Back in the mid-1960s, the US Mint experienced a shortage of coins. Plus, a change in the raw metal values, in particular silver, forced a change in the metals used for the coins.
These shortages and the changes in the coins’ metal content piqued the interest of coin collectors back in the day. The news along with the difficulty finding coins also generated an interest in coin collecting for those who had never collected coins.
Perhaps these notes, found in a collection, showcase the beginning steps for a new coin collector.
This first page shows his notes about pennies, nickels and dimes.
It also shows where he made a purchase of $1.05 in coins and a new 1965 Red Book for a total of $2.80 plus tax. The tax shows $0.08 for a total purchase of $2.88 which was not insignificant back then.
As an aside, those totals represent a nice trip down memory lane regarding sales taxes. For those who don’t know or don’t remember, we used to have sales tax of three cents on the dollar.
Back to his notes, the new coin collector goes on to identify specific coins and mint marks:
- All “S” mint coins
- All cents below 1940 (in nice shape)
- All Buffalo nickels with all 4 digits
- All 38-P, 55-P, 58-P, 59-P nickels
- All 54-P and steel cents
His next page goes on to detail specific years and mint marks by denomination.
Is this what he wants to look for in pocket change in “good condition?” Though difficult today, back then you could still find coins with those dates in pocket change.
And, had he found several of the coins listed, he could have enjoyed a significant increase in the value of his collection. For example, the 1932 D and S, 1936D and 1937S quarters, the 1939D and 1950D nickels and the 1949S and 1950S dimes are some of the key dates in the years he noted.
Did this gentleman pursue his interests? Or, did these notes get put aside to be visited on rare occasions?
For some people, those coin shortages in the mid-sixties started their lifelong and intense interest in numismatics. For others, their coin collecting days were few and far between – maybe when they received their annual mailings from the US Mint.
Whether an intense hobbyist or a casual one, we hope this gentleman enjoyed his coin collecting and coin collection during the last 45+ years.
Dollar coins just don’t circulate that much in the USA.
And they’re irritating when you receive a handful as change from the mass transit ticket machine. You must carry a heavy and bulky mass in your pocket or purse on your trip.
We’ve all seen the recent news about the US Mint having to store a surplus of 1.4 billion (that’s a “b” for billion) presidential dollar coins.
But, this isn’t the first time the US Mint became stuck with extra dollar coins in the modern production of the coins —many years after the circulating 90% silver dollar coins.
Back in 1971, the US Mint produced the Eisenhower dollar, their first dollar coin since 1935. Initially, people were interested in the new dollar coins. Many people “liked Ike” and wanted a coin with his image. Others celebrated the “return of the cartwheel,” a name used for the older silver dollar coins of the same size.
The coin’s initial popularity also benefited from the collectible 40% silver Eisenhower dollar coins produced at the San Francisco mint.
Though a few years later in 1976, news reports quoted James Parker, a spokesman for the US Mint, as saying the current $1 coin, the Eisenhower dollar, is “too big and bulky; it just doesn’t circulate.”
As a result, the Treasury Department considered a new, smaller dollar coin that would primarily be used in vending machines. The coin would be larger than a quarter but smaller than the Kennedy half dollar coin.
Mr. Parker said, “People carry a lot of quarters in their pockets. We think they might be inclined to carry a similar $1 coin if it was available. It, like the quarter, could become another workhorse coin.”
When questioned about a comparison to the unsuccessful $2 bill, Mr. Parker replied, “I think the $1 coin, if adopted, will be different. People will certainly have no excuse not to use it.”
In hindsight, that’s one of those assumptions that make donkeys out of us. Ouch.
As they began their design efforts for the new, smaller dollar coin, the US Mint ran into differing opinions and strong debates about the image for the coin. In the end, the approving body chose the Susan B. Anthony image for the coin’s obverse.
Just guessing from reports of the day, the controversial choice of the suffragette contributed to the new dollar coin’s lack of acceptance.
First released in 1979, the US Mint initially produced over 700 million of the new, smaller dollar coins for the supposedly pent-up demand.
