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THE FUTURE OF MONEY: COINAGE PRODUCTION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

DOMESTIC MONETARY POLICY 

AND TECHNOLOGY 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

APRIL 17, 2012 

Printed for the use of the Committee on Financial Services 

Serial No. 112–117 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

SPENCER BACHUS, Alabama, Chairman 

JEB HENSARLING, Texas, Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

MICHELE BACHMANN, Minnesota 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

NAN A. S. HAYWORTH, New York 

JAMES B. RENACCI, Ohio 

ROBERT HURT, Virginia 

ROBERT J. DOLD, Illinois 

DAVID SCHWEIKERT, Arizona 

MICHAEL G. GRIMM, New York 

FRANCISCO R. CANSECO, Texas 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

BARNEY FRANK, Massachusetts, Ranking 

Member 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

ANDRE ́ CARSON, Indiana 

JAMES A. HIMES, Connecticut 

GARY C. PETERS, Michigan 

JOHN C. CARNEY, JR., Delaware 

JAMES H. CLINGER, Staff Director and Chief Counsel 

(III) 

SUBCOMMITTEE ON DOMESTIC MONETARY POLICY AND TECHNOLOGY

RON PAUL, Texas, Chairman 

WALTER B. JONES, North Carolina, Vice 

Chairman 

FRANK D. LUCAS, Oklahoma 

PATRICK T. MCHENRY, North Carolina 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

NAN A. S. HAYWORTH, New York 

DAVID SCHWEIKERT, Arizona 

WM. LACY CLAY, Missouri, Ranking 

Member 

CAROLYN B. MALONEY, New York 

GREGORY W. MEEKS, New York 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GARY C. PETERS, Michigan 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

April 17, 2012 ................................................................................................... 1 

Appendix: 

April 17, 2012 ................................................................................................... 23 

WITNESSES 

TUESDAY, APRIL 17, 2012 

Blake, John, Executive Vice President of Engineering, Cummins Allison Corporation ................................................................................................................. 4 

Bosco, Rodney J., Director, Disputes and Investigations Practice, Navigant 

Consulting, Inc. .................................................................................................... 6 

Weber, Dennis H., coin industry consultant .......................................................... 8 

APPENDIX 

Prepared statements: 

Paul, Hon. Ron .................................................................................................. 24 

Blake, John ....................................................................................................... 26 

Bosco, Rodney J. ............................................................................................... 30 

Weber, Dennis H. ............................................................................................. 98 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Cleaver, Hon. Emanuel: 

Written statement of Richard A. Peterson, Deputy Director, United States 

Mint ................................................................................................................ 102 

(1) 

THE FUTURE OF MONEY: 

COINAGE PRODUCTION 

Tuesday, April 17, 2012 

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON DOMESTIC MONETARY

POLICY AND TECHNOLOGY, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 10 a.m., in room 

2128, Rayburn House Office Building, Hon. Ron Paul [chairman of 

the subcommittee] presiding. 

Members present: Representatives Paul, Luetkemeyer, Huizenga, 

Hayworth, Schweikert; Clay, Maloney, Green, and Cleaver. 

Also present: Representative Stivers. 

Chairman PAUL. This hearing will come to order. Without objection, all Members’ opening statements will be made a part of the 

record. 

The Chair also notes that the gentleman from Ohio, Mr. Stivers, 

wishes to sit in on this hearing. Without objection, he will be seated for this hearing and recognized for an opening statement and 

for questions. 

I now recognize myself for 5 minutes to make an opening statement. 

I want to welcome everybody to the hearing this morning. This 

is a subject that is not brand new. It has come up in the past on 

what we should do with our coinage, what we should do with the 

penny, what we should do with the nickel, and why we have to 

keep changing it all the time. 

I see a hearing like this and this discussion, which has gone on 

literally for years, as being a technical discussion which cannot be 

ignored. But there is also a monetary issue involved here, which is 

generally ignored, and I don’t think it should be. Why should we 

have to change the nature of our coinage? Why shouldn’t a penny 

be a copper penny? Why shouldn’t a dime be a silver dime? Why 

shouldn’t a double eagle be gold? 

And the reason is very simple. It is because we as a country live 

beyond our means. We want to spend too much money overseas. 

We want to spend too much money at home. We run up huge deficits. We can’t cover it by taxes. We can’t borrow enough money, so 

therefore, we print money. And that is where the problem comes 

from. 

We print money. The value of the money goes down and the cost 

of things go up. The cost of labor goes up. The cost of commodities 

go up. First, the so-called value or the dollar value of silver and 

2 

gold and copper and zinc—they go up essentially because the value 

of the dollar goes down. 

But we can tinker. We can change. We can take the penny and 

dilute the metal. In the old days, they might just clip the coins or 

dilute the gold or the silver. Today, we even dilute base metals. 

First, we were on gold standards and silver standards. We 

couldn’t maintain it. And then, we thought at least we could have 

a copper standard. The penny had real value up until about 1980. 

And then, the value of the copper became worth more than the 

penny itself. 

So this is where our problem lies. And if we are trying to deal 

with this by saving money, by changing the technicalities on how 

we produce the coinage itself, and think there might be a savings— 

this idea that we can save money is rather interesting to me, because the U.S. Mint isn’t even in the appropriations business. They 

so-call earn their own money. Yes, they mint their own money. It 

is sort of like saying the Federal Reserve doesn’t—the Fed can 

make profits. Of course, they create as much money as they want. 

But diluting the metals doesn’t solve the problem. And so, we 

haven’t been able to maintain the zinc standard. Now, we are going 

to the steel standard. But it seems we are not even starting off 

really well with the steel standard. Under the steel standard—the 

best I can do with these calculations—it will cost us more than a 

penny to make a penny. And a lot of people don’t even like the 

penny. I don’t know how this is all going to work out. 

Sometimes, we mint coins and there seems to be no market for 

them. We mint silver—not silver dollars—but metallic dollars. And 

they keep making it and the Mint makes money with seigniorage. 

But the truth is dollars, metal dollars, don’t circulate. The Fed 

buys them. I think sometimes we kid ourselves about this. 

But my prediction is this may be helpful. It may save a couple 

of dollars. Others will argue it doesn’t save anything—that it might 

hide the problem for a little bit, but eventually we will have to deal 

with the real problem in this country. 

The reason we have a problem with our coinage—the problem we 

have with our money, whether it is silver dollars or gold dollars— 

is the fact that we live beyond our means. And we think we can 

get away with just creating money out of thin air and believe that 

is real wealth. But that is all coming to an end. 

So the most I think we could expect if we do anything about silver—steel pennies or not—will not address, I think, the real problem that we have in this country. Since the Mint is not even in the 

budget, to say that there will be a savings, I think might be a bit 

of a stretch. I would like to save literally billions, if not trillions 

of dollars, and address the subject. 

But in the meantime, we will be dealing with these technicalities 

on how we mint the coinage. And obviously, it is the Congress that 

has this responsibility. It is not the Treasury. It is not the Mint. 

It is not the Executive Branch. Explicitly, in the Constitution, it 

says that Congress should have this responsibility and we 

shouldn’t be reneging and giving up on this responsibility. 

