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 Replies: 8 / Views: 1,570 |
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Pillar of the Community
United States
691 Posts |
When does a coin become an obligation of the United States Treasury? Is it the instant it is minted or is there some accounting process after it is minted before it is officially "issued"? Any reference to a statute, regulation, or standard operating procedure would be greatly appreciated. Similar processes in other countries might also be an interesting topic for discussion.
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Pillar of the Community
 United States
7936 Posts |
5030.20—Mint Monetary Asset Transactions
The following transactions are guidelines for the Mint's reporting to Fiscal Service for activity related to the purchase of coinage metals, establishing accountability for minted coins, and reporting the transfer or sale of these assets. In addition to the accounts described in Section 5035, the Mint also uses the following accounts for reporting monetary asset transactions to Fiscal Service: 200612—Seigniorage, minor coinage; and 200613—Seigniorage, cupro-nickel clad coinage. For coins shipped to cashiers and seigniorage is realized, on its Statement of Transactions (224), the Mint: Charges account 20X4159 at an amount equivalent to the seigniorage calculation. Credits seigniorage account 200612 and/or 200613 for the difference between manufacturing cost and face value and reports this amount on the Statement of Transactions (224) in column 2. https://tfm.fiscal.treasury.gov/v1/p2/c500.html
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Moderator
 Australia
16810 Posts |
A coin becomes a "coin" the instant it is minted, but that coin doesn't officially become "money" until some time afterwards.
Coins officially become "money" when they are released from Mint control to Treasury control. In America today, Treasury contracts out bulk money handling to the Reserve Banks and their armoured car company subcontractors. So for circulation coins, they would legally become "money" once they left Mint property in the armoured van.
Take "circulation" $1 coins as perhaps a more convoluted example. Treasury orders the coins struck; the Mint strikes the coins as per the order. The coins then get hauled, by the Reserve Bank, to those giant vaults where millions of them are sitting around waiting for the day when dollar bills are outlawed and they can actually be used in commerce. Sitting in the vaults, owned by the Reserve Bank, they are "money". But if instead, they were sitting in a vault buried under the Mint itself somewhere, or in an offsite vault still owned by the Mint, they would not yet be "money"; as the Mint still possessed them. This was, as I recall, the problem with the 1933 double-eagles: they never left the Mint's control, so technically were never "money".
Coins can be legalized in other, more roundabout ways. For example, there was the (successful) legal argument that the "Tovey specimen", a 1974 aluminium cent that was given away by a congressman, had been legally "issued" by that congressman when he gave it away, and therefore was legally "money" rather than "Mint property".
For collector coins, they would legally become "money" (in a theoretical sense as these coins are NCLT) at the moment they are passed on to the Mint's collector coin marketing department, for sale either in-person through the Mint gift shop or by mail order. This would probably happen after the coins are all packaged up and wrapped in whatever boxes they are sold in.
As far as I am aware, modern government-owned mints in other countries would all operate on a similar principle.
Don't say "infinitely" when you mean "very"; otherwise, you'll have no word left when you want to talk about something really infinite. - C. S. Lewis
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Bedrock of the Community
United States
17884 Posts |
The seigniorage for coins is counted by the government as soon as they are turned over from the coiner to the Mint Treasurer even if they are still in the Mints hands. This is unlike paper money where the seigniorage isn't counted until the notes are turned over tot he Federal Reserve.
That was why the idea of a trillion dollar coin was so appealing. A trillion dollar note would just be paper until the Federal Reserve "bought" it, but witha trillion dollar coin they just had to strike it, put it in the Mint vault, and the near Trillion dollar seigniorage could be entered into the Treasury's general fund and be available for spending.
Edited by Conder101
07/23/2022 6:44 pm
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Pillar of the Community
United States
7936 Posts |
Sounds like that could help with the poster's question.
Otherwise they can follow that link.
Edited by tdziemia
07/23/2022 7:56 pm
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Pillar of the Community
 United States
691 Posts |
Sap said ".when they are released from Mint control to Treasury control. ." But the Bureau of the Mint is a subdivision of the U.S. Department of the Treasury so maybe that might not be exactly what Sap intended to say. This might seem to be a little pedantic but this entire thread could be considered an exercise in pedantry. However, such concerns might be relevant in special circumstances such as with the 1933 double eagles or the Tovey specimen as Sap mentioned above.
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Pillar of the Community
United States
691 Posts |
A coin is an obligation of the Treasury if it is legal tender for public debts, taxes, duties, etc. Section 102 of the Coinage of 1965 states: "All coins and currencies of the United States (including Federal Reserve notes and circulating notes of Federal Reserve banks and national banking associations), regardless of when coined [emphasis added] or issued, shall be legal tender for all debts, public and private, public charges, taxes, duties, and dues." Note that Congress chose to use the word "coined", obviously to refer to coins, and additionally used the word "issued" to, presumably, refer just to currencies. This leaves us to determine exactly how the term "coined" is defined. The accounting procedures for seigniorage that tdzeimia showed us seem to be quite relevant. Clearly, once the seigniorage has been accounted for the coins are definitely obligation of the Treasury. It is the gray area between the time the objects leaves the minting machinery and the seigniorage is accounted for that I am interested in.
