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

I apologize for the delay in posting this Day 5 summary of the Hearing. Hopefully, it won't disappoint!


Prior sessions of the Hearing heard testimony from the politicians, the Olympic committees, Olympic athletes, the Treasury Department and numismatic hobby leaders - it was time to discuss matters with the private marketers!

The final session of the Hearing of the Subcommittee on Consumer Affairs and Coinage (under the House Committee on Banking, Finance, and Urban Affairs), regarding the Los Angeles Olympic coin proposals, began - as each session had - with Frank Annunzio (D-IL) and Fernand St Germain (D-RI) making opening statements that politely attacked the others' proposed legislation and enthusiastically supported their own.

I had to chuckle when the two got into a "Who got the most letters of support" contest. St Germain entered into the Hearing record a lengthy list of supporters and Annunzio threatened to bring in the 10,000+ letters he claimed to have received! Oh, the theatrics!

With the 'prelims' complete, Robert S. Warrington, Vice President Marketing, the Deak-Perera Group of New York, was called to testify. Warrington came at the issue from a somewhat 'hybrid' perspective - in what today would likely be termed a 'public-private' model.

On one hand, he believed that the US Government was not in a position to be a success promoting an Olympic coin program and thus maximizing the program's fundraising aspects. On the other, he did not support turning over the program to a private marketer and thus relinquishing control.

He promoted an approach that kept the Government in charge of the coin program, but in a role that managed outside experts that were better suited to the required tasks:

"The question is basically one of harnessing the right resources to do the job. The Government does not have to set up a private company to do the job, it need only take advantage of the existing expert's already available. These resources certainly do not exist in the Government, but they do in the private sector. There is no need to set up a whole company,"

"Just as a private business would bring in experts to do the selling job, so can the Government. The challenge to Government is to get the right resources. What is needed?"

Warrington identified experienced, high-powered Management, Advertising experts, Direct mail experts and a promotional agency to handle distribution.

"These resources all exist and are used every day by private business. There is no reason why the Government cannot use them in a similar way."

Warrington made it clear that he believed his company could step in and assist the Government with the Olympic coin program. He stated:

"My firm, Deak-Perera, the oldest and largest retailer of foreign currency exchange and precious metals products in the United States, would very much like to sell the coins."

Warrington believed that the approach he had outlined would result in lower coin prices and more funds for the Olympic games and amateur athletics. Such an opinion was not shared by Chairman Annunzio who stated:

"I am convinced in my own mind - you have not swayed me. I am convinced after listening to former Directors Eva Adams and Mary Brooks, and the present Treasurer of the United States, Bay Buchanan, who says that within 4 months she could produce $31 million to both Olympic committees. We would just be giving away a dollar because in my own heart I am convinced that our mint does have the facilities and the know-how and the wherewithal to mint and to market these coins."

Following a Q&A with Mr. Warrington, the Hearing moved on to a panel consisting of representatives of the Coin Group. The then-current Coin Group was a joint venture composed of Occidental Petroleum and Lazard Freres. Representing Occidental Petroleum Corporation was its Chairman of the Board, Armand Hammer.

Note 1: Armand Hammer was not the name sake for the well-known laundry detergent/baking soda products of similar name - the product names were in place prior to Armand's birth. Hammer was a stockholder in the brand's parent company and served for a time on its board, however.

Note 2: The original Coin Group also included The Franklin Mint ("TFM"), but, due to Securities and Exchange Commission ("SEC") issues involving several top company executives regarding insider trading, TFM was dropped from the partnership.

Armand established his reason for testifying at the Hearing:

"I am here to testify on behalf of the Coin Group, a joint venture composed of Occidental Petroleum and Lazard Freres. The Coin Group is interested in serving as the marketing organization which would be selected to carry out the marketing and distribution of U.S, Olympic commemorative coins under the provision of [the bill] as introduced by Chairman St Germain.

"My testimony will explain why the Coin Group wants to serve as the marketing organization and will respond to certain concerns.

[...]

"The Coin Group desires to act as the marketing organization under the Olympic commemorative coin program, in part, because it hopes to make a profit.