So with that, I would like to yield to Congresswoman Maloney. 

Mrs. MALONEY. In some ways, this hearing is timely. Canada’s 

recent announcement to eliminate the penny has many in Congress 

3 

questioning whether we should be doing the same thing. Have we 

simply stopped using smaller denomination coins like the penny to 

warrant making it a thing of the past? 

And there are several legislative proposals that would change the 

composition of the penny to make it cheaper to produce. But under 

the Coin Modernization Act that this Congress passed in 2010, the 

Mint is required to undertake an extensive study of alternative 

compositions of coins. This study will be completed at the end of 

this year. So I hope that this subcommittee will take another look 

at this issue when that study is released and specific recommendations are made in terms of how we can move forward. 

For now, Congress has the authority to set the weights and 

measures of coins that are produced, so I look forward to the testimony. But I think we should wait until the report comes out later 

this year before taking any specific actions. Thank you. I yield 

back. 

Chairman PAUL. I thank the gentlelady. And now, I recognize 

Congressman Stivers from Ohio. 

Mr. STIVERS. Thank you, Mr. Chairman. I would like to thank 

Chairman Bachus and Chairman Paul from the subcommittee for 

allowing this important hearing today. 

I am a new Member of Congress. And I came here to help cut 

excessive government spending and save taxpayers money. I appreciate Chairman Paul’s comments about the real problem in Washington being spending. I believe that to be true, and I am working 

hard to address that. But in these tough fiscal times, I think there 

are some things we can do to be much more efficient in America 

about the way we mint our coins, more specifically, the composition 

of our coins. 

I recognize what the gentlelady from New York stated about a 

study that the Mint is currently conducting, which will be finished 

by the end of year. But that is no reason for us to wait to do our 

own due diligence. We need to forge ahead, which I appreciate this 

committee is doing. I am not saying we are going to absolutely run 

roughshod over a study or go ahead of it, but I do think we need 

to continue to do our job. 

So earlier this year, I introduced legislation to change the composition of the 1-cent and 5-cent coins. Because since 2006, the 

commodity metals required to manufacture those coins have made 

those couple of denominations—the penny and the nickel—very expensive and uneconomical. Specifically, the cost of minting a 1-cent 

and 5-cent coin is greater than their face value. 

In fact, included in the U.S. Mint’s recent annual report, the unit 

cost to produce a penny was 2.41 cents. And the cost to produce 

a nickel was 11.18 cents. Last year, the Mint produced 4.3 billion 

pennies and 914 million nickels. 

Currently, the penny is produced from highly expensive zinc, 

which is copper-plated. And the nickel is made of a nickel-copper 

alloy. The production costs of these denominations have resulted in 

millions more in cost to the Treasury—to the Mint—than they need 

to have. 

And so that is why I suggested, in my legislation, creating steel 

coins. An American multi-ply steel composition would the material 

we would use. Most nickel is from Canada, but even Canada makes 

4 

their nickels out of steel, ironically. And because it is an American 

resource, it would help American jobs and these new coins could 

easily resemble the current coins. You could put a copper plating 

on a steel penny and they could co-circulate with the existing currency and be used in things like vending machines. 

In fact, there was a recent study that estimated that replacing 

the metallic content of nickels and dimes could actually save as 

much as $182 million to $207 million annually. So, I think it is a 

great opportunity for the U.S. Mint to operate more efficiently. 

I know the U.S. Mint is considering various materials, but I 

think that the Royal Canadian Mint recently made their transition 

to steel coins. It has been an effort that has saved the taxpayers 

in Canada money. I think it could work here. And I think it is 

worth examining. 

I appreciate Chairman Paul for having this hearing and I look 

forward to addressing the issues related to making our coins much 

more economical. 

Thank you, Chairman Paul. I yield back the balance of my time. 

Chairman PAUL. I thank the gentleman. 

I thank the Members for their opening statements, and now I 

would like to introduce our witnesses. 

Mr. John Blake is executive vice president of engineering at 

Cummins Allison Corporation, a leading producer of coin and currency counting machines. 

Mr. Rodney Bosco is the director of the disputes and investigations practice at Navigant Consulting, Incorporated. 

Mr. Dennis Weber is a coin industry consultant, and was formerly the vice president of marketing and sales for Jarden Zinc 

Products. 

Without objection, your written statements will be made a part 

of the record. You will now be recognized for a 5-minute summary 

of your testimony. We will start with Mr. Blake. 

STATEMENT OF JOHN BLAKE, EXECUTIVE VICE PRESIDENT 

OF ENGINEERING, CUMMINS ALLISON CORPORATION 

Mr. BLAKE. Mr. Chairman, members of the subcommittee, on behalf of Cummins Allison Corporation, we would like to thank you 

for this opportunity for me to speak with you today. My name is 

John Blake. I am executive vice president of Cummins Allison, in 

charge of the engineering and product development function. 

Cummins Allison is a privately held company located near Chicago in Mt. Prospect, Illinois. And we are a global leader in the development of systems for counting, sorting, and authenticating currency, checks, and coins. We have a 125-year heritage of leadership 

and product innovation. We serve financial institutions worldwide, 

as well as retail, gaming, armored carriers, government, and virtually anybody who handles coin and currency sorting and processing. 

We have 50 branch offices in the United States that sell and 

service our products. We also have wholly owned subsidiaries in 

France, Germany, Canada, the U.K., and Ireland. And we work 

with a network of dealerships worldwide in 70 different countries 

that also sell and service our products. 

5 

All Cummins products are designed, developed, and manufactured in the United States. And we have a portfolio of 350 patents 

that we depend on to protect our IP and support our R&D investments. 

As far as products, we have a broad portfolio of products from 

small desktop machines for retailers to large high-speed machines 

for volume customers who demand industry leading speed, accuracy, and dependability. We also have a line of self-service coin machines used by the public to count coins that are collected at home. 

And one of the critical features of our products is our sensing 

technology. We have a research group near San Diego that develops state-of-the-art sensing technologies that are used in our equipment. What that allows our customers to do is to authenticate and 

denominate currency and coin, and off-sort any strangers or counterfeit. 

Cummins Allison supports congressional efforts to identify costsavings opportunities, including efforts to reduce costs associated 

with the circulation of coin and currency. And being an IP-intensive engineering and manufacturing company, we understand the 

challenge; that is, how to reduce cost while still being innovative 

and maintaining features and functionality and quality. We know 

firsthand it is not an easy endeavor. 

Cummins Allison has been through a number of coin changes 

from various countries. Some have gone well. Some have not gone 

very well. And I offer the following points for consideration. 

The United States has been through a number of changes. Take 

the penny, for instance. Most of those changes, more recently, have 

been done to material only. They have maintained the size; that is, 

the diameter and the thickness of the coin. And those transitions 

to those new designs or new materials have gone relatively smoothly. 

In other countries—we have been talking about the Canadian 

one dollar and two dollars that was recently introduced, 2 weeks 

ago. There again, they have changed the material only. They have 

maintained the diameter and the thickness of the coin. And at least 

from what I understand today, the transition has been relatively 

smooth in that regard. 

Cummins Allison’s machines can process material changes. It becomes more difficult when you start talking about changing the diameter and thicknesses of coins. Those changes could require significant modifications to our machines or perhaps even replacement, which would be a significant impact in the marketplace. 

