dollar bill you forgot was in your pocket when you tossed it into the washing machine.

As currencies go, dollars are pretty flimsy things. Over time and through continued folding, spindling, and mutilation, that Federal Reserve note that began as a nice, crisp bill printed by the Treasury eventually devolves into a pathetic rag. Such damaged dollars are routinely vacuumed up at local savings banks, deposited in bags, and sent to a central processing facility for shredding -- to be replaced with more crisp, newly printed dollar bills.

Lather, rinse, and repeat enough, and the cost of printing all these dollar bills -- and of transporting them in armored trucks, of shredding them, and printing more -- adds up to a hefty bill for the U.S. taxpayer.

In contrast, a metal dollar coin, once minted, can stay in circulation, undamaged and perfectly useful, for decades... or until someone drops it down a storm drain. Specifically, the GAO estimates that the average lifespan of a dollar coin is 17 times that of a printed dollar bill.

The Math Behind Making Money

Printing dollar bills involves heavy reliance on a single commodity used to manufacture the notes -- cotton. When cotton prices spiked in 2010, that pushed up the cost of printing a dollar bill to 9.6 cents (in a more normal year, such as 2008, the cost is closer to 6 cents to print a dollar bill).

Sponsored Links
In contrast, the minting of coin-based dollars gives the government some flexibility in choosing the metals to mix and match to form the alloys that go into the coin. During WWII, for example, when copper became a strategic asset, the U.S. minted steel pennies for several years. In part due to this flexibility, the cost of minting a dollar coin in 2011 dropped to a mere 18 cents -- barely half what it cost to mint the same coin in 2010.

Result: We can mint a dollar coin for two to three times the cost of printing a dollar bill, but the coin will survive in circulation for about 10 times as long as the note.

Making Change

As you can imagine, the savings from such a switch add up pretty quick -- to $183.3 million a year. And yet a lot of folks still rebel instinctively at the idea of ditching the dollar bill. They tout its portability, the way it slips so easily into and (in our consumption driven society, more often) out of the wallet. They complain that dollar coins are too heavy, and too jingly in the pocket. They just don't like the darn things.

To me, though, these objections just don't carry any weight. So let me put this plainly, in terms any American taxpayer can understand: Would you rather switch to dollar coins, or would you rather have your taxes increased by $183.3 million to pay the price of nostalgia?

Well? Which is it? Sound off below.

True story: As a young child, Motley Fool contributor Rich Smith raided his coin collection of silver dollars to fund his addiction to Goetze's Caramel Creams. He regrets it to this day. The Motley Fool owns shares of Coca-Cola. Motley Fool newsletter services have recommended buying shares of Coca-Cola.

Fascinating Facts About U.S. Currency
See Gallery
Why the U.S. Should Get Rid of the $1 Bill

We work for it. We wish for it. We save it. We spend it. We gain it. We lose it. Above all, we need it. Yes, money certainly does make the world go round.

In America, that money takes the form of paper bills (printed by the U.S. Bureau of Engraving and Printing) and coins (produced by the U.S. Mint). However, the coins that jingle in your pocket and the bills you stuff in your wallet today are far different from the ones originally produced in the late 1700s.

As you would expect, over the last 200+ years our currency has seen many, many changes -- both big and small. That's a lot of U.S. money trivia to keep up with! So, WalletPop set out to uncover the most interesting tidbits about American currency and share our favorites with you.

Read our questions and answers to discover 10 fascinating facts about U.S. currency.

                               -By Vicki Passmore

That depends on the denomination of the note. Here are the average lifespans according to the U.S. Bureau of Engraving and Printing (or the BEP):

$1 bill - 22 months
$5 bill - 16 months
$10 bill -18 months
$20 bill - 24 months
$50 bill - 55 months
$100 bill - 89 months

Bills that get worn out from everyday use are taken out of circulation and replaced. Coins usually survive in circulation for about 25 years.