"We make no apology for that and certainly do not think it is necessary to argue before this subcommittee that the profit motive has served this Nation well."

Ah, capitalism. Where would the United States ("US") commemorative coin series be without it?!

Hammer continued,

"We believe that the profit motive will serve the cause of the Olympics equally well by insuring that the commemorative coin program is carried out properly and in a way that will insure maximum revenues for the Olympic committees.

"I would like to emphasize, however, that the hope of making a profit is certainly not the only motivation behind our interest in the coin program.

"The companies comprising the Coin Group and particularly our own company have investment opportunities which would promise equal profits with less risk.

"The proposed Olympic coin program is, however, very important to the Olympic committees and our athletes and, frankly, we want to be a part of the program.

"We are satisfied that we can and will do the best job of carrying out a successful program. Our desire to aid the Olympics explains our willingness to assume the high risks which will be imposed upon us, including the obligation to pay to the Olympic committees a minimum of $30 million regardless of any failure to make a profit or even to break even."

IMO, it was an impassioned statement of Hammer's desire for the Coin Group to be a part of the Los Angeles Olympic coin program - the one proposed by St Germain!

Hammer then discussed how members of the Coin Group handled the marketing of the 1980 Moscow Olympics coin program (outside of Communist countries) and how the US Olympic Committee ("USOC") received over $400,000 from the coin sales - even though the US boycotted the Games and the Coin Group was not legally obligated to pay the full amount to the USOC. He also noted that even though the Coin Group contracted for the coin program prior to the US announcing its boycott, it still met the terms of its contracts.

Mr. Hammer closed his testimony by clearly establishing his position regarding the St Germain vs. Annunzio coin proposals:

"The bill introduced by Chairman St Germain offers this country an opportunity to provide a significant and, indeed, essential source of funding for the Los Angeles Olympic Organizing Committee and the US. Olympic Committee-without Government risk and without the use of taxpayer funds.

"I believe in the program and I believe that despite the delays, it can still work. It is, however, essential that the bill be passed promptly."

Next to testify was Thomas F. X. Mullarkey, partner of Lazard Freres. (An apropos surname?)

Mullarkey was present to discuss the US Olympic coin legislation, including the St Germain and Annunzio proposals. He began by discussing the Coin Group's original selevction by the Los Angeles Olympic Organizing Committee ("LAOOC") for the marketing/distribution of the Los Angeles Olympic coin program:

"First, members of the Coin Group had been the exclusive marketing organization for the 1980 Moscow Olympic commemorative coins in the free world, and some of its personnel had also been involved in marketing Canadian Olympic commemorative coins within the United States.

"Second,, the necessary Coin Group had the financial and other resources to manage and finance a large coin program.

"Finally, the Coin Group offered the LAOOC favorable financial terms, including an initial deposit of $5 million and a firm guarantee of $50 million, regardless of the sales levels of the program."

Mullarkey then outlined the changes/reductions made to the original coin program proposal (Senator Cranston bill), along with the various scaled-down competing bills introduced and followed with:

"I would like to say for the record, Mr. Chairman, that we were opposed to the reduction in the number of coin designs because it significantly reduces the profitability of the coin program.

"As a direct result, the Coin Group had to decrease its guarantee to the LAOOC from $50 to $30 million. However, the Coin Group supported the Patterson bill, which also had the backing of the LAOOC, the USOC and the Department of the Treasury.

"I also want to inform the subcommittee that in March 1982, the Coin Group entered into a contract with the LAOOC which set forth in detail the terms of the letter agreement which the parties had reached in January 1981, regarding the marketing of the coins, except for certain modifications made necessary by the reduction of the number of coin designs.

"This contract, which had been given exhaustive review by Treasury officials, insured that the financial risk and burden of the coin program was shouldered by the Coin Group, not the LAOOC or the US Government.

"In early April 1982, the Coin Group felt compelled to terminate the contract, which it had the right to do, in the event the coin legislation was not enacted by March 31, 1982. Our primary reason, for terminating, the contract was that the continuing delays in passing Olympic coin legislation, along with the reduction in the number of coins noted earlier, had substantially decreased the profitability of the program and increased its risks."