By early 1980, not even a year later, the coin suffered from lack of circulation. Even with all of the initial marketing fanfare to generate interest, people would not use and circulate the coin.
Some likened the dollar coin to the quarter – it was too confusing. Others, in gambling establishments, claimed the coin didn’t feel like a $1 and didn’t provide the same resounding “clink” as the larger dollar coins.
By February 1980, the US Mint stopped all Susan B. Anthony production. Less than half of the over 700 million coins minted were in circulation.
Though some Susan B. Anthony dollar coins do carry the 1980 and 1981 dates, in mid-summer of 1981, the new director-designate of the US Mint told the Senate Banking Committee that no more of the dollar coins would be minted. Only 300 million existed in circulation and the mint stored 500 million. She advised the Banking Committee that no more of the coins were needed especially with a reduction in the US Mint’s budget.
On the other hand, these dollar coin failures do not stop various lobbyists, industries and congress from wanting a dollar coin.
Moving forward to 1995, the Director of the Mint, Philip N. Diehl, argued against a new dollar coin. Fifteen years after Donna Pope’s comments to the Senate Banking Committee, the mint still stored 300 million of unwanted Susan B. Anthony dollars.
But with a push by transit systems and the US Postal Service, the Susan B. Anthony dollar coin supply dwindled to 133 million and was projected to last for 30 months.
For the next dollar coin, congress approved a new golden-colored design with a likeness representing Sacagawea on the obverse. The size remained the same such that existing machines would accept the new dollar coins.
Before the new golden dollar could debut in 2000, demand in 1999 forced the US Mint to produce more of the previously unwanted Susan B. Anthony dollar coins.
The new Sacagawea dollar arrived with the help of Walmart and General Mills. General Mills placed coins in a few of their Cheerios boxes. Walmart agreed to dispense the new dollar coins in change. These efforts helped generate interest in the Sacagawea golden dollar.
But, once again, the new dollar coins did not circulate that widely.
Continuing the drive for a circulating dollar coin in the mid-2000s, Congress approved additional Native American golden dollar reverse designs, a new one to be released each year.
Congress also approved a Presidential golden dollar coin. In 2007, the US Mint began producing the Presidential golden dollars honoring former presidents. Each year, four new Presidential dollars arrived for circulation. These new dollar coins included the image of an early president and was released in the order in which they served in office.
The US Mint planned the Presidential dollar coin images and releases for 2007 through 2016.
But, 2011 marked the halfway point through the program, and the US Mint again faced a storage problem for unwanted dollars – 1.4 billion of them.
Required by law to mint the golden dollar coins, nevertheless the US Mint suspended the production of the circulating Presidential dollar coins. Why produce more just to store them? Instead, they will satisfy the legal requirement by producing collectible versions of the Presidential dollar coins.
In the meantime, it’s too bad the golden dollar coins can’t be easily melted for their metal value like the silver dollars.
Youngstown Vindicator – July 29, 1976 New Dollar Coin May Be Issued
The Telegraph – April 2, 1971 The ‘Cartwheel Is Back; Dollar Coins Are Minted
The Bonham Daily Favorite – August 3, 1976 Medium Sized Dollar Proposed
Kingman Daily Miner – February 22, 1980 US Mint has stopped production of coin dollar
The Lewiston Journal – February 15, 1980 Anthony dollar a flop
Daily News – January 17, 1980 Minus clink, Susan clinker
Daily Times – June 26, 1981 No More Anthony Dollars Planned
The Free Lance-Star – May 26, 1995 Treasury boss bucks dollar coins
The New York Times – May 21, 1999 Anthony dollar coin coming back briefly
The Treasury Department – December 13, 2011 Reducing the Surplus Dollar Coin Inventory, Saving Taxpayer Dollars
In working on some early 1960s coin research, I found several news reports of coin shortages. The reports frequently included economic comments by US Mint and Federal Reserve officials.
It’s interesting to review the news stories of the coin shortages, especially one-cent coins, over the past few decades.
Here’s one from the Schenectady Gazette – November 27, 1962:
Eva B. Davis, the mint director, said production is being stepped up in the mints in Philadelphia and Denver. The shortage first developed in the mid-west. Now, she guessed that the worst of the shortage is over.
