On the eve of the 2010 Lincoln cent launch ceremony, United States Mint Director Ed Moy met with about 60 coin enthusiasts to answer questions and share information about the US Mint and its coin programs.
This second article installment focuses on Mr. Moy’s discussion of a variety of topics, to include projected mintage levels for the 2010 penny, nickel and dime expectations, circulation coin design improvements, production processes, and coin distribution answers — like how the new shield cent made its way into Puerto Rico before the coin was ceremoniously released on February 11, 2010. (Read the first coin forum article where Moy discusses America the Beautiful Quarters.)
The following questions and answers are transcribed as carefully as possible from the unscripted coin forum, but are not to the accuracy or excitement level of actually attending the event.
Q: What happened to the 2009 dimes and nickels especially the Denver Mint and second, what would it take to get the president off the coins and get some beautiful designs?
A: Getting back to the point I was making before… 2009 was probably one of the worst years for our economy, and it was a slow one. Because of the slow volume of activity… they [Federal Reserve] didn’t really need a whole lot of new coins until the economy picked up again. What the Federal Reserve ended up doing was ordering and putting [into circulation] those coins that had different designs on them like the quarters, the presidential dollars, and the pennies. That was it. They had plenty of coins in their vault and so as a result, we gave them nominal nickels and dimes. That’s why you’re not seeing them.
You see a Philadelphia Mint [struck coin]. You see them if you’re in Philadelphia, but nobody has seen the Denver Mint that I know of.
A: And that’s really a function of how the Federal Reserve stores their inventory. Roughly, we made the same amount in Denver that we made in Philadelphia. And so put yourself in the Federal Reserves position. Their first priority is to make sure commerce works. And so to them a penny is a penny is a penny. It doesn’t matter if it’s an Indian head penny or a Lincoln new year or a Lincoln Memorial or a Lincoln bicentennial penny. They don’t care as long as it’s useful as a penny. And so when they store that, they don’t mark the boxes and say: "this is this and this and this." All they know is when Citi Bank calls up and says we need 200 boxes of pennies, they just take a fork lift in there and take the first box of pennies they see and shovel them out. And so who knows what some of these pennies are, their designs.
Your second question, you know, every coin the United States makes, is authorized by Congress. Congress tells us we have to make quarters, we have to celebrate national parks, we do five a year. All of that, if a new law came that authorized that [design] change. There’s one other way that things change, but it’s too complicated. If you’ve got the same design of the coin for a really long time you can make that change. No one’s ever done it before, because Congress made very clear that they have the authority to determine these designs. And so, no Mint Director has kind of stepped out and said we’re going to change the Roosevelt dime to Ronald Reagan. It just never happened. Just Congress does it. Even though the law kind of allows it.
Q: I’m curious about the circulating coins in 2009, also 2010, why would Puerto Rico receive them in circulation before the United States would?
A: The Federal Reserve orders the pennies, and we deliver them to all Federal Reserve depositories, and then from there, the Federal Reserve distributes them on the basis of when banks decide to order them. And it just happened that Puerto Rico was one of the first ones who needed more pennies, and so they ordered them and the Federal Reserve just picked up a bunch of them, sent them over there, and they just happened to be the 2010 pennies. Again, there’s no Federal Reserve depository where they store the [new] coins, they don’t mark the coins really. It’s just a matter that Puerto Rico’s banking system was the first one that needed pennies this year, and they just happened to get the 2010 pennies.
Q: You can blame rightfully the Federal Reserve for not getting the coins out, and I’ve tried all this last year to get pennies and quarters like that, it’s extremely hard, so I want to commend you on the direct ship program. And ask, can that be extended beyond dollars? Would you do it with the quarters? It’s a wonderful program and I would think that anybody that’s been involved with that would agree with me.
A: For those who are unfamiliar… the Federal Reserve is the exclusive distributor of those coins [we make for circulation]. When you come tomorrow to see the unveiling of the coin and do your exchange, the United States Mint isn’t bringing pennies for you to exchange. That’s not our role, instead, we let the bank who went to the Federal Reserve to get them, and they’ll get the change for you.
And so just to clarify roles, the United States Mint makes the coins, its the Federal Reserve’s job to distribute them. Given that, the reason we’ve got the direct ship [before explaining the reason, Mr. Moy explains the program].
For those of you who might not be familiar with it, we had a requirement that we had to make a certain amount of Native American [$1] coins. The Federal Reserve said we’ve got plenty of dollar coins. People use them once and usually gives them back through the system and our reserves are really burdened now. The Mint has to make them, but nothing says the reserve has to distribute them, [or] order any of them. So we had to figure out some way of getting them out into circulation.