Coin construction can have impact in other ways. It can impact 

machine function and coin durability, such as if you use soft materials. If you use soft materials, that impacts not only the wear 

characteristics of the coin, but also the durability of the machines 

that we have in the marketplace. 

Common metals also are more readily available, and therefore, 

are an open opportunity for counterfeiting—maybe not so much a 

threat for low-value coins. But certainly for higher-value coins, that 

would become a significant concern. So, the ease of counterfeiting 

should be carefully studied in any change that is proposed. 

Coins should be unique to other coins in other countries. Again, 

counterfeiting—we had one particular case in the U.K. with the 

6 

U.K. pound, where they used the same blank in another country, 

and it is creating a problem in the U.K. 

Some competitors use scales. While Cummins equipment can 

process coins of different weights, when you are talking about 

scales and different weights of material, it is very difficult to separate denominations, count and authenticate, based on the differences of weight of a particular denomination of coin. 

Finally, changes could impact worldwide the value of American 

currency and could affect public commerce. Confidence in commerce 

will cost the government far more than what would be saved by initial material alteration. 

So for seamless transition, Cummins Allison believes that stakeholder input is essential, and early involvement is the key. Stakeholders should work collectively to raise and address issues. And 

we suggest the development of a government industry stakeholder 

taskforce that would ensure technical, commercial, and public 

issues are addressed early and at every stage of the project. 

For Cummins directly, we would welcome the ability to test and 

report on options early and we believe this is very important. We 

prefer to establish a strong partnership with Congress, the Treasury Department, and the U.S. Mint. This relationship would ensure 

that decisions made are in the best interest of the American public. 

So in conclusion, Mr. Chairman and members of the subcommittee, again, thank you for the opportunity to appear here. 

Cummins appreciates your efforts and supports the efforts of the 

U.S. Mint to reduce costs. However, we encourage everyone to proceed slowly and cautiously on decisions to alter weight, appearance, 

size, and material of our Nation’s coins. Any savings realized would 

mean nothing if there are societal costs due to the inability to process and circulate American currency. If changes make coins attractive to counterfeit, that puts our economic and national security at 

risk. 

So, we commend the subcommittee for taking the time and care 

to research this important matter. Going forward, we encourage 

Congress, the Treasury Department, and the United States Mint to 

consult with all stakeholders long before decisions are made. This 

should ensure a smooth transition and public acceptance while protecting the security of our Nation’s monetary system. Thank you. 

[The prepared statement of Mr. Blake can be found on page 26 

of the appendix.] 

Chairman PAUL. Thank you. Now, I recognize Mr. Bosco. 

STATEMENT OF RODNEY J. BOSCO, DIRECTOR, DISPUTES AND 

INVESTIGATIONS PRACTICE, NAVIGANT CONSULTING, INC. 

Mr. BOSCO. Thank you, Mr. Chairman, members of the subcommittee, Congressman Stivers. My name is Rodney Bosco. I am 

a director in the Disputes and Investigations Practice at Navigant 

Consulting, Incorporated. Navigant is a global advisory firm that 

provides independent, objective analysis and opinions on accounting, financial, economic, and operational issues facing our clients. 

I am pleased to testify today concerning our Nation’s coinage, the 

factors that influence their cost of production, and two studies we 

recently conducted that have applicability to legislation being considered by this body. 

7 

Our first study examines potential cost savings available to the 

United States Mint if it were to move to multi-ply plated steel compositions for the vended nickel, dime, and quarter denominations. 

Our second study looks at the potential consequences of a hypothetical decision to eliminate production of the penny on the United 

States Mint’s costs and profits. 

Both studies were commissioned by Jarden Zinc Products, North 

America’s leading plated coin blank producer and a licensee of the 

Royal Canadian Mint’s multi-ply plated steel technology. The studies were conducted by myself and by Kevin Davis, who is a director 

and colleague of mine at Navigant. 

As the subcommittee endeavors to find ways in which to make 

our coins more cost-effective to produce, our work has led us to 

three key findings that I would like to share with you today. First, 

raw material costs—that is, the cost of the metal itself—currently 

make up between 50 and 70 percent of the total production costs 

for the nickel, the dime, and the quarter. 

The change in the metallic content of these coins to multi-ply 

plated steel will reduce the per unit raw material cost of each of 

these coins by over 80 percent, based on recent metal prices. Applied to the average, historical production of these coins over the 

past 30 years, raw material cost savings would average approximately $200 million annually. 

Our second finding relates to the opportunity presented by the 

parallel adoption of an alloy recovery program. Under such a program, the United States Mint would collect and replace existing 

copper nickel alloy coins with multi-ply plated steel coins and salvage the copper in the nickel from the retrieved coins. Since its 

launch of multi-ply plated steel coins in 2001, the Royal Canadian 

Mint has had in place an alloy recovery program that has generated more than $200 million in revenue for the Canadian people. 

The United States Mint could execute a similar program for its 

current copper and nickel alloy coins—the 5-cent, 10-cent, and 

quarter, dollar denominations. Based on the analysis we have conducted, which assumes the recovery of one-third of the coins minted in the last 30 years, such a program has the potential to generate more than $2 billion in additional revenue for the United 

States Mint. 

Our third finding relates to the impact of eliminating penny production on the United States Mint’s costs and profits. The United 

States Mint has reported that its production of 4.3 billion pennies 

during Fiscal Year 2011 resulted in a loss of $60.2 million, or 

roughly 2.4 cents per coin, leading some to suggest that the penny 

should be dropped as a means of eliminating such losses. 

We have found that ending production of the penny would not 

eliminate these losses, as a portion of the United States Mint’s fabrication, distribution, and administrative costs currently assigned 

to the penny are fixed and would continue to be incurred regardless 

of whether the penny is produced. 

We estimate this fixed portion to equal $30.7 million, based on 

2001 production, resulting in an apparent cost reduction at first 

blush of $29.5 million in Fiscal Year 2011. However, the analysis 

does not end here. Dropping the penny will result in increased demand for the nickel, which the U.S. Mint currently reports costs an 

8 

excess of 11 cents to produce each coin. If production of the nickel 

doubled in response to elimination of the penny, a scenario posed 

by the U.S. Mint’s acting Director in answering a question from 

this subcommittee in 2006, the United States Mint would incur 

losses of approximately $40 million related to the additional nickel 

production. This amount is greater than the perceived cost reduction of $29.5 looking at the penny alone, resulting in an overall increase in net loss to the Mint of as much as $10 million. So our 

analysis of the United States Mint’s costs found the possibility of 

greater losses to the Treasury without the penny. 

Mr. Chairman, I thank you for the opportunity to appear here 

today. And I welcome the opportunity to answer your questions. 

[The prepared statement of Mr. Bosco can be found on page 30 

of the appendix.] 

Chairman PAUL. Thank you. I recognize Mr. Weber. 

STATEMENT OF DENNIS H. WEBER, COIN INDUSTRY 

CONSULTANT 

Mr. WEBER. Thank you, Mr. Chairman. I appreciate the opportunity to visit with the committee this morning and speak to the 

Canadian experience with controlling costs for circulating coinage. 

