September 13, 2016 – Producing coinage as cheaply as possible seems to be the most important task for many national mints. But how surprised was the audience when Jon Cameron stated at the Coin Conference in Madrid in 2015 that it wouldn’t make any sense for the US Mint to save a few millions, while the change of material for small money would cost the industries involved much, much more. Thus the US Mint has demonstrated that it is more than a profit centre; it is a national mint committed to the public.
Tom Jurkowsky, Chief of the Office of Corporate Communications, U.S. Mint.
Therefore, we have asked Tom Jurkowsky, Chief of the Office of Corporate Communications, a few questions about the operating principles of the US. Mint.
What are the major tasks of the U.S. Mint?
Created by Congress on April 2, 1792, the United States Mint is the world’s largest manufacturer of coins and medals. It operates globally alongside leading online retailers and ranks among the most technologically advanced enterprises in the country. The U.S. Mint has approximately 1700 employees and generates more than $3.1 billion in annual revenue.
The Mint produces circulating coinage for the nation to conduct its trade and commerce. Circulating coin production is approximately 16 billion annually.
In addition to producing coins, the U.S. Mint has other responsibilities, including:
- Distributing U.S. coins to the Federal Reserve banks and branches
- Maintaining physical custody and protection of U.S. gold and silver assets
- Producing proof and uncirculated coins, Congressionally authorized commemorative coins and medals for sale to the general public
- Manufacturing and selling platinum, gold and silver bullion coins
The U.S. Mint operates six facilities. Each facility performs unique functions critical to our overall operations. Manufacturing facilities in Philadelphia, Pa. and Denver, Colo. produce coins of all denominations for circulation. Both facilities also produce dies for striking coins.
All sculpting and engraving of coins and medal designs is performed in Philadelphia. Production of numismatic products, including bullion coins, is primarily at facilities in San Francisco, Calif., and West Point, N.Y. All four production facilities produce commemorative coins authorized by federal laws.
The United States Bullion Depository at Fort Knox in Kentucky stores and safeguards U.S. gold bullion reserves. Administrative and oversight functions are performed at headquarters in Washington, D.C.
Q: Who is making the most important decisions concerning minting issues? Politics or the management of the U.S. Mint?
Since Fiscal Year 1996, the U.S. Mint has operated under the Public Enterprise Fund (PEF) (31 USC § 5136). The PEF enables the U.S. Mint to operate without an appropriation. Revenue is generated through the sale of circulating coins to the Federal Reserve Banks (FRB), numismatic products to the public and bullion coins to authorized purchasers. Revenue in excess of amounts required for operations are transferred to the U.S. Treasury General Fund.
Coins and medals (e.g., Congressional Gold Medals) issued by the Mint are under the jurisdiction of congressional “authorizers,” while more general policies affecting the bureau are determined by budget “appropriators.”
Coins and medals are authorized by, and under the general oversight of:
- Senate Committee on Banking, Housing and Urban Affairs (legislation considered and hearings held at the full committee level)
- House of Representatives Committee on Financial Services and its Subcommittee on Monetary Policy and Trade
In 2004, the House of Representatives Committee on Ways and Means asserted its jurisdiction over coin issues under the U.S. Constitution (Section 7, Clause 1)–“All Bills for raising Revenue shall originate in the House of Representatives…” by requiring consideration of all commemorative coin program bills by the full body.
Commemorative coin programs are statutorily limited to only two per year. Recipient organizations identified by the authorizing legislation for each program are eligible for surcharges after all costs to produce the coins are recovered by the Mint.
The House of Representatives and Senate authorizing committees have committee rules requiring two-thirds co-sponsorship of each body (290 in the House of Representatives and 67 in the Senate) before the committee considers legislation authorizing commemorative coin programs and Congressional Gold Medals.
Commemorative coins honor persons, events and places of historical significance to the nation, while Congressional Gold Medals are the highest civilian recognition bestowed by Congress. The Mint is usually authorized by Congress to produce and offer for sale bronze medal duplicates (three inches in diameter) and replicas (1.5 inches) of Congressional Gold Medals after they are awarded to the recipients.
Q: The mintage of U.S. commemorative coins are some of the highest in the world. What are the reasons for producing these commemorative coins?
Congress authorizes commemorative coins that celebrate and honor American people, places, events and institutions. Although these coins are legal tender, they are not minted for general circulation. Each commemorative coin is produced in limited quantities and available for only a limited time.
As well as commemorating important aspects of American history, culture and respected organizations, these coins help raise money for important causes. Part of the price of these coins is a surcharge that goes to organizations and projects that benefit the community. For example, surcharges on the U.S. Capitol Visitor Center commemorative coins helped build a new visitor center under the U.S. Capitol’s East Plaza.
Since the modern commemorative coin program began in 1982, the Mint has generated more than $500 million in surcharges to help build new museums; maintain national monuments such as the Vietnam War Memorial; preserve historical sites such as George Washington’s home and the Statue of Liberty; and support various Olympic programs.
Q: How do you rate the question of security?
The U.S. Mint has its own police force of law enforcement professionals, maintaining the highest level of security for its employees, facilities and assets entrusted to us. It is the Mint’s longstanding policy not to discuss or provide details of its security operations or procedures.
