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Jay H § Matching cuts / 2014-10-02 02:41:13

Don't mess with big paper
 / 

Why didn’t US dollar coins take off, or even take hold, in 1999-2000? Stan Collender, who led the award-winning marketing effort for the popular golden Sacagawea coins, breaks it down:

The reason had nothing to do with consumers refusing to use it: Instead, businesses refused to order the coins and so didn’t have any to give to consumers.

Their reasoning made a great deal of sense. Most large retailers pay to get bills and coins delivered to them by armored vehicle and, because they weigh more, coins are more expensive to deliver than bills. The average retailer didn’t want to spend anything additional for coins when there was a perfect substitute product — dollar bills — that it could get at a lower cost. That meant that, unless they received a Golden Dollar as payment from a customer, retailers had none to use as change. Like almost any other new product, consumers quickly tired of asking for the coins when the answer almost always was no…

There were other reasons. The most prominent was that the manufacturer of the paper for the dollar bills who wanted to keep selling it to the federal government, waged an aggressive anti-dollar coin campaign and trashed the effort every way imaginable. For example, the Mint had to cancel a promotional effort in Boston because the paper manufacturer, which was located in Massachusetts, protested to its senators and the senators demanded that the Mint cancel the effort.

I think everybody who’s breathed the air around economics gets the thesis that money is an economic product subject to supply and demand like any other. But to actually see it broken down as analysis of discrete things — a fiat currency backed by the full faith and credit of the US gov’t but whose weight and materials and cost and durability and shape all turn out to be crucial to its success or failure — man, it’s another thing altogether.

Via @dancohen.

One comment

Adam says…

Thanks for that. I’m based in Australia and have done business in the US for the last couple of years. US currency drives me crazy, I could never understand how such a big economy could function efficiently with 25c coins! That along with paper $1 bills and all notes being the same colour. Sure Australian money looks weird at first but once you get the hang of it plastic is the way to go. Try suggesting that see what sort of a frenzy it causes!

Incidentally as an outsider I think this is indicative of the biggest problem the US faces – vested interests. You guys have lost your edge because you can’t take the most simple steps to increase efficiency. I hear you can’t even submit your tax returns online to the government because of vested interests in the Accounting industry.

AC

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