I ’ ve constantly been reasonably of a fooling numismatist. not fanatic or anything, but I suppose coins have constantly been kind of interesting to me because each one carries its own defend patch of history made up of the countless interactions that others have had with it. It ’ south playfulness to imagine who ’ s hands some especial mint has passed through, what they may have bought with it, and what their lives were like. Going through that thought march always made it all the more stimulate that the mint was passed on to me and that my biography was now a part of its floor. Another view that made coin collecting fun for me was hunting for U.S. coins made with 90 % silver in my bare change, which are increasingly rarely found in circulation .
Buuuut, I don ’ deoxythymidine monophosphate want to get all sentimenal and philosophical here. today I want to look at the relatively late history of the production costs of U.S. mintage, specifically U.S. quarters. I ’ ll be looking at quarters from 2 different time periods : 2000-2016 and 1932-1964. You might be wondering about the significance of those timespans. excellent interview ! 1932 was the first class when the quarter as we know it today in and artwork ( though not necessarily composition, more on that soon ) was minted, with George Washington ’ sulfur burst on the obverse and the bald eagle on the overrule side of the coin. It ’ mho worth noting that the quarters minted from 1932-1964 were composed of 90 % ash grey and 10 % copper, weighing in at a total of 6.25 grams – while the quarters from onwards weigh merely 5.67 grams and are made of cupronickel ( copper-nickel ), with 8.33 % of it being nickel .
Since a batch of the data we ’ five hundred normally use to reverse engineer costs is already provided for us and frankincense so are the what and how components, this post will be more of a history lesson with explantions for why things turned out the way they did. Enjoy the ride !
Okay, let ’ s start with 2000-2016. fourth dimension to dig around the U.S. Mint locate. Looking at the production reports section, I see that the earliest report that they have available is from 2001. That ’ second great, but what about all of the years before that ? Did they not start keeping records until 2001 ? Reading through the 2001 report, I see this
The pursue auxiliary schedules were prepared in conformity with the newfangled report requirement per Public Law 106-445 section 5134 ( e ) ( 2 ) of deed 31, United States Code that was amended in FY 2000, which required the United States Mint to include in its annual report particular information regarding the costs and expenses for producing, marketing, and distributing circulating neologism — both in crying and on a per-unit basis — a well as crude tax income from the sales of each denomination .
well that explains it ! Excuse me one moment as I take the time to scour through 17 years of reports to aggregate and distill the crucial gorge .
I ’ thousand back, and hera ’ s what I gleaned :
|Year||# Produced (MM)||Unit Cost||General & Administrative||Distribution Cost||Total Costs||Revenue (MM)||Profit (MM)|
I have some observations…maybe questions besides .
General and Administrative costs have been dropping
Looking at the postpone, over the past 16 years the overhead associated with manufacturing a quarter has gone polish by quite a bite, from $ 0.0229 in 2002 to $ 0.0008 in 2016. That ’ s a 96.5 % decrease in costs ! Props to the Mint for being able to accomplish that. now I ’ megabyte wondering how they were able to do that. Starting in 2003, in the introduction to the manufacturing report card, the 37th Director of the U.S. Mint, Henrietta Holsman Fore opens with this :
beloved Customers and Colleagues ,
To meet the challenges that lie ahead, we have set priorities for the organization to help us capitalize on opportunities, reduce expenses, and measure our progress both internally and against first organizations in an effort to endlessly improve business operations .
We have defined a clear sight and outlined impregnable, focus priorities to become more effective and add more prize to the ferment we do while meet or exceeding the expectations of those who work with us .
source : U.S. Mint Annual Report, 2003
So we can see that there was a absolved focus on cutting costs and becoming more effective early on. It seems like whatever initiatives she implemented to do this were working, up until 2008. By 2007 the general and administrative costs had dropped to $ 0.0125/coin, before precipitously climbing to $ 0.0302 between 2008 and 2010. possibly this excerpt from 2008 can explain the increase in price ?
unfortunately, lower volumes means that we must allocate our sterilize costs over fewer units, offsetting the benefit of lower metallic prices .
informant : U.S. Mint Annual Report, 2008
That checks out because production numbers did decrease from previous years in 2008, a course that continued to get worse up until about 2012 .