I am a technical consultant under contract to the Royal Canadian 

Mint. I am not an employee of the Mint, nor am I a spokesman for 

the Royal Canadian Mint. 

For nearly 3,000 years, mankind has used coinage to facilitate 

commercial transactions. And one would think that in that amount 

of time, every possible combination of materials, shapes, and designs would have been used. But societies change. Technologies 

change. And the demands of the marketplace necessitate the continuous evolution of coinage systems. 

On April 10th, the Royal Canadian Mint completed a process 

that was initiated in 1996. Last week, the Canadian 1-dollar and 

2-dollar coins were converted from nickel and copper-based alloy to 

the modern, safe, and secure multi-ply technology. 

Multi-ply technology is a proprietary process developed in Canada that applies electroplated layers of nickel and copper to an inexpensive steel core, which creates circulating coinage that is both 

attractive and affordable. In an age of escalating global metal costs, 

governments need to produce coins more cost-effectively without 

compromising quality. Canada has been using the multi-ply process 

for circulating coins since 2001 when the 5-cent, 10-cent, 25-cent, 

and 50-cent denominations were converted from expensive nickel 

and nickel-based alloys to the more affordable steel coins. 

Because the multi-ply steel coins are nearly identical in size, 

weight, and appearance to the nickel alloy coins they replace, the 

transition went almost unnoticed by the general population of Canada. The major reason the transition from pure nickel and nickel 

alloy coins to multi-ply electroplated steel went so smoothly was 

the commitment by the Royal Canadian Mint to involve the major 

stakeholders early and continuously throughout the process. 

The national banks of Canada, charitable organizations, coin 

handling and coin transportation companies, and the vending industry were personally and continuously updated during the conversion. Particular attention was given to the vending industry as 

9 

their support was critical for a seamless changeover. Despite the 

fact that the vending industry represented only a fractional percentage of retail transactions, nevertheless, every reasonable effort 

was made to address their concerns. 

The annual production volume of Canadian circulation of coins 

has traditionally been only about one-tenth the volume of circulating coins produced by the U.S. Mint. Nevertheless, the transformation from nickel and nickel alloy to multi-ply has saved Canadian taxpayers over $250 million. 

The older pure nickel and nickel alloy coins have successfully cocirculated in Canada with the new multi-ply coin for over a decade. 

The Royal Canadian Mint, however, has for the last 6 years maintained an active program of removing the older nickel and nickel 

alloy coins from circulation. 

Again, with the escalating global prices for commodity metals, 

the older coins are eventually defaced and sold for their metal content. The profit from these sales is returned to the Canadian taxpayers. But Canada is not alone in enjoying the cost-saving benefits of multi-ply technology. Since its introduction, multi-ply technology has been adopted internationally by 28 different countries, 

representing over 60 denominations. 

The New Zealand experience is a good illustration of this process. 

In 2004, the Reserve Bank of New Zealand sought public input on 

a proposal to reduce the size of the 10-cent, 20-cent, and 50-cent 

coin, while concurrently changing the composition from expensive 

alloy to electroplated steel. The Reserve Bank wanted to reduce the 

size of the coins to make coin usage more convenient for the public 

and for cash-handling businesses. The conversion to electroplated 

steel was motivated by the desire to maintain positive seigniorage 

well into the future. 

The Reserve Bank also recognized that to be accepted by the 

public, the new coins had to be durable and they needed to function 

in vending machines. After extensive, independent testing, the Reserve Bank of New Zealand selected multi-ply as the only process 

that met their criteria for public acceptance. Multi-ply coins have 

been in circulation in New Zealand since 2006. 

The Reserve Bank of New Zealand took a very aggressive approach with the introduction of their new multi-ply coins. Rather 

than co-circulate coins of different sizes and different compositions, 

the Reserve Bank elected to completely replace the old coins and 

over a period of 6 months, old coins were removed from circulation 

as the new coins were introduced. 

After the coins were recalled, they were demonetized, and the demonetized coins were sold to recoup the current metal value. The 

profit generated from the demonetized coins was sufficient to cover 

the cost of the new multi-ply coins and to generate additional revenue for the taxpayers of New Zealand. 

I brought with me samples today for the committee of current 

circulation coins for the Canadian 5-cent and 25-cent coin. And I 

think the committee will notice that the 5-cent coin is almost identical in weight and feel to the U.S. nickel. The major difference is 

that the Canadian 5-cent coin costs approximately 3 cents to 

produce versus the reported 11-cent cost to manufacture the U.S. 

5-cent coin. Assuming that approximately a billion coins or a billion 

10 

nickels are produced every year, this generates a cost savings to 

the American taxpayer of approximately $80 million a year. 

So I want to thank the committee for the opportunity to appear 

today, and I look forward to your questions. 

[The prepared statement of Mr. Weber can be found on page 98 

of the appendix.] 

Chairman PAUL. I thank the panel, and I will yield myself 5 minutes for questioning. 

I want to talk a little bit about a cost, but not the cost to the 

government because we are debating on how much money the government might save or what it will be—how much cost it will be 

to change. But what about the cost to private industry or local government that has meters—parking meters—or other coin machines? There have been some estimates that there will be a cost 

to them, too. They have to change their equipment and change 

their coin machines. One estimate was as low as $530 million, 

which would be not inconsequential. It is really hard to calculate 

absolutely how much it would cost—some have even said it could 

cost over a billion dollars. 

Mr. Blake or Mr. Bosco, could you address that? What is the 

cost? We can’t say there would be no cost. There has to be some 

cost when these machines have to be changed. 

Mr. BLAKE. I can speak on behalf of Cummins Allison and our 

equipment. It is a difficult thing to say because it depends mostly 

on the nature of the changes. As I mentioned earlier, if you change 

metal only and you maintain the size and diameter of the coin, the 

cost, at least for our equipment, would most likely be less significant, maybe because we most likely will have to change things like 

software or sensors or things like that. 

As far as the other industries, the vending industries, again, I 

would encourage the committee to engage those organizations and 

really study this and consider any changes. It could be significant, 

or it could be simple. It depends on what it is. 

Chairman PAUL. But you wouldn’t be able to eliminate some 

costs to the vendors? 

Mr. BLAKE. There is always going to be an associated cost. Even 

if I had to update software for a particular machine, there is always a cost involved. How extensive that is depends on the nature 

of the changes. 

Chairman PAUL. Do you have anything to add, Mr. Bosco? 

Mr. BOSCO. We certainly recognize the fact that there will be additional costs. Unfortunately, the scope of our analysis was centered on the impact of the Mint’s operations and did not look at external consequences of changing the coins. So unfortunately, I am 

not in a position to add anything further to the discussion. 

Chairman PAUL. Mr. Weber, I wanted to ask about the cost of 

the blanks. This is a basic cost and we can’t ignore that. But if we 

could buy blanks from a foreign country at one-half the price that 

they can be produced in the United States, would that be a wise 

move for us in the Congress to recommend that we buy the steel 

blanks at the best price? 