That’s when we came up with the Direct Ship Program. If you’re a business and you wanted to order these and you’re high volume but not what a bank might have, you can order directly from the Mint. It’s very safe and its been very successful getting the Native American dollar coin out in circulation. Now there’s been some abuse with that. Some people have been charging on their credit cards, and get the coins so they get frequent flyer miles. Then they take the coins, then automatically go to the bank, dump them into the bank, or use that to pay off their credit card. So there’s been a little scheme, but by in large that’s really been a small percentage. I don’t know what it was. It was less than a percent of the whole, but still it was controversial enough that it made a lot of newspapers.
So there’s been some abuse of the program, but bottom line to answer your question, it’s been successful getting the dollar out. We’ve used that because the Federal Reserve wasn’t ordering those other coins. It would begin blurring the the lines if the Mint did that for commonly circulated demanded coins. If we did it for pennies or for quarters, then that would really get us into a gray area. So not for now.
Q: Do you have a projected Mintage for the 2010 penny?
A: So far, the Federal Reserve has hinted that — it changes because they reverse at the end of the month, but they project for all of 2010 for it to be in the 2.2 billion range. Now, to give you a prospective, that’s a lot of coins. That’s more coins than virtually any country in the world does for all its currency. So it shows the United States is the biggest person on the block but at the same time, in 2007 at our peak production, we were making roughly 8 billion pennies. So we’re at 25% of our highest level.
Q: I understand the Federal Reserve distributes it, but Atlantic City ordered practically no coins for 2009. Why doesn’t the Mint make it accessible to the average person, to be able to order directly from the Mint, if we can’t get them from our normal distribution centers?
A: The enabling laws that set up the Mint and the Federal Reserve say different roles (or rules) for each. The role of the Mint is to manufacture the coin at the level the Federal Reserve needs or for the economy to function. The Federal Reserve’s job is to give the coins to the banks. So what you’re saying is, because of the poorer economy the banks aren’t ordering as much, and is there a different way? And this gentleman said, why not use the direct ship program? But that was just used for a specific coin that the Federal Reserve wasn’t ordering. It was very useful there because they didn’t care. If we decided to expand that to coins that are commonly used, we would get some controversy.
Q: There are not any nickels and dimes through the Federal Reserve in Atlanta, so consequently, there were eight states in the southern sections that received no 2009, only pennies, and … so consequently, as collectors, we have to go outside and buy them at premiums. If I’d just be able to keep up. If there was just some admittance to bridge that gap there when this happens.
A: I know that sounds logical that there should be something to bridge the ends but the way the laws, again, have set up the roles of the Mint and of the Federal Reserve… [if] we start driving under our wings, that’s when we start getting into trouble. The Mint is also not making nickels and dimes … But with Native American dollar coins, the Mint was mandated. Whatever presidential dollars were made, 20% of that had to be Native American coins that the Federal Reserve can order. We had to figure out some way of getting the dollar out there and it was a mutually cooperating arrangement that we have with the Federal Reserve.
Q: What were those [2010 Lincoln cent] production numbers? You said 2.2?
A: 2.2. billion projected for 2010.
Q: So you’ll make like 60 million Philadelphia and 50 million Denver? I follow production numbers really close. At that rate, it’s a little over a billion, instead of 2.2 billion. Is there any chance they’re going to discontinue making the penny? Like they did the 09 nickels and 09 dimes?
A: Yeah, and so the easiest answer for that is [to] put yourself in the Federal Reserves position. They’re not ordering coins for collectors, they’re ordering coins for businesses. What they’re trying to project is whether the economy improves or not, people using… so today, no. The coins that they’ve ordered through January is 1 billion. They gave us a 2 .2 billion projection, therefore they project by 3rd or 4th quarter that the economy is going to turn around enough where banks and businesses are going to need more change. And so if you took a point in time like in September they order at a rate of 3 billion, but it averages out on a annual to 2.2. Right now you’re seeing the lower orders, and with the higher orders you’re seeing an annual order being 2.2.
Q: That’s like some of those 2009 circulating quarters, you’ve got some of the lowest Mintages in years.
A: We felt that. Our main job is making circulating coins. That’s where our employees and talent and resources are put and when that goes down, it’s not like you can take the same presses and make numismatic products out of it – they’re different presses. We’ve had a lot of internal struggles to deal with how much demand shifts.