Not quite a year later, The Press-Courier on August 1, 1963 told a similar shortage story:
Eva B. Adams, director of the US Mint, says, “There has been a shortage of coins for months, and it appears to be growing worse.” But she pointed out that a recent study ordered by the mint indicated the demand for coins goes hand in hand with the ups and downs of the economy.
Just six months later, the Lewiston Morning Tribune on March 21, 1964 reported:
Miss Eva B. Adams, director of the Mint, is asking Congress for funds to enable working around the clock three shifts and Saturdays and Sundays. The growth of demand for new coins is double that of the gross national product in the last 35 years.
In 1965, over a year later, the Spokane Daily Chronicle on July 27 told of more shortages:
An officer of the Federal Reserve Bank says the US coin shortage is worse than ever, and not likely to improve until the new Philadelphia mint is completed in two years. He speculated the lack of silver can be traced to the country’s growth and prosperity.
On March 1, 1966, the Milwaukee Journal reported an improvement:
The coin shortage has lessened enough for the US Mint to mint coins for Panama. But, Miss Eva Adams, director of the mint, said Tuesday that although the United States coin position had improved, the mint would not be able to make coins for other nations until the new Philadelphia mint opened next year.
Just over a year later on June 1, 1967, The Telegraph-Herald discussed another coin shortage problem:
The Treasury Department responded to a coin shortage due to the hoarding of the silver coins. The mint’s production of the new cupro-nickel coins has not met the demand of the buying public. As part of the solution, the Treasury Department barred the melting and export of silver coins.
A report in the December 27, 1970 Sarasota Herald-Tribune chastised the mint director for calling the one cent coin a “penny.” For the real issue, however, Mary T. Brooks, director of the mint, asked people to use pennies found in shoeboxes or other collection spots. She wanted to reduce the pressure on the mint production facilities.
Three years later, the November 14, 1973 Eugene Register-Guard quoted Mrs. Brooks, director of the mint, saying that her “biggest headache” is the shortage of pennies.
In 1974 on April 16, the Deseret News described the penny shortage as it related to the increase in copper prices. Mary Brooks, director of the mint, does not think there are big operators; instead regular citizens are hoping for a windfall if copper prices continue to rise. But, the shortage is such a problem that the Treasury Department barred the export or melting of copper pennies.
Through the 1980s the US Mint continued to be concerned about a penny shortage when the copper prices rose again. But the decade did not experience the severe shortages of the 60s and 70s.
But, in 1994, the US Mint churned out the pennies to address another “hoarding” shortage. The July 10, 1994 The Day newspaper speculated the shortage was due to people just not wanting to carry pennies. Instead they throw them in shoe boxes, in jars and other storage places instead of keeping them in circulation.
Again in 1999, another penny shortage occurred on the east coast. The Business Journal of August 1, 1999 discussed the billions of pennies produced by the mint in 1997 and 1998. The mint also increased its penny production to six days per week, 24 hours per day. The executive director of Americans for Common Cents commented, “There’s a close correlation in the strength of the economy and penny production.”
In the US Mint’s fiscal year 2001 annual report, the Director of the Mint’s message identified the correlation of coins and the economy. Henrietta Holsman Fore noted, “The demand for circulating coins is directly related to the economy. Since mid-2000, when the U.S. economy began to slow, demand for coins decreased. Our numismatic business also has been affected by the economic slowdown.”
Through the years, the lowly penny (or, to be proper, the one cent coin) encountered the most shortages.
Pulling from the US Mint’s annual reports, their fiscal year penny distribution through the 1990s and 2000s provides an up and down graph:
Looking at the penny distribution chart and thinking back to the economic ups and downs of the last couple of decades; does the graph show America’s economy?
At the end of the 90s and early 2000s, the increase in the graphic corresponds to the dot-com market craze. Then, after the disastrous events of September 2001, a sharp drop occurred. The economy increased in the mid-2000s only to drop in the last couple of years.
