Commems Collection Classic: What If? 1950 Intermediate Coinage - Part I

The year 1950 was a busy one for "Intermediate Coinage" proposals in the United States ("US") Congress. (Intermediate Coinage = A coin with a denomination in between existing US coinage denominations.) There were no less than six intermediate coinage bills introduced between the Senate and House of Representatives ("House"); all called for new coins for circulation to support daily commerce.

Organized efforts for intermediate coinage denominations were formalized in 1948 with the organization of the American Institute for Intermediate Coinage ("Institute") - designed to be a research and public relations organization that promoted intermediate coin denominations. The Institute argued for the introduction of intermediate coinage - namely, a 2-1/2 cent and a 7-1/2 cent piece - to better serve industries such as soft drinks, music vending/jukebox and others that made use of vending machines.

The Institute was a direct driver behind several of the intermediate coinage proposal introduced in 1950.

7-1/2 Cents

First to be introduced was a Senate bill by Sheridan Downey (D-CA). It was introduced in early January 1950 and was referred to the Senate Committee on Banking and Currency.

The bill called for a 7-1/2 cent piece.

3 Cents

Warren Grant Magnuson (D-WA) introduced two bills in the Senate in mid-January 1950. The first proposed a three-cent coin. Upon its introduction, it was referred to the Senate Committee on Banking and Currency.

7 Cents

Magnuson's second coin bill, introduced at the same time as his three-cent coin proposal, called for a seven-cent piece. As with his other coin bill, it was referred to the Senate Committee on Banking and Currency.

2-1/2 and 7-1/2 Cents

A fourth intermediate coinage bill was proposed in the Senate in early March 1950. The bill was introduced by Glen Hearst Taylor (D-ID) on behalf of himself and Sheridan Downey (D-CA), Homer Earl Capehart (R-IN) and Harry Pulliam Cain (R-WA). The bill called for the minting of 2-1/2 and 7-1/2 Cent pieces.

The bill was referred to the Senate Committee on Banking and
Currency.

The Senate Banking Committee's Subcommittee on Currency and Coinage - Senator Taylor was the Subcommittee Chairman - held a Hearing on its coin proposals in March 1950.

Nellie Tayloe Ross, Director of the Bureau of the Mint, was the first to testify. She was clearly opposed to the coin proposals:

"It is my personal view, and that of the Treasury Department, that no conditions now exist which would justify the addition of new coins to our system. No country-wide demand or desire for it is evident. Were there a widespread insistent call for some one particular denomination, it would seem to have significance, but when there are proposed six at a time, 2-1/2 , 3, 6-1/4, 7, 7-1/2, and 12-1/2 cents, it would suggest that each one was the idea of some group, probably a small one, expecting to benefit by it ."

Note: Ms. Ross was referring to the Senate as well as the House bills that proposed intermediate coinage.

Ross also discussed the technical/production and economic issues related to introducing such new coins - each would have negative consequences in the Mint's view.

During Q&A with Director Ross, Chairman Taylor stated what might be my favorite line of the two-day Hearing:

"...in introducing this bill, I did not introduce it because I was sold on the idea of fractional coins, but I have had a number of people, and the committee told me that they had been contacted by numerous people, interested in the question, and so I introduced the bill, simply as an excuse to have a hearing and see what people had to say about it."

Talk about transparency!

Edwin W. Mehren, President of the Squirt Company (a beverage company) and Chairman of the American Institute for Intermediate Coinage. was next to testify. He, of course, argued in favor of the new coinage, indicating that he had spoken to "thousands of people" who supported the new coinage.

He argued that the new coins would enable more accurate pricing of many items, enable lower cost increases in a growing economy (i.e., slow inflation) and ultimately create better values for consumers. He claimed a net savings to the American public of "between five and eight billion dollars a year." (This was questioned by Senator Taylor!)

To combat one of Director Ross' arguments regarding the difficulties that would be experienced by businesses if they had to track fractional amounts, Mehren entered into the Record a series of letters from companies that produced accounting machines with each indicating that their machines could handle the intermediate amounts without issue.

Mehren also entered into the Record a series of newspaper editorials from across the US that supported intermediate coinage and extolled the value of such coinage for small purchases such as "newspapers, bus fares, candy bars and chewing gum, cigars and cigarettes."

Mehren also entered a 1940 report from the Federation of Tax Administrators into the Record. After discussing the pros and cons of the use of sales tax tokens by some states to address the sales tax on low-cost items, the Report stated:

"The difficulties experienced with the use of State tokens have suggested issuance of fractional coins by the Federal Government. The chief arguments for fractional coinage by the United States are these: such coins would be distinct yet uniform in all the States; they would be acceptable as legal tender in all the States; they would save the States the cost of issuing tokens and administering a token system; and they would not be liable to be destroyed or used for nonmonetary purposes as has been found to be the case in a few States."

Mehren was followed by the testimony of three company executives:

- Claude J. McLain, President Farmers Creamery, representing the Milk Industry Foundation
- Richard A. Conover, President, O-So-Grape Company and First Vice President, National Brands Soft Drink Institute
- Joseph Strathman, Owner of Seneca Wholesale Company and President of The Citizens State Bank (Seneca, Kansas)

Each of the executives voiced their support of the intermediate coinage and outlined advantages that would be enjoyed.

The Hearing was then adjourned for the day, and was scheduled to resume the following day.


To continure with the Day 2 proceedings of the Hearing and review the House bills that called for intermediate coinage, see: What If? 1950 Intermediate Coinage - Part II