Mr. WEBER. I think there is adequate capacity from vendors in 

the United States to supply blanks to the U.S. Mint, so that 

shouldn’t ever be an issue. And there is certainly—if those blanks 

11 

could be purchased domestically, the impact on transportation 

costs—I don’t know if it would be exempt from import duties or 

whatever, but certainly, I think if we can keep that business at 

home, it would be a lot better. 

I should mention that in fact, all of the steel that goes into the 

Canadian coins for their circulation business and for the coins that 

they produce and export to foreign countries, comes from steel 

which is precision-rolled here in the United States. So, the steel for 

those coins are used in Canada. And the coins that are exported 

do come from the United States. 

Chairman PAUL. Yes, but wouldn’t it be a wise and frugal move 

that if it came up—we don’t know how to predict future prices— 

if it were 50 percent lower, wouldn’t this be a wise thing for us to 

do since we are in the business of trying to save some money? 

Mr. WEBER. I think that all of those options need to be considered. 

Chairman PAUL. Okay. Also, I would like to ask a little bit about 

eliminating the penny—you really don’t save money. Was that you, 

Mr. Bosco? You mentioned that you don’t save a whole lot of money 

by just stopping? To me, this is rather amazing, astounding that 

you can stop something—I can’t imagine anything in private industry where you no longer produce something and there would be no 

savings. But why don’t you explain that to me, that you wouldn’t 

save money, because you are not—if you got rid of the penny, you 

wouldn’t be buying blanks anymore, so there has to be some savings. Would you address that? 

Mr. BOSCO. And you are absolutely right, Mr. Chairman. If the 

United States were to stop production of the penny, they would no 

longer purchase blanks from their current supplier and that would 

save them approximately $47 million. In addition, they would lose 

the revenue that they receive from selling those finished pennies 

to the Federal Reserve of approximately $43 million. So we are 

looking at a net savings just at that level, of approximately $4.3 

million. 

The other issue, though, which is perhaps unique to the penny, 

but perhaps is not as prevalent in other types of commercial goods, 

is that in order to facilitate commerce, there needs to be low denomination coins. And in the absence of the penny being available 

as a low denomination coin, the nickel would need to pick up the 

slack. Additional nickels would need to be produced. And under the 

current composition of the nickel, the Mint would lose approximately 6.5 cents for each nickel it makes. 

So yes, up to a point, there is savings for the penny, but then 

when you take into account the additional demand for the nickel, 

those savings become eroded, and eventually they flip over and become additional loss. 

Chairman PAUL. But I am not sure we can compare selling something to the Federal Reserve as a real sale. The Federal Reserve 

has no money, except they print it. It is not really a cost. It really 

indirectly is a part of the problem, because the Fed just creates the 

money and they buy these pennies or the dollars and that so-called 

profit goes to the Mint. And it is just sort of a game that we play. 

So if you didn’t have that money coming in, and let’s say the 

Mint was on budget where it should be and the Congress had to 

12 

appropriate the money, they are going to go to the Fed, too. They 

won’t have the money. They just go to the Fed and the Fed prints 

the money and gives it to the Mint. So this idea that we are actually selling something which might not ever be used, and quite 

frankly, I am not sure too many people are using these pennies. 

They tell me there are a lot of jars filled with pennies in people’s 

homes. And this whole idea that the Fed keeps buying them—I 

can’t imagine a bank actually ordering pennies from the Federal 

Reserve, because they have a high demand for pennies. Most people are trying to get rid of their pennies. Though, what I would like 

to sort of hone in on is actually where we are, but anyway, I want 

to go ahead and yield to Mr. Cleaver his 5 minutes. 

Mr. CLEAVER. Thank you, Mr. Chairman. Let me first present a 

statement from Richard Peterson, the Deputy Director of the U.S. 

Mint, who is not here with us today. And I ask for unanimous consent that this statement be placed in the hearing record. 

Chairman PAUL. Without objection, it is so ordered. 

Mr. CLEAVER. Thank you, Mr. Chairman. I understand the desire 

to want to get this issue out in the discussion arena for the Members, but we are going to receive a report from the Treasury in December. Many of the issues we are discussing, I think, would be 

discussed at that time when the report comes in. And many of the 

answers that we are considering may be provided in the report. 

Nonetheless, I do have some issues. One is, of course, whether 

or not, with the Coin Modernization and Taxpayer Savings Act, it 

would allow the Treasury the authority to make these changes, including coin composition, without Congress. 

Now, I am assuming, Mr. Weber, that when Canada did this, 

they went through the budget process. And so, therefore, I guess 

maybe the legislators did make some changes if it went through 

the legislative process. Is that what happened? 

Mr. WEBER. Yes. The Canadian Mint and the U.S. Mint are very 

similar, in that neither one of those organizations makes policy. 

They implement policy. So just as the U.S. Mint produces coins 

that are specified by Congress, the Royal Canadian Mint produces 

coins that are specified by Parliament. 

Mr. CLEAVER. Were there provisions made for the high possibility 

that the metals would increase in cost at some point, and a candidate could again face a situation where the cost of the metal exceeds the monetary unit? Was there some provision made for that? 

Mr. WEBER. I am a little off base here, but I think that the provisions that were established back in the mid-1990s that allowed for 

the creation of multi-ply coins, which we believe will be in positive 

seigniorage well into the future, did allow for the Canadian 1-cent 

coin to be produced in either copper-plated zinc or copper-plated 

steel, at the discretion of the Mint, whichever was more cost effective for the taxpayer. 

So, there was on the lowest denomination coins some flexibility 

built in. But the multi-ply was seen as a real solution to the longterm negative seigniorage potential. The elimination of commodity 

metals and going to a very cost effective steel core coin was—is perceived to be effective in keeping all of those coins in positive seigniorage for at least the next decade. 

13 

Mr. CLEAVER. Yes. That is where I was going is that ultimately, 

or eventually, you are going to end up having to address that issue, 

even if it is 10 years from now. Am I correct? 

Mr. WEBER. I am a bit of a coin collector and I have, as Dr. Paul 

alluded to, $20 gold pieces and $1 Morgan silver dollars. And I 

think it would be extremely difficult in a commodity-driven marketplace to maintain an alloy coin in a positive seigniorage position for 

an indefinite period of time. But that is why modernization efforts 

have to take place. The economy is constantly changing. 

If you look at the number of coins produced by the U.S. Mint, 

they are half of what they were a decade ago. And that is because 

of e-commerce, debit cards, etc. 

Mr. CLEAVER. I don’t have time to get my next question out to 

Mr. Bosco, so I will ask it later. Thank you, Mr. Chairman. And 

I yield back the balance of my time. 

Chairman PAUL. I thank the gentleman. And now, I yield 5 minutes to Mr. Luetkemeyer from Missouri. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. Mr. Bosco, I was 

interested in—we were discussing this before at the committee 

hearing and I want to follow up a little bit with the comments 

made by the chairman. 

I had two interns in my office in the last 2 years from Australia—one last year and one this year. And when they got ready 

to leave, I asked them what was the unique thing about our country or just interesting thing that they thought off the top of their 

head would be something that would stick out with them. And both 

of them made a comment with regards to the penny, which is interesting, because they said, ‘‘In Australia, we don’t have pennies. We 

just round it up to the nearest nickel.’’ They said, ‘‘It is very inconvenient to carry all those pennies in our pocket all the time.’’ 