In the most recent 2010 Annual Report, the Director of the Mint commented, “The state of the American economy affects each of our business lines – circulating coins, bullion and numismatics. In FY 2010, the United States Mint performed in one of the most difficult operating environments in our 218-year history. We experienced low first and second quarter demand for circulating coins and record high demand for bullion. The high volume of gold and silver blanks required to keep up with demand for bullion stymied numismatic production for most of the fiscal year. Metal costs continued to rise.”
In fact, the first pages of the 2010 Annual Report provide the graphic illustrations of the sharp decreases in both circulating and numismatic coins over the past few years.
Long story short, a study of the US Mint’s performance with circulating coins, numismatic items and investment bullion through the years tells a large part of the nation’s economic history.
Here we go again – coins versus bills. (See our earlier post Vocal minority – dollar coins back in July.)
Some members of Congress want to decrease the number of dollar coins being minted due to the large stockpile of coins held by the US Mint.
Other members agree with the Government Accountability Office (GAO) that significant savings could be had with the demise of the dollar bill and the increase of the dollar coin.
Now, the GAO does advise that we the people – as individuals, as businesses and as government – would incur costs in the first year when the dollar bill is no longer produced. But, they also advise that those costs could be recouped within just a few years.
Years ago, we had large and heavy silver dollars circulating called “cartwheels.” Those were ended in 1935. The dollar coins were missing from the US Mint’s production until 1971 when the Eisenhower dollar made its first appearance.
The new Eisenhower dollar was the same size as the earlier silver dollar cartwheel, but it did not contain the silver content of the earlier dollar coin. There were collectible versions with 40% silver but not the 90% silver.
With a lack of acceptance in circulating the coins, the US Mint’s production of the Eisenhower dollar coins was stopped after just a few years. The Eisenhower dollars have dates from 1971 through 1978.
Some thought a smaller, lighter dollar coin would be more popular with the general public. Along came the hotly contested Susan B. Anthony dollar. Expecting a large demand, the US Mint made hundreds of millions of these coins only to see them remain in their storage areas.
Many people did not like the Susan B. Anthony dollars because of their size. They are larger in diameter than a quarter, yet the two coins can be easily confused. People did not like losing $0.75 when they confused the dollar for the a quarter.
The Susan B. Anthony dollar coins were initially minted in 1979 through 1981 though the 1981 coins were only distributed in uncirculated mint sets.
Congress still wanted a dollar coin for circulation. This time, they specified a golden color to remove the visual confusion with the quarter. But, due to the vending machines already modified for the size of the Susan B. Anthony dollar, the size of the new dollar coin was kept the same.
Interestingly, before the US Mint could produce the new golden dollars, the existing vending industry needed more dollar coins. Thus, the Susan B. Anthony design came out of its storage to be struck once more in 1999.
In 2000, the new golden dollar featuring Sacagawea was produced. Again, expecting large demands, the US Mint produced hundreds of millions of the new golden dollar.
In 2001, the production decreased significantly. Another dramatic decrease in production occurred in 2002. From 2002 through 2007, the circulating production numbers remained under ten million. In 2008, circulating production increased to 25 million.
In 2009, the Native American dollar coin was introduced keeping the Sacagawea obverse and introducing a new reverse in each year.
Another set of golden dollars was introduced in 2007, the presidential dollar series. This series introduced four new presidential dollars each year honoring our presidents in the order in which they served.
In 2007, for President Washington, the US Mint produced over 300 million coins. For Adams and Jefferson, over 200 million coins were made for circulation.
Subsequent presidential coins have experienced a continued reduction in the number minted. Even for President Lincoln in 2010, less than 100 million were struck for the public.
Even with the reduction in the numbers minted, the US Mint continues to store large stockpiles (over $1.2 billion) of the excess dollar coins.
Per the GAO, we could save billions of dollars since the dollar coins last significantly longer than the dollar bills – 30 years versus 3 years.
Maybe the savings number is valid, but is the American public ready to go without the dollar bill?
It seems the American public with a choice between the dollar coin and the dollar bill has chosen the dollar bill every time. That’s why the Eisenhower, the Susan B. Anthony and the golden dollars have not been popular. The American public does not want them.
