US Mint to Issue 2010 Proof Eagles, Research Coin Compositions in HR 6162

A comprehensive bill introduced in the U.S. House of Representatives would authorize the United States Mint to produce proof gold and silver American Eagles and change the diameter and edge letterings of the upcoming America the Beautiful 5 oz Silver Coins.

It would also give the U.S. Mint the authority to research and develop the use of alternative metals for coins, while adding reporting requirements and Congressional oversight.

The Coin Modernization, Oversight, and Continuity Act of 2010, numbered H.R. 6162, was introduced in the House by Rep. Mel Watt (D-NC) on September 22, 2010. The bill would enact a series of measures discussed in July 2010 during a hearing on "The State of U.S. Coins and Currency" before the House Subcommittee on Domestic Monetary Policy and Technology, which is led by Rep. Watt.

[Editor’s Update: H.R. 6162 passed in the House without objection on September 29, 2010.]

Proof American Eagles Authorized

The United States Mint is required by law to produce bullion American Eagles to meet public demand, but there is no such condition for numismatic versions. The enormous popularity for bullion coins caused the cancellations of the collector proof and uncirculated versions in 2009. And with bullion Silver Eagle buying at an all-time high this year — nearly 25 million have already been purchased, the 2010 Proof Silver Eagles and the uncirculated counterparts are at risk of never seeing the light of day.

H.R. 6162 would give the U.S. Mint the flexibility to produce all American Eagle Silver and Gold versions, as recommended by Mint Director Moy during the July hearing. Provisions in the bill’s "Technical Corrections" section would amend Section 5112 of title 31, United States Code, by striking "quantities" and inserting "qualities and quantities that the Secretary determines are" sufficient to meet public demand. As the U.S. Mint resides under the authority of the Secretary of Treasury, the amended law would allow the Mint to produce uncirculated and proof American Eagles even when there is unprecedented demand for the bullion versions.

"I am encouraged to know that the Subcommittee is exploring the possibility of an amendment to the law that would afford the Secretary the authority to approve the minting and issuance of American Eagle Silver Proof and Uncirculated Coins even when we are unable to meet the public’s demand for the bullion versions of these coins," Director Moy testified in July.

"We can mint 200,000 per month, and if we can begin by September, we will be able to produce about 830,000 one-ounce silver American Eagle coins to meet collector demand for this product in the remaining months of 2010," Moy added.

For the Coin Modernization, Oversight, and Continuity Act of 2010 to become law, it must pass in the House and Senate, and get signed by the President. Under the best scenario, October would seem the earliest that could happen. As such, around 600,000 numismatic Silver Eagles could still be minted this year based on Moy’s forecasts.

America the Beautiful Silver Bullion Coins

This is the inaugural year for the America the Beautiful Quarters™ Program which will honor national parks and other national sites with 56 different reverse quarter designs through 2021.

As companions to the quarters and through the Mint’s America the Beautiful Silver Coin Program, investors and collectors will also be able to purchase massive 5-ounce, .999 fine silver bullion versions of the quarters.

Production challenges, however, have resulted in their delayed release. Specifications for the silver coins mandate a diameter of 3.0 inches and edge letterings denoting each coin’s fineness and weight. The diameter and weight requirements result in a very thin coin, and produced "crumples" when letters were added to initial test strikes. To overcome the issue, the Mint purchased a new printing press and developed specialized production techniques. The last official notice from the Mint in August was that the development work was completed, and that 500,000 coins this year would be released.

H.R. 6162 gives the Mint more flexibility (which they would have preferred earlier) in manufacturing the coins. It eliminates the requirement of edge letters altogether, and it changes the America the Beautiful Silver Bullion Coin diameter specifications from 3.0 inches to between "no less than 2.5 inches and no greater than 3.0 inches."

Additionally, the design section in the authorizing America the Beautiful coin law would be amended. The silver coins would not have to be "exact duplicates" of the quarters, but instead share their "likeness."

Coin Compositions, Modernization and Oversight

The main thrust of H.R. 6162 focuses on circulating coin production expenses. An issue that has repeatedly come to light during the last several years as the cost to produce the penny and nickel jumped above their face values.

The coin composition debate returned in July when Director Moy noted that in Fiscal 2009 it took 1.62 cents to produce the Lincoln penny and 6.03 cents to strike every Jefferson nickel. The tug of war in years past has keyed on Congressional members not wanting to give up their authority over U.S. coinage and the Mint’s desire to alter a coin’s makeup as needed.

H.R. 6162 presents a compromise of sorts. It would give the U.S. Mint the authority to study and develop less expensive metallic compositions that continued to work with vending machines, parking meters and the like. However, coins would remain unchanged until a new law was enacted, keeping the power in Congress. In that respect, the bill requires the Treasury Secretary to submit a biennial report as an oversight measure:

"To the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate analyzing production costs for each circulating coin, cost trends for such production, and possible new metallic materials or technologies for the production of circulating coins."

The report would include detailed recommendations for any appropriate changes to the metallic content of circulating coins in such a form that the recommendations could be enacted into law.

As is typical with coin legislation which is introduced in the House, the Coin Modernization, Oversight, and Continuity Act of 2010 has been referred to the House Committee on Financial Services.