Do you know of any other countries in the world that don’t have 

pennies or pence or whatever it is? 

Mr. BOSCO. I know that there are other sovereignties that have 

dropped their pennies— 

Mr. LUETKEMEYER. Their lowest denomination? 

Mr. BOSCO. I can’t name them for you as I sit here, but I know 

certainly Australia and New Zealand— 

Mr. LUETKEMEYER. It begs the question that the chairman was 

asking about your comment with regards to saving money by not— 

that we can’t save any money by getting rid of the penny. I really 

have a problem with trying to grasp how you cannot save money 

by doing that. 

Your comment that we are going to use more nickels, I really 

don’t see how that is even close to being accurate from the standpoint you may use a few more, but I don’t think you are going to 

use many more, because you are going to have the same amount 

of economic activity instead of having your 95—instead of being 97 

cents, you have 95 cents with a nickel on the end of it and two pennies—you will just have 95 cents if you round it down. Or if it goes 

to the upper—the next nickel, it would be the dollar. So I don’t 

know why we would have more nickels. Can you explain to me why 

we would need more nickels? 

Mr. BOSCO. Certainly. What we do know is when countries have 

retired their lowest denomination coin, there has always been an 

14 

increase in the usage of the new lowest denomination coin. In the 

case of Australia, there was an increase in the number of 5-cent 

coins that were minted once the 1- and 2-cent coins had been retired. 

The motivation for our analysis really centered on the testimony 

or the answer provided by the Mint’s then-acting Director in 2006 

to a question posed by the subcommittee: What would happen to 

the United States coinage and the costs to create that coinage if 

the penny were to be dropped at that time? And the acting Director 

responded in part by saying that there would be an increase in the 

production of nickels to compensate for that. And the challenge 

that was faced was that the nickels were being made at a loss at 

the present time. 

Mr. LUETKEMEYER. I understand that part of it. I was just kind 

of curious about the increased usage. I really would have to have 

somebody sit down with me and go through the transaction and 

show me how we were going to be using more nickels. I really have 

a problem with that. But that is neither here nor there. 

Mr. Weber, in your written testimony, you said something about 

the Canadian Mint investigating issuance of special digital currency. Can you tell me what digital currency is? 

Mr. WEBER. Yes. That wasn’t actually in my testimony, but there 

was an announcement recently that the Canadian Mint is investigating a product that they call Mint Chip and it is e-currency. 

And it is something that they are looking into, but I do not have 

a lot of details on that. I can have someone from the Canadian 

Mint provide a statement to the committee if that would help. 

Mr. LUETKEMEYER. I was kind of curious what digital currency 

would be, how you—what it would look like—how it would interact, 

and what—it is kind of interesting. Everything else has gone digital. Why not currency, I guess. 

I guess the next question I have is with regards to the amount 

of money that seems to be coming out of circulation. One of the 

comments that was made or some of the discussion that was had 

was how much of the money that comes out of circulation is due 

to collecting and loss and things like that. 

How much—every year we produce more, I guess, coinage to be 

able to supply more activity. How much of it is—or do you have 

any research that shows why we are producing more? Is it because 

of loss—just dropping in the back of your seat of your car or something or, it comes out of—are people collecting it? Why do we need 

to continue to do more? 

Mr. WEBER. We haven’t conducted any studies about the reasons 

for coinage leaving circulation. At the time that the Mint was completing the 50-State Quarter Program, it did provide what it believed to be an estimate that approximately half of the coins that 

it had minted for the program were likely held by collectors because of the unique collector value of those coins at the time. I 

don’t believe that would necessarily apply to the other denominations. But as I mentioned, we have not studied that issue. 

Mr. LUETKEMEYER. Okay. I see my time is up. Thank you, Mr. 

Chairman. 

Chairman PAUL. I thank the gentleman. I yield 5 minutes to 

Ranking Member Clay. 

15 

Mr. CLAY. Thank you, Mr. Chairman, for yielding. And thank 

you for conducting this hearing. 

Let me ask Mr. Weber—as a consultant to the Royal Canadian 

Mint, in your experience, did Canada face higher manufacturing 

costs as a result of the replacement die they had to use? 

Mr. WEBER. Actually, Canada not only advanced their coinage 

material, but concurrently came up with technology to improve 

tool-and-die life. And the Canadian Mint actually markets that 

technology internationally to other mints. 

So in fact, with the transition to multi-ply and improvements in 

their tool-and-die manufacturing, they actually saw an improvement in tool and die. 

Mr. CLAY. Time-wise, how long did the process take from start 

to finish? 

Mr. WEBER. The approval for multi-ply came in 1996, and the 

coins were introduced in 2001. But the majority of that time was 

taken up with the construction of a manufacturing facility in Winnipeg, so all of the technology in and around the multi-layer plating process had to be developed. And equipment needed to be purchased and installed. 

So from initiation to introduction was a period of 5 years, but 

that is primarily due to the fact that the manufacturing facility 

had to be constructed. 

Mr. CLAY. Thank you. And Mr. Bosco, your testimony discusses 

significant raw material cost savings associated with a transition 

to copper-plated steel, but does not address the concerns outlined 

by former Mint Director Moore that the savings incurred from 

using steel could be offset by higher manufacturing costs. Is this 

something that you can address? 

Mr. BOSCO. Not at this time. Our study did not look at the costs 

associated with transitioning the penny to plated steel. So I am not 

in a position to address that— 

Mr. CLAY. What factors should Congress consider in order to 

mitigate the impact that changes to composition of the penny and 

the nickel could have on existing coin-operated devices? Mr. Blake? 

Mr. BLAKE. Yes. I think I can answer that for you. I strongly encourage the establishment of a subcommittee with Congress involved with all stakeholders in trying to make these kinds of decisions. They are not easy. There are a lot of considerations that 

need to be made. And I think that is the best approach. 

If I could go to the example of what has happened in Canada, when they were working on the $1 and $2 coin changes, Cummins 

Allison was involved very early in the process. We were given test 

coins before the coins were introduced to make sure that whatever 

impact it had on our equipment, we could manage and minimize 

costs. 

The same thing happened with the introduction of the euro coins 

back in the early 2000s. Again, we were involved early. The Mint 

engaged us early in that process to make sure that what they were 

doing was something that was more compatible with what would 

be taking place when they introduced those changes in industry 

and in the marketplace. 

Mr. CLAY. In Representative Stiver’s bill, the Steel Nickel Act includes a provision to ensure that the Secretary of the Treasury sets 

16 

specifications of the 5-cent coin in a way that would ensure that 

not more than one change would have to be made to coin accepting 

and coin handling equipment. Should a similar provision be included in the bill he introduced to change the composition of the 

penny? 

Mr. BLAKE. I think anything you can do to reduce the cost of the 

penny and the nickel is something that Cummins supports. However, I still strongly—I don’t know how you could simply say, ‘‘It 

is only limited to one change.’’ 

I think you have to go through a series of investigative activities 

with stakeholders and try to arrive at an acceptable solution that 

quite honestly works. And whatever those changes are, the objective should always be to try to minimize the societal costs and the 

cost of making those changes to existing equipment and machines 

that are installed in the vending and anybody who is processing 

coin and currency. 