People wanting the dollar coin claim that the dollar bill should be taken away. They claim that other countries have done it – Canada, France, United Kingdom, Australia, Japan, the Netherlands, New Zealand, Norway, Russia and Spain to name a few.
Doesn’t this remind you of the times when you told your mother that all your friends were “doing it” and she replied, “If they jumped off a cliff, would you jump too?”
In other words, just because other countries have done it doesn’t make it necessarily a good thing for us to do.
Frankly, our government representatives in Washington are getting irritating with all of the things they’re telling us we have to do.
Then again, there could be business opportunities if the dollar bill is removed from circulation. Just think of the suspenders you could sell to help keep men’s pants up. Or, what about selling women’s purses with wheels to help with the extra weight.
There are proposals to remove the dollar bill to save money in the budget cut discussions. On the other hand, there are bills from both the Senate and the House to reduce the dollar coinage, even to stop the presidential dollar series, required from the US Mint.
The next few weeks and months should prove interesting to the dollar coins.
We have a new book on Amazon: Days of Our Coins Volume I
Take a look at our book trailer:
You can find more information on Amazon: Days of Our Coins Volume I
A new book: Days of Our Coins Volume I
The other day we posted a press release about the United Future World Currency and their coin that traveled to the International Space Station.
In their Editor’s Notes, they mention, “The coins of the UFWC have been given legal tender status at the forthcoming ‘EXPO MILANO 2015′. A special set of coins will be commissioned for this occasion and will be utilised for the duration of the International Exposition.”
But, let’s think about the logistics of having a special legal tender status for these coins.
If the majority of the European nations (including the city of Milan) remain on the Euro as their currency, what will be the trading value of the United Future World Currency coinage? Will it be one-for-one with the Euro? What will the coins cost? Will a premium be charged to obtain the United Future World Currency?
For example, let’s go back in time over 100 years ago to the Columbian Exposition.
The United States Mint produced the first commemorative coin, the Columbian silver half dollar, in 1892-93 for the World’s Columbian Exposition held in Chicago in 1893.
The commemorative coins initially sold for one dollar even though their legal tender value was a half dollar. Since the general public did not widely purchase these commemorative coins, the US Mint released the excess at face value for circulation. (That had to make some people unhappy who paid $1.00 for theirs.)
The Columbian silver half dollar obverse:
Now, the reverse:
In the early days of the commemorative coins, the US Mint used the same metals as the circulating coins. At that point in time, they did charge a premium for the commemorative coins, at least initially, but the premium was not as dramatic as today’s collectible commemorative coin prices.
The US Mint uses commemorative coins to generate numismatic interest, and with collectible commemorative coins, they also obtain revenues for particular causes. Collectible commemorative coins, whether cupro-nickel clad or silver coins, include premiums that are several times their actual face value (legal tender value).
Of course, today, there are circulating commemoratives, for example, the state and national park quarters. For those commemoratives, their legal tender value and their “cost” are the same.
Back to the intial question, how will the United Future World Coins be used in the 2015 Expo?
As with the initial delivery of the Columbian half dollars, will the United Future World Coins cost more to purchase than their legal tender value?
And, how will their legal tender value be determined against the local currency?
Which mint will produce the coins? How will they determine how many to produce? Will the coins contain precious and semi-precious metals?
Consumers will not want a coin that does not retain its value for purchases. Collectors will not want a coin that is too widely distri buted or does not have metal content value.
Or, perhaps, the coins will only be collectibles and not really circulating coins during the 2015 Expo.
In summary, they have quite a few challenges to overcome before the 2015 event.
A new book: Days of Our Coins Volume I
It’s taken a lot of time and effort, but it was worth it.
The new book, Days of Our Coins Volume I, was published on Amazon’s Kindle platform today.
If you don’t have a Kindle device, Amazon provides free downloads of their Kindle Reader for other hardware such as PCs and MACs.
You can find more information on our web page, Days of Our Coins Volume I, on the main web site.
Of course, there’s a description on Amazon as well: Days of Our Coins Volume I.
The US Mint has provided many different coins with a variety of subjects through the years. This book showcases their designs and a small glimpse into the related history.
