Commems Collection Modern: 1983-84 Los Angeles Olympics - The House Hearing - Part A

I tried to avoid it, but I am having to split the discussion of the House Subcommittee Hearing into installments. Try as I might, I just couldn't edit my draft down to one manageable piece without losing the core of its content! The House Subcommittee Hearing to be discussed covered a broader range of topics/issues. and was far more contentious than the previously discussed Senate Hearing. It often seemed as if a criminal prosecution case was being tried, with witnesses getting grilled by one of more members of Congress. It must have been quite a scene back in 1982!


That said, iit's time to shine the spotlight on the 'Bulldog' - Representative Frank Annunzio (D-IL). I dare say, that if it wasn't for Annunzio and his persistence, the modern United States ("US") commemorative coin program would look very different!

Note: I realize that this is a long post, but I believe the material it covers provides a solid foundation for what will follow in future installments.

As mentioned in my last Los Angeles Olympic coins post, Annunzio, as Chairman of the House of Representatives ("House") Subcommittee on Consumer Affairs and Coinage (under the House Committee on Banking, Finance, and Urban Affairs), called a Hearing to discuss the Los Angeles Olympic coin proposals then active in Congress.

It was a comprehensive Hearing that exceeded previous Hearings for coin proposals - including those that discussed more coinage bills!. As I mentioned previously, the Hearing extended over five days in April and May, 1982, and involved testimony from over two dozen witnesses, including representatives of the relevant Olympic committees and their potential marketing partners.

It is impossible for me to fully summarize the Hearing here - the transcript for the multi-day Hearing is nearly 600 pages long! - but suffice it to say that Representative Annunzio was relentless in his pointed questioning and witness follow-up throughout the proceedings - he was a strong opponent of a private marketing company taking over a US commemorative coin program (at least for US sales).

He also objected to the possibility of such a marketing company potentially abusing collectors with an extremely large, multi-year coin program that stood to greatly benefit (financially) the marketing company more than the Olympics and he questioned the "guaranteed" payments to the Olympic committees - a minimum of $30 million - as a result of contract award to the selected marketer.

Here are a few excerpts from Committee Chairman Annunzio from his opening comments:

"Today the subcommittee meets to begin hearings on the various proposals to strike Olympic coins.

"This is an issue that has generated much controversy and debate. I intend to have full hearings to permit everyone an opportunity to present their views on this issue. No one who wants to testify will be denied the opportunity to testify."

And,

"Proponents of multi-coin programs sold by private marketers have accused me of many things. I have been accused of reneging on my promises, and of not making known my specific objections to the multi-coin bills.

"My concerns are simple. They have been set out in great detail in 15 speeches to the House, 2 press conferences, innumerable meetings, and hundreds of letters.

"I want a coin program that will raise money for the Olympics without ripping off the American people and the American Government. I just can't understand why that is so difficult for people to understand. This is a program that belongs to the American people and not to the private marketers."

And,

"I am not against private companies making profit because this is what the free enterprise system and the private system is all about, but I am against profit being made on the blood, sweat, and tears of American athletes, amateur athletes, and this is what they [the proposed private marketers] are doing."

From these comments, I think Annunzio made his position very clear from the outset of the proceedings.

House Committee on Banking, Finance and Urban Affairs Chairman and Subcommittee member Fernand Joseph St Germain (D-RI) also offered an opening statement (St Germain was the sponsor of the House bill that supported a large, multi-year coin program marketed by a private company). Some excerpts:

"I have introduced [a bill], which I believe is a reasonable compromise among the various programs before this subcommittee.

"I have introduced this legislation for four basic reasons. First, the XXIII Olympic games will be held in Los Angeles in the summer of 1984 and the prestige of the United States will be on the line as the entire world watches.

"Second, during this period of record deficits, it appears there is little or no possibility that the administration or the Congress will endorse the use of millions of dollars of public moneys for U.S. athletes or the conduct of the Olympic games.

"Third, consequently, private fund-raising activities need to be encouraged. Olympic coins have been used by other countries in such efforts in all the recent Olympic games.

"Fourth, that an Olympic coin program be designed to assure that the private participants are willing and able to provide not only the production and marketing costs for the coins, but an up-front $30 million guarantee for the Olympic committees.

"While I have the greatest respect for the subcommittee chairman and the subcommittee system, I would say that I do not want this subcommittee, for whatever reason, to become the burial ground for the 1984 Olympics."

[...]

"We can tighten the screws, make the conditions difficult, satisfy the accountants, ignore the realities of private fundraising efforts, and end up with no program. It would be better to face a straight up or down vote than to see the issues hidden behind a smokescreen of unworkable proposals. I think we owe this much to our Olympic athletes. I think we owe this much to the American people."