Mr. CLAY. Thank you for your response. And Mr. Chairman, I 

yield back. 

Chairman PAUL. I thank the gentleman. I yield 5 minutes to Mr. 

Huizenga from Michigan. 

Mr. HUIZENGA. Thank you, Mr. Chairman. I appreciate that. And 

having a formerly Canadian wife, I am very familiar with the 

‘‘loonie’’ and the ‘‘toonie’’ as they are dubbed up in Canada. 

But at this time, I am actually going to give my time to my good 

friend and colleague from Ohio, Mr. Stivers. If that is okay, I will 

yield to him. 

Mr. STIVERS. Thank you for yielding me time. I do want to address one thing that has come up a couple of times from the gentleman from Missouri and the gentlelady from New York about the 

study that is going on. 

Congress has a constitutional mandate to regulate security in Article I, Section VIII, Clause V, which I would like to read, since it 

is only one sentence long: ‘‘Congress has the responsibility to coin 

money, regulate the value of foreign coin, and fix the standard 

weights and measures thereof.’’ 

So, I don’t think Congress should cede its authority and constitutionally mandated requirement to deal with currency. And while I 

consider the folks at the U.S. Mint to be experts, it is Congress’ job 

to do this. That is why I have introduced these bills and that is 

why I think it is important. 

The first question I have is for Mr. Blake. It is pretty simple. 

When you suggested that counterfeiting may be a problem, do you 

expect that is a high likelihood or a low likelihood with the 1-cent 

and 5-cent coins? 

Mr. BLAKE. Let’s face it. We are talking about going with materials that are lower cost and more readily available. Whenever you 

do that, you always open yourself up to the possibility— 

Mr. STIVERS. I understand that. I am asking if you think it is a 

high likelihood or a low likelihood that the 1-cent and the 5-cent 

coins— 

Mr. BLAKE. On low-value coins, it is probably less likely. 

Mr. STIVERS. Thank you. That is all I needed there. 

The second question I have is for Mr. Weber. You talked about 

an alloy recovery program that over 6 years has been in place in 

17 

Canada. What percent of the previous coins have been recovered? 

Do you have any idea? 

Mr. WEBER. I am really not sure, but I could get that information 

for you, Congressman. 

Mr. STIVERS. Okay. That kind of goes to the question that I had 

for Mr. Bosco. You suggested that maybe a third of the coins could 

be recovered. I didn’t know if that was—what you used for that or 

how you came by that number. that is why I wanted to compare 

it to the experience that Mr. Weber might have seen in Canada. 

Mr. BOSCO. It was essentially—it was judgment. We looked at 

the dollars retrieved in Canada and tried to back into what that 

might translate into in terms of number of coins. But that number 

is subject to refinement, clearly. 

Mr. STIVERS. Sure. And obviously, that money can be used to— 

for any capital expenditures and the balance could be returned to 

the U.S. taxpayers or to pay down the national debt. Obviously, we 

would have to do that legislatively. 

The next question I have is actually for Mr. Blake. We talked a 

little bit about the impact on the vending machine industry and 

that is what I want to get to next. What is the cycle for capital expenditures on vending machines? And over what period of time 

would they typically update or replace their machine through capital expenditures? Obviously, that varies a little bit, but can you 

give us an idea? 

Mr. BLAKE. Cummins Allison is not involved directly in vending 

machine devices and so forth. We make machines that count currency and handling, so I am not in a good position to speak on that 

regard. 

Mr. STIVERS. Okay. My understanding is that it is a 5- to 7-year 

cycle that they update and replace most of their machines. And I 

guess the point of that is that as long as we work within that cycle, 

we can help ensure and limit the cost to these folks. 

And that is, I guess, my question for Mr. Weber. What did the 

Royal Canadian Mint do to pacify the vending machine industry’s 

concerns? Obviously, you had a 5-year window of phasing in. Did 

that help? What else did you do? Obviously, you limited some of 

the changes. Could you help us understand how you worked with 

the vending industry in Canada? Or how they worked with the 

vending industry? 

Mr. WEBER. I think the more relevant experience is the introduction of the $1 and $2 coin. As I mentioned, in the first 5 years, a 

lot of that time was taken up with the construction of the plating 

facility. So what Canada did was they invited all of the stakeholders in. And these are the cash handling people, cash transportation folks, charitable organizations, national banks, and of 

course, the vending machine people. 

And what Canada did was actually delayed for 1 year the introduction of these coins to allow the vending machine people more 

time primarily to upgrade software, because essentially the shape 

of the coin didn’t change. And with that allowance of additional 

time and great communications and getting samples into people’s 

hands early, the impact on the vending industry in Canada was 

minimal. 

18 

I don’t think you can eliminate it. There is going to be some expense there, but I think it can be managed. And it is managed 

through education and communication. 

Mr. STIVERS. Thank you. I yield back the balance of time to Mr. 

Huizenga. 

Chairman PAUL. I thank the gentleman. And now, I yield 5 minutes to the gentleman from Texas, Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman. I thank Ranking Member 

Clay. I also thank acting Chairman Cleaver. I thank the witnesses 

for testifying as well. 

I would like to make mention of a few things that I believe are 

important as it relates to this effort, to the effort itself. Obviously, 

we all agree that we should not pay 2.4 cents to produce a penny, 

and we should not pay 11.2 cents to produce a nickel. 

The question becomes, what is the approach that we would utilize to remedy this? And in seeking an approach, I would like to 

acknowledge some of my colleagues who have been associated with 

this endeavor. Of course, our former chairman, the Honorable Barney Frank, and Mr. Gutierrez introduced a piece of legislation. I 

would like to note that this piece of legislation passed the House 

in 2008. It did not make it through the Senate, but the House has 

acted on this issue. And I want to thank the current Members, 

Representatives Roskam and Castle. 

I think everyone is trying to move in the same direction. It is 

just that there are different approaches. I think it is important to 

make mention of Representative Watt, because he did pass a bill 

in the House that made it to the President’s desk and did receive 

the President’s signature. This bill gave authority to conduct R&D 

on all circulating coins. 

And it is important to note his bill, titled the Coin Modernization 

Oversight and Continuity Act—it is important to note that this authority has been accorded the Treasury. Actually, it requires the 

Mint to report to Congress. And that report is due by December 

14th of this year. It is important to note this, because he seems to 

have taken a rather holistic approach without giving a sense of direction—simply said, ‘‘Help us with our sense of direction.’’ 

And that report, I would assume, was thought to be something 

that would be beneficial at the time we passed the law that required the report. And if we thought it would be beneficial to have 

the report, it would seem that we would think it beneficial to utilize the report that passed in the bill that passed the House, 

passed the Senate, and was signed by the President. 

So I do express a desire to know what the report will contain, 

such that we will have an opportunity to get some additional sense 

of direction. Let me just ask each of you to respond to the concern 

that we hear by way of the report, some of the needs thought to 

be associated with this issue. Mr. Blake? 

Mr. BLAKE. Again, I commend the Members of Congress for taking the steps to try to reduce cost. I think that is a step in the right 

direction. We are all looking for direction in this matter. I think it 

is an important matter. And if we can start to get some direction 

from the report that is due later in the year, then that would be 

a good thing. 