I hope you have as much fun going through the pages as I did photographing the coins and editing their images along with researching the historical anecdotes in order to build the book.
It’s interesting what can be learned from fiction, or at least from some fictional writers who strive to include facts around which they weave their fictional stories.
One such author, James Rollins, included in his relatively new book, The Devil Colony, comments about Benjamin Franklin, Thomas Jefferson and Meriwether Lewis.
We remember the history of the Lewis and Clark expedition into the Louisiana Purchase and westward to the Pacific Ocean during the years of 1804 into 1806.
In 2004, the US Mint recognized their efforts with the Lewis and Clark Bicentennial Commemorative silver dollar coin.
For everyday remembrance, the US Mint produced four nickels, two in 2004 and two in 2005, to recognize the 200th anniversary of the Lewis and Clark Expedition.
The 2004 Westward Journey Keelboat nickel:
The 2004 Westward Journey Peace Medal Nickel:
The 2005 Westward Journey American Bison Nickel:
The 2005 Westward Journey Ocean In View Nickel:
In addition, the US Mint developed a Lewis and Clark Coin and Currency Collectible set to not only showcase the commemorative coin and two of the nickels but also to remember the history via stamps, currency and the Sacagawea dollar for her contributions to the expedition. The collectible set included two historical booklets highlighting the journey and the Louisiana Purchase.
But, did you know that Meriwether Lewis died at the age of 35 just a few years after their trek across the country and back?
And, did you know that his initial cause of death was noted as suicide, yet today there are many forensic historians who claim he was murdered?
The suicide theories:
- He was subject to bouts of depression
- He suffered from a recurring and debilitating disease that made him kill himself
But, since he supposedly died of gunshot wounds and he was shot twice – once in the head and once in the torso, suicide seems unlikely.
The murder theories:
- Victim of armed robbery – either from an attack on the dangerous Natchez Trace Trail or from the innkeeper, though they only stole money not his other valuables
- Attacked by the innkeeper who thought Lewis was taking liberties with the innkeeper’s wife
- Assassinated by the orders of the General of the Army
- Killed by either servants or so-called friends
That’s not a history lesson found in the recognition of the famous Lewis and Clark journey.
In addition to the mention in the book, The Devil Colony, several web sites exist to discuss the murder versus suicide issue and put forth their arguments in the debate.
His descendents have a web site called Solve the Mystery where they discuss the issues and their efforts to have the body exhumed for 21st century science to study the evidence remaining after all of these years.
Another site, The Death of Meriwether Lewis, discusses the book and argues for the murder theories. A subsequent blog adds more detail to the murder theory.
The Smithsonian included an article, Meriwether Lewis’ Mysterious Death, near the 200th anniversary of his death commenting on both sets of theories. In addition, the Wall Street Journal had an article roughly a year ago, Meriwether Lewis’s Final Journey Remains a Mystery, describing the efforts of the family to learn the truth.
A couple of other sites include similar discussions and add further conspiracy theories:
This has been an interesting trip back in time even though a definitive cause of death has yet to be determined.
Regardless, in his short 35 years of life, Meriwether Lewis contributed much to exploration, to science at the time and to his relatively new country.
Meanwhile, our pocket change of the 2004 and 2005 nickels reminds us of the team’s accomplishments while the Lewis and Clark Commemorative silver dollar highlights the two men who guided the team through the long and successful journey.
This is not a political blog to harangue politicians and their politics. At the same time, many of the figures found on our coinage portray politicians. As we study those figures on our coins, it’s interesting to review their philosophies. Their economic positions are certainly worth review considering the economic challenge our country faces today.
Take a look at the gentleman on this coin:
President Dwight D. Eisenhower became our 34th president in 1953. He served two terms and achieved a balanced budget for three of his eight years in office.
At the beginning of his first term in his 1953 State of the Union Address, President Eisenhower presented several points:
The grand labors of this leadership will involve:
Application of America’s influence in world affairs with such fortitude and such foresight that it will deter aggression and eventually secure peace;
Establishment of a national administration of such integrity and such efficiency that its honor at home will ensure respect abroad;
Encouragement of those incentives that inspire creative initiative in our economy, so that its productivity may fortify freedom everywhere; and
Dedication to the well-being of all our citizens and to the attainment of equality of opportunity for all, so that our Nation will ever act with the strength of unity in every task to which it is called.