The legal status of objects as they move through the manufacturing process itself is largely irrelevant as no one has any reason to challenge or account for their status at this point. . As objects leave the machinery they are inspected to ensure compliance with quality standards. Those that do not comply are destroyed. But, suppose some unscrupulous mint employee steals one of these non-compliant objects from the reject bin. Is what he or she stole a "coin"? If it is just a misshapen blob of metal with no devices then it is probably not a coin. But what if, although imperfect, it exhibits all of the required devices of a coin. Is it then a "coin" and an obligation of the Treasury even though the seigniorage has not been accounted for?
Conversely, what about a questionable object that leaves the manufacturing and inspection process and the seigniorage for this object is recognized in the accounting process? A blank planchet might be a good example. Is it a "coin" and is it legal tender?
And what about pattern coins? Are they really coins?
Before someone jumps in to point this out, just let me state that it is highly unlikely that anyone will ever dispute the face value legal tender status of a double eagle, spectacular error, or pattern coin. This is just merely a topic for idle chit chat.
Maybe I should switch to de-caf.
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Moderator
Australia
16810 Posts |
"Regardless of when coined" is a reference to the year of manufacture; in other words, US coins remain legal tender indefinitely, and have no default "expiry date". It isn't intended to refer to the specific time of day a coin was produced. The lawyers, of course, are free to argue otherwise. "Coined" may be taken as a synonym for "produced", though, because coins have additional paperwork needed to certify them as legal tender, the entire production mechanism for producing a coin is incorporated into the term "coined", not just the physical striking. Error coins: yes, an error coin that leaves the mint "illegally" (eg smuggled out by a mint worker) is not legal tender, while an otherwise identical error that leaves the Mint through official channels and ends up getting counted bagged and shipped, is "legal tender". The problem is that "otherwise identical" phrase I just threw in there. Because there's no scientifically provable way of telling the difference between the legal and illegal output streams. Just like there's no way of determining if a normal regular coin has been stolen from the Mint or not, just by physically examining it. "A difference that makes no difference is no difference" is a good maxim here. If there is literally no way to tell the difference between a blank or planchet stolen from the mint and a blank or planchet accidentally issued into circulation, then trying to set up some kind of arbitrary distinction between them is futile. As for the definition of "coin", there is some debate as to whether the "legal tender" status truly matters. Because pattern coins, trial strikes, and coins like the 1974 aluminium pennies and 1964 silver dollars are all "not legal tender". Then you've got the whole question of coins issued by the likes of Hutt River Province, Transnistria and Taiwan, where the legal existence of the country itself is under question and therefore, from an international law perspective, cannot be considered truly "legal tender" since the issuing authority declaring the coins to be legal tender is not itself "legally" allowed to do so. For patterns, the only difference between an "official pattern" and an "unofficial pattern" or "fantasy pattern" is the source of the coin: "official patterns" come from an official government mint, "fantasy patterns" come from a private mint. But legally, they are both "not legal tender coins". And on the other side of the coin (hehe, see what I did there) we have the so-called "coins" that are distinctly not "traditional coin shaped", despite being declared by a legitimate government somewhere to be legal tender. Is a one-kilogram sphere of silver modelled in the form of the "Star Wars" Death Star truly a "coin", just because the government of Niue declares it to be a coin? The "legal tender only" folks would feel obligated to say "yes, it's a coin". Therefore, coin collectors generally do not strongly insist on "legal tender status" to qualify as a "coin". Yes, it's an important criterion, but not the sole criterion, or even the first criterion. Don't say "infinitely" when you mean "very"; otherwise, you'll have no word left when you want to talk about something really infinite. - C. S. Lewis
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Pillar of the Community
United States
7936 Posts |
Well, I still don't know the answer, but will say the following:
1. I am pretty sure there is no accounting to the level of individual coins. There is no date and time stamp on individual coins. However, if they go into bags, I assume there is an identifier on the bags that can be traced to manufacture date?
2. I used to work in a large manufacturing company. We made product in 100 ton lots every five to six hours, that were numbered as product came off the line (or shortly thereafter) and the numbers were linked to calendar dates. I assume that when a lot number got assigned, the product was "on the books," i.e. within 24 hours of manufacture.
I would be shocked if the U.S. Treasury took more than 24 hours to get their manufactured coins "on the books." After all, a U.S. mint is just a manufacturing operation, and modern business systems account for the conversion of raw materials into finished goods in a manufacturing operation like this very efficiently these days. The seignorage calculation is a simple arithmetic calculation that literally occurs in nanoseconds.
Edit after re-reading earlier post.
The error coin that was in a scrap bin is a different matter. I would never have been a Treasury liability as it would never have shown up as a coin on the books.
Edited by tdziemia
07/24/2022 8:52 pm
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Posted 07/22/2022 12:19 am