Just under half of the notes printed by the Bureau of Engraving and Printing are $1 notes. In fiscal year 2009, the exact percentage was 42.3%.

Martha Washington is the only woman whose portrait has appeared on a U.S. currency note. It appeared on the face of the $1 Silver Certificate of 1886 and 1891, and the back of the $1 Silver Certificate of 1896.

No portraits of African Americans have appeared on paper money, but commemorative coins were issued in the 1940s bearing the images of George Washington Carver and Booker T. Washington, followed more recently by the release of a Jackie Robinson coin. Paper money does bear the signatures of four African American men who served as Registers of the Treasury (Blanche K. Bruce, Judson W. Lyons, William T. Vernon, and James C. Napier) and one African American woman who served as Treasurer of the United States (Azie Taylor Morton).

The largest bill ever printed was the $100,000 bill; it was actually a Gold Certificate issued in 1934. These notes were used for transactions between Federal Reserve banks and were not circulated among the general public. President Woodrow Wilson was depicted on the bill.

A mile of pennies laid out is $844.80. By this standard, America is about $2.5 million wide, coast to coast.

The Federal Reserve Bank of San Francisco describes what this motto means and how it came into use:

"E Pluribus Unum" is used on many of our country's seals and most of our currency and coins. During the American Revolution, the Continental Congress issued a three-dollar bill bearing the motto, "Exitus in Dubio Est," which translates to "The Outcome Is in Doubt." Despite congressional pessimism about the war, John Adams, Ben Franklin, and Thomas Jefferson proposed the more prophetic motto, "E Pluribus Unum" -- "One From Many." The motto first appeared on the Great Seal of the United States in 1782. The Great Seal, however, didn't appear on U.S. currency until 1902.

The so-called "all-seeing eye" that sits atop the pyramid on dollar bills was included as a reflection of divine providence. This was not the only option that was considered to fulfill that desired theme. A depiction of the Children of Israel in the Wilderness was also discussed as a possibility.

Surprise! Our so-called "paper currency" is actually not paper, but is made of cotton/linen material. It consists of a 75% cotton / 25% linen blend with silk fibers running through it. If it were made of paper, it would fall apart if you accidentally left it in your pants pocket and sent it for a whirl in your washing machine.

As we mentioned before, accidents happen. Fortunately, our "paper currency" is built to take quite a beating. The BEP says it would take 4,000 double folds (first forward, and then backwards) before a note will tear.

According to the BEP, it is. Its website explains: "The BEP redeems partially destroyed or badly damaged currency as a free public service. Every year the U.S. Treasury handles approximately 30,000 claims and redeems mutilated currency valued at over $30 million. Experts examine damaged currency and can approve the issuance of a Treasury check for the value of the currency determined to be redeemable."


Are Contributions to School District Programs Tax Deductible?

The IRS allows you to claim a deduction for the donations you make to qualified organizations. These organizations include more than just charities and will include any school district program that does not operate for profit and is solely supported by state and local governments.

Read More

Brought to you by TurboTax.com

What is Form 1099-NEC?

The IRS has reintroduced Form 1099-NEC as the new way to report self-employment income instead of Form 1099-MISC as traditionally had been used. This was done to help clarify the separate filing deadlines on Form 1099-MISC and the new 1099-NEC form will be used starting with the 2020 tax year.

Read More

Brought to you by TurboTax.com

Do I Qualify for Earned Income Credit While on Unemployment?

Receiving unemployment benefits doesn't mean you're automatically ineligible for the Earned Income Credit, but there are other requirements you'll also need to satisfy to claim the EIC.

Read More

Brought to you by TurboTax.com

Guide to Short-term vs Long-term Capital Gains Taxes (Brokerage Accounts, etc.)

Not all capital gains are treated equally. The tax rate can vary dramatically between short-term and long-term gains. Generating gains in a retirement account, such as a 401(k) plan or an IRA, can also affect your tax rate.

Read More

Brought to you by TurboTax.com
Read Full Story
Your resource on tax filing
Tax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.