In any case by 2016 general and administrative costs had dropped to $ 0.0008. From this line in the 2015 report, I guess the Mint just got very thoroughly at controlling costs. The increase production figures over time credibly contributed excessively .
The Mint controlled indirect costs, allowing the increased shipments to generate more seigniorage .
source : U.S. Mint Annual Report, 2015
Regarding low production numbers from 2009-2012
While early years ( including those after 2012 ) had at least 1.5 billion quarters minted, this meter period merely saw ~2 billion quarters minted between all 4 years ! I ’ megabyte reminded of a wrinkle I saw in the 2002 report .
The demand for circulating coins is directly related to the economy. Since mid-2000, when the U.S. economy began to slow, requirement for coins decreased .
source : U.S. Mint Annual Report, 2002
well we did have a reasonably bad fiscal meltdown that turned into the Great Recession in 2008, nowadays that I think about it. Let ’ s crack open the 2009 report to find out more, since these reports have a fiscal year ending on September 30th and the 2008 fiscal crisis didn ’ thymine occur until October .
Mint Director Edmund C. Moy drops this on us :
The big story in fiscal Year ( FY ) 2009 was the recession. The United States Mint is no foreign to recessions, as we ’ ve survived and thrived through 33 of them since 1854. But the severity and celerity of this recession challenged us and affected all three lines of our coining operations .
generator : U.S. Mint Annual Report, 2009
Makes sense. I wonder precisely how that directly affected coin production ?
Our circulating coin product was at a 45-year low with fewer cash transactions because of the decelerate economy and Americans cashing in coins they ’ five hundred been saving .
If money international relations and security network ’ metric ton exchanging hands, I suppose it doesn ’ t make common sense to mint more .
Do unit costs track the spot price of metals the coin is composed of?
Remember how I mentioned earlier that modern quarters are composed of cupronickel ( bull + nickel ) ? I compiled the commercialize prices for nickel and copper going back to 2005 and averaged the close prices for both per month- then I took those numbers and averaged them per year. The follow graph shows the percentage change on a annual basis in the prices of both metals, overlayed with the percentage change in the cost of making a quarter. For those on mobile the bluing line is nickel, the brown line is bull, and the black line is the change in cost of making a quarter. I scraped the bull and nickel prices from these tables kindly publicly provided by Business Insider .
interestingly enough, changes in the cost of making a quarter seem to track the changes in price for copper and nickel. After 2012, the price changes in the cost of these metals seem to decrease less, but ultimately are silent negative .
The cost of making a quarter appears to be most influenced by the swings in the price of copper. This makes common sense, since quarters are 92.67 % copper, with only 8.33 % being nickel. It ’ s a good thing too- good look at that 150 % monetary value swing between 2005 and 2006 in the price of nickel. That flower is huge !
The unit cost of making a quarter in 2016 was the lowest it’s been since 2005. Why?
From 2012-2016 prices for both metals saw relative consecutive decreases ranging from -9 % to -30 %. I ’ five hundred guess that that has a batch to do with it .
Look at that seigniorage!
Something that makes sense but never truly ocurred to me is that if the government can produce currentness for cheaper than it sells that currentness ( at boldness value ), then they ’ ve made a profit. As it turns out there ’ s a password for that, and it ’ sulfur called seigniorage. Did you know that ? I didn ’ triiodothyronine know that. Good for you if you did. In fact, I ’ meter kind of curious as to how many people have that word in their vocabulary. Do me a favor and mail in the comments whether or not you already knew that word .
anyhow looking at the net income column in the table, the Mint earns hundreds of millions of dollars each year in seigniorage .