Q: Do you produce coins for other states? Why or why not?
Congressional authorization for the production of foreign coins by the U.S. Mint began with the Act of January 29, 1874. The first foreign coins were produced for Venezuela during fiscal year 1876, in several denominations.
A detailed summary of foreign coins produced through calendar year 1962 appeared for the first time in the 1963 Annual Report of the Director of the Mint (pgs. 63-89). By then, the U.S. Mint had produced a grand total of 6,794,360,597 coins for 37 different countries.
Production of foreign coins was not a continuous activity. Under the terms of the proviso in the 1987 legislation, the 1965 annual report stated that, “…During the year under review the United States Mint temporarily suspended the customary service of minting coins for other governments in order to utilize its entire capacity and facilities for the production of domestic coins…” Foreign coin production would resume, or be suspended, as needed throughout the history of this activity.
By December 31, 1980, the Mints at Philadelphia, San Francisco, New Orleans, and Denver produced a total of 11,193,348,346 coins for 42 foreign countries.
The last record of foreign coins produced by the U.S. Mint dates to the “Annual Report of the Director of the Mint for Fiscal Year Ended September 30, 1984” (page 33), specifies 45,600,000 pieces produced for Panama.
Documents in the Mint historian’s reference files and digital archives are very limited on this topic. Surviving agency records have been retired to the National Archives and are now under their jurisdiction as permanent records of the U.S. Mint (Record Group 104).
Without access to all the facts, it’s difficult to present specific reasons why foreign coinage production was discontinued. It seems that by 1987, the Mint’s own production schedule could no longer support the manufacture of foreign coins. The five-year (1980-1984) American Arts Gold Medallion Program had ended, the first of the modern commemorative coins had been issued in 1982, and production for the American Eagle Gold and Silver Bullion Program – authorized in 1985 – was already active. With more American Eagles and commemorative coins anticipated in the future, the simultaneous production of foreign coins would have conflicted with the Mint’s primary responsibility to manufacture coins for the nation.
The feasibility of producing foreign coinage is reviewed from time to time, but no decision has been made, to date, to reactivate this function.
Q: Do you think a nation needs a national mint?
When the framers of the U.S. Constitution created a new government for their untried Republic, they realized the critical need for a respected monetary system. Soon after the Constitution’s ratification, Secretary of the Treasury Alexander Hamilton personally prepared plans for a national mint. On April 2, 1792, Congress passed The Coinage Act, which created the Mint and authorized construction of a Mint building in the nation’s capital, then Philadelphia. This was the first federal building erected under the Constitution.
Since our institution’s founding, the men and women of the Mint have taken great pride in rendering the story of our nation in enduring examples of numismatic art. To hold a coin or medal produced by the Mint is to connect to the founding principles of our nation and the makings of our economy.
Here and abroad, people cherish our products because they are stores of value, as well as exquisite encapsulations of America’s ideals. In forms designed to be passed from hand to hand and saved from generation to generation, the coins we mint reflect our shared history and traditions. Whether it is learning to count, understanding the value of saving through the weight of a piggy bank or remembering the coin toss at your first football game, coins connect us to many of our fondest memories.
Perhaps most importantly, the U.S. Mint connects us with the core values of America. From the great promise of our “E Pluribus Unum” credo beneath the banner of Liberty, each coin is a small share in the ongoing American experience, linking us in an unbroken line to our country’s – and the Mint’s – origins in the U.S. Constitution.
Q: Some denominations of the U.S. currency are produced with the risk of losing money as soon as metal prices rise. Nevertheless, it was decided to retain the alloy of the blanks, as a change would bring a loss on the part of many concerned parties belonging to the private sector. So what is more important for the Mint: Serving the public or making a profit?
The primary mission of the Mint is to manufacture and distribute circulating coins, precious metals and collectible coins, and national medals to meet the needs of the United States. Like all manufacturing organizations, in order for the Mint to create these products and generate their respective revenues, costs must be incurred.
FY2015 circulating coin shipments to the FRB reached a total of 16.2 billion coins. Continuing a trend that began in 2011, shipment volumes increased for all denominations. The overall mix for FY2015 coin shipments included 57% pennies, 9% nickels, 18% dimes, and 16% quarter-dollar shipped. Over the past five years, the Mint has had approximately $265 million of negative seigniorage resulting from penny production and $231 million from producing nickels. These are significant losses that reduce amounts the Mint returns to the Treasury General Fund. For a business, this is unsustainable. However, the U.S. Mint is commissioned by Congress to serve the American people by producing circulating coinage to meet the needs of the nation – and we consistently carry out our mission in the most efficient and cost effective manner possible.
Decisions regarding the metal composition of coins are made by Congress rather than the Mint. To date, no metal composition has been identified that will reduce the cost of producing the penny below one cent. Other compositions for other coin denominations are being researched, but no decisions have been made to change metal compositions. As a result, the Mint will continue to serve the American public, which is our highest goal, in spite of the changes in metals prices.
Ursula Kampmann conducted this interview.
A short version of this interview was published in the Mint News Quarterly 3 / 2016 in cooperation with Currency News. Here you will find the homepage of Currency News, where you can subscribe to this journal.
Not too long ago, CoinsWeekly paid a visit to the San Francisco Mint. Here you will find the report about it.