The purpose of this message is to suggest certain lines along which our joint efforts may immediately be directed toward realization of these four ruling purposes.
Later in his speech, he goes into more economic detail:
I have referred to the inescapable need for economic health and strength if we are to maintain adequate military power and exert influential leadership for peace in the world.
Our immediate task is to chart a fiscal and economic policy that can:
(1) Reduce the planned deficits and then balance the budget, which means, among other things, reducing Federal expenditures to the safe minimum;
(2) Meet the huge costs of our defense;
(3) Properly handle the burden of our inheritance of debt and obligations;
(4) Check the menace of inflation;
(5) Work toward the earliest possible reduction of the tax burden;
(6) Make constructive plans to encourage the initiative of our citizens.
It is important that all of us understand that this administration does not and cannot begin its task with a clean slate. Much already has been written on the record, beyond our power quickly to erase or to amend. This record includes our inherited burden of indebtedness and obligations and deficits.
The current year’s budget, as you know, carries a 5.9 billion dollar deficit; and the budget, which was presented to you before this administration took office, indicates a budgetary deficit of 9.9 billion for the fiscal year ending June 30, 1954. The national debt is now more than 265 billion dollars. In addition, the accumulated obligational authority of the Federal Government for future payment totals over 80 billion dollars. Even this amount is exclusive of large contingent liabilities, so numerous and extensive as to be almost beyond description.
The bills for the payment of nearly all of the 80 billion dollars of obligations will be presented during the next 4 years. These bills, added to the current costs of government we must meet, make a formidable burden.
The present authorized Government-debt limit is 275 billion dollars. The forecast presented by the outgoing administration with the fiscal year 1954 budget indicates that–before the end of the fiscal year and at the peak of demand for payments during the year–the total Government debt may approach and even exceed that limit. Unless budgeted deficits are checked, the momentum of past programs will force an increase of the statutory debt limit.
Permit me this one understatement: to meet and to correct this situation will not be easy.
Permit me this one assurance: every department head and I are determined to do everything we can to resolve it.
The first order of business is the elimination of the annual deficit. This cannot be achieved merely by exhortation. It demands the concerted action of all those in responsible positions in the Government and the earnest cooperation of the Congress.
Already, we have begun an examination of the appropriations and expenditures of all departments in an effort to find significant items that may be decreased or canceled without damage to our essential requirements.
Getting control of the budget requires also that State and local governments and interested groups of citizens restrain themselves in their demands upon the Congress that the Federal Treasury spend more and more money for all types of projects.
A balanced budget is an essential first measure in checking further depreciation in the buying power of the dollar. This is one of the critical steps to be taken to bring an end to planned inflation. Our purpose is to manage the Government’s finances so as to help and not hinder each family in balancing its own budget.
Reduction of taxes will be justified only as we show we can succeed in bringing the budget under control. As the budget is balanced and inflation checked, the tax burden that today stifles initiative can and must be eased.
Until we can determine the extent to which expenditures can be reduced, it would not be wise to reduce our revenues.
Meanwhile, the tax structure as a whole demands review. The Secretary of the Treasury is undertaking this study immediately. We must develop a system of taxation which will impose the least possible obstacle to the dynamic growth of the country. This includes particularly real opportunity for the growth of small businesses. Many readjustments in existing taxes will be necessary to serve these objectives and also to remove existing inequities. Clarification and simplification in the tax laws as well as the regulations will be undertaken.
In the entire area of fiscal policy–which must, in its various aspects, be treated in recommendations to the Congress in coming weeks–there can now be stated certain basic facts and principles.
First. It is axiomatic that our economy is a highly complex and sensitive mechanism. Hasty and ill-considered action of any kind could seriously upset the subtle equation that encompasses debts, obligations, expenditures, defense demands, deficits, taxes, and the general economic health of the Nation. Our goals can be clear, our start toward them can be immediate–but action must be gradual.