It's clear, the "opposing" sides were staking out their positions early in the Hearing!

The first witness to provide testimony was J. Dexter Peach, Director, Energy and Minerals Division, General Accounting Office ("GAO"). He was accompanied by several colleagues.

Mr. Peach was not an advocate for any specific coin proposal, but rather was looking to make sure, regardless of the proposal pursued, that the Government would not be subject to unexpected costs, financial losses or missed revenue.

He outlined his key issues:

"Essentially, there are three issues which will ultimately determine the extent to which the Federal Government will indirectly finance the Olympic games through a coinage program. They are: First, the extent to which the Federal Government bears the financial risk of depreciation in the market price of the gold and silver and other costs associated with redemption of the coins at face value.

"Second, the extent to which the Federal Government incurs uneconomical manufacturing costs, thereby foregoing revenues which the Federal Government historically has derived from the minting of coins.

"And finally, the extent to-which the coins are marketed as tax deductible contributions, resulting in foregone future Federal tax revenues."

Peach then spent considerable time providing details about each issue and the risks of such issues - potentially >$300 million - with each of the Olympic coin programs proposed. From the GAO's analysis, the large, multi-year private-marketing proposals represented the greatest risk and the more conservative proposal of Representative Annunzio the lesser. This made Annunzio happy!

After concluding his testimony, Peach was subject to questions from the Subcommittee. Representatives Frank Annunzio, St Germain, Chalmers Pangburn Wylie (R-OH), Henry B. Gonzalez (D-TX), Thomas Beverley Evans Jr. (R-DE) and Jerry Mumford Patterson (D-CA) were each given several minutes for follow-up. During the first round of questions:

- Annunzio took every opportunity to tout his bill and reinforce the potential financial losses associated with St Germain's 17-coin bill

- St Germain took on the persona of a prosecuting attorney breaking down a key witness as he worked to get Peach to confirm that his bill incorporated safeguards against most of the issues Peach had raised during his testimony

- Gonzalez was most interested in the coin program's potential gold coin(s) and the Canadian coin program for the 1976 Montreal Olympics

- Evans brought up the potentially avoidable pitfalls of the Susan B. Anthony $1 coin and pushed for a market survey about the Los Angeles Olympic coin program before launching into one and spending millions of dollars on a program the public wouldn't accept.

- Patterson was focused on the financial impacts to the Treasury/Mint associated with the inevitable rise and fall of gold and silver prices in the market, as it related to a potentially unsuccessful program and the return of unsold coins to the Mint.

The US Government would stand to lose money if silver and/or gold prices fell causing the intrinsic value of the various coins to be less than their face value; the coins were specified to have an intrinsic value nearly the same as face value at the time of issue. In this scenario, if the marketing company returned a large volume of unsold coins to the Mint, the US Government would be left "holding the bag" on the loss of precious metal value while the marketer would not suffer a loss when compared against their initial purchase price for the coins.

So, for example, if the marketer purchased a $100 gold coin for $100 (plus a small surcharge on production-related costs), the coin's composition would have nearly $100 in gold value. If the spot price of gold then fell such that the gold in the coin was worth only $80, the marketer could return the coins, get $100 each for them and leave the Treasury/Mint to deal with the loss in gold value - the 'return price' floor for the marketer would always be the coin's face value..

The debate between 'camps' continued for an extended period, with both sides doing their best to enlist the support of Mr. Peach. (It often seemed as if Peach and/or his GAO colleagues were caught in the middle, and being asked to comment on topics of which they stated they were not qualified - antitrust issues, for example - they refused to give opinions in these cases.

I think this statement by Peach summed up his/the GAO position well:

"I hope that I make clear that I don't view my purpose here today to suggest any program. As I said at the outset of my testimony and tried to emphasize again at the end, I see the decision on the size and the nature of the Olympic coinage program as a policy judgment which the Congress rightfully should make, and my role is nothing more than trying to provide some information and possible options that can be considered by it in rendering its judgment. So I am not here to be in support of any specific approach to developing a coinage program."

He continued...

"I raised problems to be considered. As I indicate, the different bills address those problems differently, some in part, some more than others. But they are different, too, in terms of the bills and how they would work, in terms of marketability and the other things, all of which have to be considered."

The Hearing ended for the day after Peach was thanked and dismissed. Big changes were in the works, however. Stay tuned!


See "TBD" - 1983-84 Los Angeles Olympics - A Compromise Reached? to continue the story of the Olympic Coin Act for the 1984 Los Angeles Olympics.


For other of my posts about commemorative coins and medals, including more modern commemorative coin stories, see: Commems Collection