19 

I also encourage the establishment, again, of a committee. What 

we don’t want to happen is something in the report and then act 

on it in haste. So I think we are all interested in what is going to 

happen in December with this report. 

Mr. GREEN. Because my time is about to elapse and I would like 

to hear from the other two—let me just simply say this to you, sir, 

and to all of you—do you think that, given that the bill that requires the report passed the House, passed the Senate, and was 

signed by the President, should we look into the report before we 

take action? Or should we simply ignore the fact that a bill passed 

the House, passed the Senate, and was signed by the President 

calling for information, calling for intelligence on how to do this— 

required an R&D research be done? Do you think that we ought 

to honor what we required—the House, the Senate, signed by the 

President? Is that of no consequence? 

I will start with Mr. Blake, again. Mr. Blake, let me just go to 

the next person now, because my time is up. Go ahead, sir. 

Mr. BOSCO. We certainly are not in any position to direct Congress with regard to the timing of approaching this issue. The purpose of our studies, which predated actually the bills that— 

Mr. GREEN. Because my time is about up, your position is that 

you would not direct Congress. Thank you. And I don’t mean to be 

rude, crude, and unrefined; it is just that I would like to hear from 

others. 

What is your position, Mr. Weber? 

Mr. WEBER. I think there is—certainly, waiting for the report is 

a good idea. But I think in the interim, you continue to lose money 

on these coins. So I think the committee needs to be aware of taxpayer losses on an ongoing basis, so that when the report is issued, 

you can act relatively quickly to make whatever changes are necessary. 

Mr. GREEN. So your position is to use the report, but start a process now. Okay. 

I thank all of you for your time. And thank you, Mr. Chairman, 

you have been more than generous. I yield back. 

Chairman PAUL. I thank the gentleman. We will have time for 

a second round of questioning. 

I would like to direct my question to Mr. Weber. 

You are not with Jarden Zinc Products at the moment. Is that 

correct? 

Mr. WEBER. That is correct. 

Chairman PAUL. Does that company do any blanks or participate 

in any private mintage? Or is this always blanks and different 

things for governments? 

Mr. WEBER. Jarden produces blanks for a number of different 

countries that are struck for circulating coinage. They do not, to 

the best of my knowledge, participate in token programs and things 

of that nature, though they have some, I believe, capacity for striking coins—it is very limited. 

Chairman PAUL. So it is mostly government, then. I am interested, obviously, in the nature of money and our finances. And 

there is a private coin that is issued now and it is an ounce of copper. And it is a large coin. It reminds me of the big penny that we 

had many, many years ago. 

20 

That coin today, because it is one ounce—my estimate—it is 

probably worth about 25 cents. So in reality, in real money, it is 

worth about a quarter. What is your opinion about more of that 

coming up? One of my answers to our dilemma is not so much to 

close down the system we have, but just allow some competition 

out there—competition with our current monetary system, instead 

of trying to doctor up and tinker around and make this money 

work that is constantly losing value, where we can’t even afford 

steel in our money. 

What is your opinion about maybe encouraging private alternatives, say in coinage? There is a lot of resistance in the government, because governments like a monopoly on coinage. But the 

whole idea that you can have today a copper coin that is worth a 

quarter and the worst thing that could happen to that is that its 

purchasing power will probably go up. 

Do you have any sympathy at all for private competition in the 

use of coinage? 

Mr. WEBER. I think there is a very, very robust market in bullion 

coins. And bullion coins can be purchased from the Mint. They can 

be purchased from private producers. They can be purchased internationally. 

To consider copper or nickel a bullion product is a bit of a 

stretch. Because what people are doing is, they want to make that 

investment. They are not making that investment in the hopes that 

they are going to lose money. So it is an investment vehicle. They 

are buying it today in the hopes it will go up in the future. It is 

different than having coins and currency for commerce. 

Chairman PAUL. But overall, the precious metals, they have obviously, in terms of dollars, gone up in value. The dollar keeps going 

down. 

Yes, buying bullion coins may be as an investment protection one 

thing, but I am talking about permitting competition. Because the 

monopoly laws say that if you tried to use a silver ounce in circulation and use it as money or call it a dollar, you can get into really 

serious trouble with that. The government doesn’t like that. The 

Treasury comes down pretty hard on an individual. 

But I am trying to see a transition period where we would have 

more of this. So in your personal view, would you have any sympathy for maybe permitting a little competition—true competition—in coinage? Where in a way, it would indirectly place even a 

bigger check on government destroying the value of money—it 

would be an incentive to say, hey, maybe we ought to keep up with 

the private market. 

Mr. WEBER. I think the real challenge there is interstate commerce. If I buy a copper coin of some sort minted in New York, I 

have no idea what the purchasing power of that coin would be in 

California if it is coming from a private facility. Whereas, if I am 

getting a quarter from Denver or Philly, it doesn’t matter, I can 

take it anywhere in the country and use it. So I think managing 

that would have some real challenges. 

Chairman PAUL. But the purchasing power of our dollar is different in New York as in Texas, also. It varies a whole lot. 

Okay. I think we will go on, and I will yield 5 minutes to Mr. 

Cleaver. 

21 

Mr. CLEAVER. Thank you, Mr. Chairman. I actually only have 

one question, and any of the three of you can answer, I would hope. 

Given the emerging technologies which generate a higher and higher demand for metals and alloys, and as Dr. Paul mentioned earlier, that when you have that demand for those metals and alloys, 

that then the cost is going to rise. Is there any benefit in considering non-metallic alternatives? Plastic? Pigskin? The sky is the 

limit. 

Are there some non-metallic alternatives that—with you, Mr. 

Weber—that Canada considered? What are some options? Why 

would we go into an area where we know the cost of the metals 

and alloys are rising and start using that for new coinage? 

Mr. WEBER. I am not aware of any attempts to make plastic 

coins, for example. There was some discussion of ceramics, but that 

looks to be more expensive than the metals. It is interesting. The 

human experience is that if you go to a country that uses aluminum for coins, there is a perception that those are useless because people want to feel the weight of a coin. So generally, the 

heavier metals have been the coins that have gotten the most viability in the commercial marketplace. 

Mr. CLEAVER. Okay, maybe I am out here by myself. We know 

that the cost of the metal will rise. We have new technologies coming out every day and they are demanding more metals. And so, 

am I way out there to assume that the cost is going to continue 

to rise for metals and alloys? 

Mr. WEBER. I think it is a reasonable assumption that demand 

could drive prices higher. I think that is why it is really incumbent 

to have ongoing development programs and ongoing research programs to stay ahead of the curve. It is one of the things that Canadians have really done a very good job at—very innovative—very 

research-driven. And they have a few things on the shelf that look 

very promising. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

Chairman PAUL. I thank the gentleman. I want to thank the witnesses today for their testimony. And our hearing is now adjourned. 

The Chair notes that some Members may have additional questions for the panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 30 days 

for Members to submit written questions to these witnesses and to 

place their responses in the record. 

[Whereupon, at 11:13 a.m., the hearing was adjourned.] 

(23) 

A P P E N D I X 

April 17, 2012 

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