/u/born_lever_puller, a moderator at /r/Coins on Reddit reached out to me and had more insights to provide on seigniorage :
Before the days of income tax, seigniorage – the remainder between the sum price to produce a coin and its confront respect, was a manner for governments to replenish their treasuries .
so people would bring their silver medal to the mint to have it assayed and made into government-issued and certified legal tender – which was authoritative for commerce, but the government kept some of it for themselves. In the early days the uracil Government didn ’ thyroxine have access to silver or gold bullion in adequate quantities and relied on miners or traders to sell it to them. There is good attest that some of the first coins struck by the US government used Martha Washington ’ s own family silverware – fancy tea pots, urns, pitchers, serving dishes, platters, utensils, and that kind of stuff .
here ’ s the fun part. The U.S. Mint didn ’ t start releasing cost and output data until 2002, when a law passed requiring it to do so as we learned above. That means that we ’ ll have to reverse engineer the datum .
How much did it cost to produce quarters from 1932 – 1964?
Since quarters made during this era were 90 % argent and 10 % copper, I ’ ll begin by looking at ash grey and copper prices for the same period. We ’ re looking at a timespan of 32 years, so to save time and simplify the presentation ( we ’ re lone estimating after all ! ) I ’ ll sample 2 years from the start and goal of each ten like so :
- 1932 & 1939
- 1940 & 1949
- 1950 & 1959
- 1960 & 1964
To get the price of each metal in the stern, I ’ ll be using this formula : [ % of alloy in quarter ] * [ metallic price/gram ] * 6.25g .
Looks like by the time the U.S. Mint was ready to end production of quarters with ash grey in them, the cost of argent in a quarter had already risen to $ 0.23 !
|Year||Silver Cost*||Copper Cost*||Total Quarter Cost|
* Historical prices for flatware and copper obtained from the U.S. Geological Survey .
obviously with argent prices rise, continuing product was going to be unsustainable- and that ’ s just the cost of the materials. If we added general, administrative and distribution costs, it would surely cost more to make a quarter than a stern is actually worth .
Why were quarters initially only 90% silver?
I mean, why not equitable go 100 %, ya know ? Alexander Hamilton may be able to tell us. In his addressal to the 1st congress of the United States on January 28, 1791 he says
It is sometimes mentioned, as an expedient, which, systematically with a rid coinage, may serve to prevent the evils desired to be avoided, to incorporate in the coins a greater proportion of debase than is common ; regulating their value, however, according to the quantity of pure metallic they contain. This, it is supposed, by adding to the difficulty of refining them, would cause bullion to be preferred, both for manufacture and exporting .
from On the Establishment of a mint
initially I thought the answer was to prevent people from melting the coins down for bullion and manufacture purposes, therefore taking the coins out of circulation. As it turns out, I misunderstood Hamilton. /u/born_lever_puller who I quoted earlier enlightened me on the 2 chief reasons why the U.S. minted coins using a silver medal alloy rather of arrant eloquent .
The inaugural is that silver is quite soft and would be a poor option of alloy for usage in a coin that ’ sulfur intend to be tossed around in circulation for decades to come. The early reason is that during the early on days of the U.S., the colonies had to rely heavily on imports, as they lacked many of their own resources. Had they minted 100 % pure silver or gold coins to pay for these imports, it ’ s highly probable that the coins would have been kept by the exporting countries and would not have made their way binding into circulation in the U.S. This was crucial because during that period there was a dearth of cherished metals in the colonies and the U.S. ’ minting facilities were hush in their infancy, being ineffective to keep up with demand.
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I truly appreciate you making it this army for the liberation of rwanda, and I hope you had as much playfulness reading through this as I did writing and discovering the information. next workweek, there ’ s something reasonably obscure and overlooked that I want to learn and break down the price of .
I forgot to mention, quarters were not the lone ones to contain actual silver in them at some point. Dimes and half-dollars did vitamin a well during the same period. If you ’ re concerned in starting your own silver coin collection, it ’ s relatively bum to do so and you can buy coins on Amazon here .
If you enjoyed this, check out my survive mail where I tried ( and largely failed, but it was fun ! ) to guess how much it costs to make a leather wallet. Thanks for recitation and stay stuned for more !
Category : Economy
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