Second. It is clear that too great a part of the national debt comes due in too short a time. The Department of the Treasury will undertake at suitable times a program of extending part of the debt over longer periods and gradually placing greater amounts in the hands of longer-term investors.
Third. Past differences in policy between the Treasury and the Federal Reserve Board have helped to encourage inflation. Henceforth, I expect that their single purpose shall be to serve the whole Nation by policies designed to stabilize the economy and encourage the free play of our people’s genius for individual initiative.
In encouraging this initiative, no single item in our current problems has received more thoughtful consideration by my associates, and by the many individuals called into our counsels, than the matter of price and wage control by law.
The great economic strength of our democracy has developed in an atmosphere of freedom. The character of our people resists artificial and arbitrary controls of any kind. Direct controls, except those on credit, deal not with the real causes of inflation but only with its symptoms. In times of national emergency, this kind of control has a role to play. Our whole system, however, is based upon the assumption that, normally, we should combat wide fluctuations in our price structure by relying largely on the effective use of sound fiscal and monetary policy, and upon the natural workings of economic law.
Moreover, American labor and American business can best resolve their wage problems across the bargaining table. Government should refrain from sitting in with them unless, in extreme cases, the public welfare requires protection.
We are, of course, living in an international situation that is neither an emergency demanding full mobilization, nor is it peace. No one can know how long this condition will persist. Consequently, we are forced to learn many new things as we go along-clinging to what works, discarding what does not.
In all our current discussions on these and related facts, the weight of evidence is clearly against the use of controls in their present forms. They have proved largely unsatisfactory or unworkable. They have not prevented inflation; they have not kept down the cost of living. Dissatisfaction with them is wholly justified. I am convinced that now–as well as in the long run–free and competitive prices will best serve the interests of all the people, and best meet the changing, growing needs of our economy.
Accordingly, I do not intend to ask for a renewal of the present wage and price controls on April 30, 1953, when present legislation expires. In the meantime, steps will be taken to eliminate controls in an orderly manner, and to terminate special agencies no longer needed for this purpose. It is obviously to be expected that the removal of these controls will result in individual price changes–some up, some down. But a maximum of freedom in market prices as well as in collective bargaining is characteristic of a truly free people.
I believe also that material and product controls should be ended, except with respect to defense priorities and scarce and critical items essential for our defense. I shall recommend to the Congress that legislation be enacted to continue authority for such remaining controls of this type as will be necessary after the expiration of the existing statute on June 30, 1953.
I recommend the continuance of the authority for Federal control over rents in those communities in which serious housing shortages exist. These are chiefly the so-called defense areas. In these and all areas the Federal Government should withdraw from the control of rents as soon as practicable. But before they are removed entirely, each legislature should have full opportunity to take over, within its own State, responsibility for this function.
It would be idle to pretend that all our problems in this whole field of prices will solve themselves by mere Federal withdrawal from direct controls. We shall have to watch trends closely. If the freer functioning of our economic system, as well as the indirect controls which can be appropriately employed, prove insufficient during this period of strain and tension, I shall promptly ask the Congress to enact such legislation as may be required.
In facing all these problems–wages, prices, production, tax rates, fiscal policy, deficits–everywhere we remain constantly mindful that the time for sacrifice has not ended. But we are concerned with the encouragement of competitive enterprise and individual initiative precisely because we know them to be our Nation’s abiding sources of strength.
Looking at his description of the Nation’s problems, they don’t appear to be that much different than we face today – except in scale. In particular, he talked of problems in the billions compared to today’s issues in the trillions of dollars.
Rather than learning from history and from the gentleman honored on this coin, we appear doomed to repeat the same problems over and over again.
Click on this link to find President Eisenhower’s 1953 State of the Union Address in its entirety.
The August monthly coin show is still over a week away on Sunday, August 14.
In the meantime, let’s review our open Coin Challenge showing a bird and provide some more hints.
Our first hints explained this bird is on a commemorative coin and could have been found in pocket change.
Two more hints:
1. This bird is hunted for sport and for food
2. The coin’s design also includes two wheat ears
Those should help, have fun!