Like so many other aspects of day-to-day consumer life in the United States, the availability of coins has become disrupted by the COVID-19 pandemic. The ability to exchange dollars for coins had been largely taken for granted, especially given the necessity of coins for parking meters, laundry machines, and other coin-operated devices. But the availability of coins depends on the complex operations of multiple entities working together to get coins moving through the U.S. economy.
This is not the first time, however, that organizations like the U.S. Department of the Treasury and the Federal Reserve System have responded to disruption in the availability of coins. For example, actions they took to get coins moving in 1951 bear a striking resemblance to the actions taken today—as do the voluntary actions of ordinary American citizens today.
Who Manufactures U.S. Coinage? How Do New Coins Move into the Economy?
The U.S. Department of the Treasury produces coins and paper money. The U.S. Mint, established by an act of Congress on April 2, 1792, manufactures coins. The Bureau of Engraving and Printing, which dates back to the Civil War, prints paper money.[1] Both of these organizations fall within the Treasury. Though this blog post will focus on coinage, you can learn more about U.S. paper money in this Inside FRASER blog post on the history of the Federal Reserve note. You can also learn more about the production of paper money in “Distribution of Currency and Coins,” a brief article by the Treasury.
To estimate necessary levels of coin production and plan the timing of coin shipments to Federal Reserve Banks, the Mint evaluates economic data, including seasonal variations in demand. After the Mint produces coins, armored carriers and tractor-trailer trucks transport them to the 12 regional Federal Reserve Banks and their branch offices.[2]
How Do New Coins Reach Consumers? How Has COVID-19 Impacted this Process?
The 12 Federal Reserve Banks and branch offices receive coin orders from more than 8,000 banks, credit unions, and savings and loan associations.[3] Commercial banks deposit surplus coins at Federal Reserve Banks. More than 20 billion coins are processed annually by the Federal Reserve System, which removes counterfeit coins and foreign coins from circulation.[4]
In 2020, the COVID-19 pandemic unsettled the usual processes of coin distribution and circulation. Coin deposits at Federal Reserve Banks fell substantially, while Mint production decreased following implementation of employee safety measures. Demand for coins then increased as parts of the country began reopening after widespread lockdowns. Ultimately, the Federal Reserve’s overall coin inventory declined.[5] Consequently, the popular term “coin shortage” might actually be something of a misnomer when applied to contemporary events. Consider the following excerpt from a June 2020 statement by Federal Reserve Bank Services:
The primary issue with coin is a dramatic deceleration of coin circulation through the supply chain. As of April 2020, the U.S. Treasury estimates that the total value of coin in circulation is $47.8 billion, up from $47.4 billion as of April 2019. While there is adequate coin in the economy, the slowed pace of circulation has meant that sufficient quantities of coin are not readily available where needed. With establishments like retail shops, bank branches, transit authorities and laundromats closed, the typical places where coin enters our society have slowed or even stopped the normal circulation of coin.[6]
Although coin shortage evokes the recent need to be asked to pay with exact change or electronically to help businesses stay open, coin availability disruption, while less memorable, is a more accurate description of the current challenge. The larger problem is that coins aren’t circulating through the economy.
Coin Availability Disruption in 1951
While it might be tempting to say “unprecedented” when describing various consequences of the COVID-19 pandemic, a visit to FRASER shows that the Treasury and the Federal Reserve have responded to coin availability disruptions before—in 1951, for example. While the causes of that disruption differ from those of today’s, the responses to each event by the government and the people have been similar and crucial to allowing commerce to run smoothly.
In 1951, the Mint requested one million pounds of copper to supply its coin production for the month of September. Although copper was primarily needed for the production of pennies, it was also needed for use in nickels, dimes, quarters, and half dollars. Because copper was also needed to support the Korean War, the National Production Authority cut the Mint’s request by 30 percent. A strike in the mining industry in that year, however, led to “not one pound” of the Mint’s order being delivered as late as September 24, according to the New York Times on that day.[7] Allan Sproul, president of the Federal Reserve Bank of New York, sent this article in a message to all banking institutions in the Second Federal Reserve District, offering “to supply additional copies [of the article] upon request for lobby display, for newspaper editors, and for similar purposes” to ensure broad awareness of the Mint’s challenges. Other Federal Reserve Banks also issued district-wide notices.
Responses of Yesterday and Today
In 1951—as today—American citizens from all walks of life played a vital role in getting coins moving. In addition to spreading the word via newspaper and radio, and issuing calls for the return of pennies, banks in 1951 “acted to persuade local officials to empty parking meters at more frequent intervals” and even “urged operators of automatic vending machines to remove coins more promptly.”[8] Further, the Federal Reserve encouraged banks “to accept all loose and uncounted coin brought to their windows in response to public appeals.” In Memphis, Tennessee, a motor company offered a dollar bill to anyone who contributed 90 pennies to a local drive within a one-week period, successfully collecting more than one million pennies for shipment to the Federal Reserve.[9] A woman in Virginia also rose to the occasion, depositing more than 45,000 pennies at her bank. In 1951 and 2020 alike, financial institutions were encouraged by the Federal Reserve to hold only the supply necessary to meet customers’ relatively immediate coin demands.[10]
What can American citizens do today to improve the availability of coins? According to the U.S. Coin Task Force, people can help get coin moving by returning their coin to circulation in a variety of ways: spending it with retailers, returning it to their bank or a coin recycling kiosk, or donating it to their favorite charity organization.[11] Although electronic payment is widely used, it is not available to everyone. Estimates show that 18% of Americans don’t have access to, or underuse, banking services.[12] In 2020, the Mint reminded us that “for millions of Americans, cash is the only form of payment and cash transactions rely on coins to make change.”[13] Without cash and coins in circulation, it’s harder for “underbanked” families to buy basic necessities, or other goods and services, and to fully participate in the economy. The social value of cash is at the core of financial inclusion. Put simply, getting coins moving through the economy is the neighborly thing to do.
[1] Bureau of Engraving and Printing. “BEP History: Papers prepared by the Historical Resource Center, 2004.”
[2] U.S. Department of the Treasury. “Distribution of Currency and Coins.” Last updated November 13, 2014.
[3] Heather Hennerich. “How Do Coins Get to Where They’re Needed?” Federal Reserve Bank of St. Louis Open Vault Blog, September 23, 2020.
[4] U.S. Department of the Treasury (2014).
[5] Federal Reserve Bank Services. “Strategic Allocation of Coin Inventories.” June 11, 2020.
[6] Federal Reserve Bank Services. “Federal Reserve Convenes U.S. Coin Task Force with Industry Partners.” June 30, 2020.
[7] George A. Mooney. “U.S. Becoming Penny-Poor; Mint Lacks Metal and Funds.” New York Times, September 24, 1951.
[8] George A. Mooney. “Shortage of Coins Remains Serious.” New York Times, November 25, 1951.
[9] New York Times. “Million Pennies Bought to Ease Coins Shortage.” October 13, 1951.
[10] Federal Reserve Bank Services (June 30, 2020).
[11] See getcoinmoving.org for more recommendations and resources from the U.S. Coin Task Force.
[12] Board of Governors of the Federal Reserve System. “Report on the Economic Well-Being of Households in 2020.” May 2021.
[13] United States Mint. “United States Mint Statement on Circulating Coins.” July 23, 2020.
© 2021, Federal Reserve Bank of St. Louis. The views expressed are those of the author(s) and do not necessarily reflect official positions of the Federal Reserve Bank of St. Louis or the Federal Reserve System.
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