People are upset at us for [canceling] proof silver eagles. Well, when you get to look at the amount of silver bullion, it was almost 30 million last year. That beats every other country’s silver bullion rolls put together. We were able to triple production. And we still have to keep up with demand. And the law very clearly states we need to make sure that bullion demand is satisfied. We tried to get ahead of the curve by getting our planchet makers to really produce more planchets. But you’ve got a problem because the planchet makers… in order to make as many planchets as you want [they] have to buy x amount of sculptures, and x amount of presses, making sure the Mint isn’t going to fall off the roof next year. [They] want a five year guarantee that you want to order planchets at this high rate. So those are tough things.
Q: Last year you did a pass around with the presidential dollars, as far as usage, is there any plan to do a national roll out?
A: Lets see, for those of you who aren’t familiar, Congress wanted us to make valid points again and have them coexist with dollar bills. The first thing I’m thinking as Mint Director is working out of closed circulation, the dollar coin is never going to have a 100% conversion rate to the bill. How can it be used more than it was being used in the past?
We focused initially on coin intensive transactions — automated car washes, laundries, toll booths, metro systems, etc. And what we found is a lot of success. The New York subways system has 10 million dollar coins in circulation because when you get them in change people who use the subway there keep them.
[In an experiment,] we picked out 4 geographical cities, advertised benefits there were to use the dollars, signed up retailers to use the dollar coins, and got banks to adequately stock themselves so whoever wanted dollar coins could get dollar coins easily.
We found you could increase usage, but after that, because its not a closed system like a subway, the person getting the dollar coin would think… well that’s cool, keep 3 give them to my grandchildren, and use one the next time. But if I get a bunch of them I’m going to bring them to the bank every week. And so a lot of those coins were being used once or twice, and then after that they were being returned back into the system and ended back into the Federal Reserve system. We did learn that there is a number of national retailers who got very interested in this, and now they’re in that second step of trying to work out a reasonable approach that’s cost effective. So it’s an ongoing learning implementation.
Q: The design is very important, and so is composition, can you address any of the things going on with composition with circulating coins that have been going up lately?
A: One of the things that I’ve cared much about has been the beauty of our coins. I’m a collector like many of you are. I started in my parent’s restaurant. As a cashier, taking away all of the silver coins that were interesting looking coins. Then I got taken off with a large Indian head cent. I was a kid, this shows me how old I am. I found a large cent in there, I started arguing with a customer, "No that can’t be, everything looks like the Lincoln cent, you’re trying to screw my family." Then my dad said don’t worry son, it’s really a real cent. And when I looked at it, it was. What that made me do was say, "Oh, that’s a really nice design."
It started me collecting, and I wasn’t even Native American. I said hum, who was this person and why were they on the coin, and I’ve gotten off with education and a whole bunch of other things.
So I’ve realized the power of good design. And that’s why I decided last year to recreate the Saint-Gaudens design because that was a beautiful picture that told a wonderful story about America. And that’s a point that I could see coming out of the Mint again. But the last time we’ve had a Renaissance coin was years ago, and it was a period that took us 20 years to build up to, and it was a really prolific period for about 15 years, and then it faded.
Once in a while since then we’ve gotten that great coin, but we haven’t had that consistency. Just think of it, the buffalo nickel, the standing liberty half dollar, saint gaudens double eagle, saint gaudens eagle, and the mercury dime. When you think of those things, it all came from a very small period of time. So one of the things I’ve tried to do during my tenure as Mint Director is: How do I inspire our artists to take artistic excellence up to the next level? And we’re doing it in little ways.
One of the things we’re doing you’ll see in the new 2010 cent is, one of the things I could do was, take the original Victor David Brenner portrait of Lincoln, and make it the way it originally was when it was done. In other words, over time we’ve flattened that portrait out, because it’s cheaper for us to stamp coins without so high a surface. Well, I’m not going to make a whole lot of coins in 2010 because of the economy, so it’s a great time for us to revisit some of this.
So what you’ll see in the national park quarters, and in the Lincoln penny, is the digital exact reproduction of the original plaster down to the original high relief of those coins. When you see them, you’ll notice the difference, because you can feel them. Because that’s what a coin is. It’s got real bumps on it and everything, and that’s one way of expressing the excellence we have in America. Another way of excellence of showing the world that we’re doing artistically wonderful, wonderful things.
This ends the second article installment covering questions and answers from the February 10, 2010 US Mint coin forum. Stay tuned for additional segments.