Mullarkey then expressed the Coin Group's support for the St Germain bill and its opposition to Annunzio's bill. He stated that the Coin Group did not believe the limited Annunzio coin proposal could deliver the desired sales/profits results.

Mullarkey continued,

"We are also concerned about the fact that your bill does not guarantee the LAOOC or the USOC a single dime. If the country adopts a privately marketed coin program and it fails to live up to expectations, the Olympic committees will receive at least $30 million."

As part of his concluding remarks, Mullarkey took one more shot at Annunzio and his proposed coin program:

"As I stated before, we [the Coin Group] continue to be interested in serving as the marketing organization for the Olympic commemorative coins. If we are selected, we pledge to conduct the coin program in a professional and efficient manner which will be a credit to the LAOOC, the Olympics and this country.

"I would like to say, for the record, Mr. Chairman, that we are opposed to the reduction in the number of coin designs because it significantly reduced the profitability of the coin program."

The last Coin Group panel member was J. Donald Gartland III, a marketing expert/consultant. He offered supportive testimony on behalf of the Coin Group:

"In summary, our support for the [St Germain] legislation is based upon the fact that it provides a multi-coin program and for management of the marketing and distribution of the coins by a private organization.

"We consider it to be essential for Olympic coin legislation to include both a multicoin program and private marketing if the commemorative and fund-raising purposes of the program are to be fulfilled.

"Based on our experience in previous Olympic commemorative coin programs, and in particular our experience with the Montreal and Moscow Olympic programs, we are convinced it is essential that there be a variety of coin designs which is also in keeping with the tradition of multi-coin Olympic programs."

"I would also like to note that your program [referring to the Annunzio proposal] provides for a minting of 50 million silver coins, which is an enormous number of coins per design. We believe that a program which is authorized to produce this number of coins would be difficult, if not impossible to market outside of the United States and particularly in Europe."

"We [the Coin Group] are convinced that a successful program requires that it be managed by a private marketing organization. We do not believe that the U.S. Mint is in the position to make the numerous decisions that have to be made and to handle the numerous details that have to be attended to if the program is to be a success."

Gartland closed his remarks with a personal guarantee:

"Finally, Mr. Chairman, I would like to emphasize that as a person who will be essentially involved in the marketing of the coins, I am acutely aware of the importance that the program be carried out with the highest level of professionalism and integrity and I would like to assure this subcommittee that this will be done, and I appreciate the opportunity to express my views."

The conclusion of the panel's statements led to an extended Q&A session. Most of the Subcommittee's questions were directed to Mr. Hammer, though Mr. Mullarkey and Mr. Gartland were also called upon for specific topics. Bottom line, neither side was swayed by the arguments of the other, with Annunzio stating:

"The question then that must ultimately be resolved is not which bill wins the votes in the committee or in the House, that is not the test of an Olympic program. The test is which program will win the support of coin collectors and the general public. I think the general public will support my bill because all of the profit goes to the athletes. I question whether or not the general public will support a program that turns only $5.40 out of every $25 raised to the athletes [the St Germain coin proposal].

"It is no secret that Congress is not held in very high esteem by the general public. How can the people not hold us in a very low regard if we give away our mint, sell out to private interests and generally ignore the little people? That is the reason I am urging that we follow the normal legislative process on this legislation, so that we don't get hit hard just like we have been getting hit, undeservedly so, on our $75 allowance per day, in the press, living away from home. We are being held in very low esteem, and as the years go by I want to tell you you might not agree with me, but the quality -- we got quantity around here, but I am worried about the quality.

"We can go a long way toward renewing public confidence in the Congress with this legislation. But only if we vote to protect the interests of government and its people rather than protecting the lobbyists and their high paying special interest clients."

With that, the final session of the Los Angeles Olympic Coin program Hearing was adjourned.


See "TBD" - 1983-84 Los Angeles Olympics - Post-Hearing Aftermath! to conclude 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