As I have traveled through the United States over the past few years, I have noticed that there are many special-issue coins there: the quarters honouring different US states, the different Jefferson and Buffalo nickels, and the variations even in the one-cent coin.
At the same time, in Canada, we have had comparatively fewer special-issue coins that actually find their way into circulation: the poppy quarter to honour veterans, and the 2010 Olympic games quarters featuring different winter sports are the ones I recall seeing most, but of course the looney ($1 coin) commemorating the 100th year of the Saskatchewan Roughriders was popular in Saskatchewan last fall.
I save all the special-issue coins I receive. It's almost as if I'm lame enough that I buy coins from the Franklin Mint and the like, but it's not quite that serious. One exception occurred when I bought a $10 roll of quarters featuring the sport of curling and took them to the curling club, where I passed them out; I didn't save those, but I expect many of the folks there did.
For years, every time I received a special-issue coin, I'd throw it into a separate container on my dresser. I kept telling Ms. Eclectic I was saving them in case any of our grandchildren ever started a coin collection. Meanwhile, of course, it's as if I was buying those coins from the mints as collectables. I paid face value which, most notably for quarters and loonies, was well-above the minting costs, and the mints were profiting from my decision to save the coins.
Then last winter, much to my surprise and delight, I heard one of our grandchildren half complain when she received in change the special one-dollar coin commemorating the 100th year of the Saskatchewan Roughrider football team. As I recall she said,
"Darn, now I don't have any money"
Me: "Why not? You have a looney."
Granddaughter: "But this one is special. I can't spend it."
It turns out that she, like me, saves all the special-issue coins. So as we were down-sizing, purging, cleaning out our house as we prepared to move to our apartment condo, I dug out the container of coins that I had and passed them on to her.
In the process of collecting these coins and passing them on to our granddaughter, several things occurred to me:
- I expect that many special-issue coins find their way into collections just as they did for me. What that means is that (aside from the pennies, and probably the nickels, [see here]), the US and Canadian gubmnts are behaving somewhat like a latter-day Franklin Mint: producing coins at a fraction of their retail value and selling them to the public. We know this generally happens these days with all the standard-issue dimes and quarters these days, but to the extent that the special-issue coins go into collections and out of circulation fairly rapidly, the gubmnt mint makes higher profits (seignorage) with the special-issue coins than it does with its standard issue coins. As the Wikipaedia entry says,
Seigniorage is a convenient source of revenue for some governments. [note the misspelling of gubmnts].
- The US seems to have many more of these special-issue coins than does Canada. Of course one reason is that they have 50 states plus a few protectorates or territories, compared with Canada's 10 provinces and 3 territories.
- As I pondered that observation, I wondered why the US would have so many more special-issue coins. If there is seignorage to be had, surely the Royal Canadian Mint could stamp out more special issue coins and earn more seignorage. It turns out the Canadian Mint is quite active in the production of special-issue, seignorage-earning coins, but it sells them as collector sets for prices well-above the face value of the coins. The Royal Canadian Mint has adopted more of the Franklin Mint model and less of the US mint model.
- It occurs to me that economies of scale and market size might explain the different models. Given that it costs quite a bit to produce the dies and to set up the production runs of the special-issue coins, it might make sense that for smaller production runs in the smaller Canadian market, the Franklin Mint model is more lucrative than is the US mint model. In Canada, the most profits can generally be earned by producing special-issue coins at high prices for a limited number of collectors. Meanwhile, in the US, the market is so large among more common collectors (like me), relative to set-up and minting costs, that more general collectors are catered to, with the special-issue coins being issued at face value and finding their way into circulation initially.
- Of course this is all speculation, based on my casual empiricism that the US produces more special-issue variations of coins for circulation than Canada does.
An additional observation: it turned out that when I gave all my special-issue coins to one granddaughter, I realized she was receiving a lot of coins with a total value that was pretty high. To try to balance the gift by giving something of equal value to her sister, I offered her sister my treasured skunk skin. For some inexplicable reason, that didn't seem to go over so well.
Addendum: it strikes me as silly for the US mint to bring out special-issue pennies. When the distribution costs are included with the production costs, surely those pennies earn negative seignorage, i.e. lose money. By encouraging people to save those pennies, all the US mint is doing is increasing the demand for the pennies and increasing their losses. It all reminds me of the joke about the sociologist who went into business. When it was pointed out that the business was losing five cents on each item sold, the sociologist responded, "I know, but we make up for it in volume." I have to wonder if a sociologist is making the decisions about minting special-issue pennies in the US.
Update: Well, here's an interesting form of seignorage: the $5trillion coin.