Commem Profits at Stake|
October 15, 2012
This article was originally printed in Numismatic News.
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Nearly three quarters of a century after Congress read a scathing attack on the abuses associated with the issuance of commemorative coinage, and then remedied it, Sen. Jim DeMint, R-S.C., has introduced, S. 3612, the Commemorative Coin Reform Act of 2012, to change the playing field of modern non-circulating commems and their sponsors.
Once again, perceived abuses are a motivation. The latest are allegations related to lobbying by a firm employing a former girlfriend of Illinois Sen. Mark Kirk.
DeMint’s bill would entirely eliminate the payment of surcharges for commemorative coin programs to private organizations or entities.
Under the current system, a member of Congress in the House or Senate introduces a measure that calls for a person, place, event or thing to be commemorated with a silver dollar, or silver dollar and $5 gold piece, or a three-coin set with a 50 cent piece of cupronickel, and the two precious metal coins.
When the coins are sold, a surcharge, typically $3 for the 50-cent piece, $10 for the silver dollar and $35 for the gold coin is added on – and the beneficiary makes millions on their sale.
There typically is one, but there can be more than one beneficiary, nearly always a non-profit non-governmental organization, and they are awarded the proceeds subject to certain conditions that are imposed as a condition of obtaining what is in effect a financial grant to the entity.
Commemorative coins began in 1892 when the Columbian Exposition in Chicago talked Congress into striking a half dollar for them, sold to them at face value. They then sold the coin for $1, a 100 percent profit. It sounds like a trifling sum, but in 1892 workers earned 16 cents an hour, $1.60 a day. In 2012, the average worker makes $55,000 a year (or about $227 a day, $28 an hour).
Because Congress is given rights over money in the Constitution (Article I, section 8, “To coin Money, regulate the Value thereof”), each commemorative coin had to be authorized. And that meant that a number of sponsors who were entitled to buy issues at face value – with significant profits on resale theirs for the taking – took advantage of the situation.
Many of the low mintage commemoratives during the 1930s arose from this – as the sponsors manipulated the marketplace to make even more profits.
Even before this, the Mint responded by asking the President to veto legislation. This led, President Herbert Hoover in 1929 to veto a commemorative coin bill, and succeeding presidents, FDR, Truman, and Eisenhower to do likewise, until by 1954 the last of the old-style modern commemoratives were issued.
There were a number of abuses; Congress passed the Act of Aug. 26, 1935, extending the lifetime of the Daniel Boone bicentennial commemoratives, and also authorized re-dating of the coin. On May 6, 1936, the recoinage of San Diego Exposition commemoratives was authorized, together with their reissue bearing a 1936 date.
It became clear that the abuse of commemorative programs was systemic, and that the only means of resolving it was legislative. The Cochran Committee, named for Rep. Jon Cochrane, investigated the issue and written with the help of Harry X Boosel, a report was issued which proposed an end to the abuses.
On Aug. 5, 1939, the legislation was enacted halting the issuance of commemoratives authorized under prior Acts of Congress (the most egregious example of which was the Oregon Trail commemorative, coined from 1926 to 1939) and setting the stage for the Treasury Department’s successful termination of commemorative coin programs after 1954.
Even years later, in 1948 when he vetoed a Minnesota commemorative statehood coin, President Harry S Truman remembered the analysis: “I call to the attention of the Congress a fine report issued in 1939 (H. Rept. No. 101, 76th Congress) by the late Congressman John Cochran in which he graphically revealed the abuses which have resulted from multiple issues of commemorative coins.” Commemoratives resumed in 1982 with a coin honoring the 250th anniversary of George Washington’s birth. The government itself was the beneficiary. The 1984 Olympics followed, and they bollixed up the coins by going back and adding mintmarks and having multiple levels of pricing.
The Statue of Liberty centennial, a program I was hired to work on the legislation for, came next; they were determined to have a dollar and a gold coin, and my analysis led me to recommend – and for them to accept – a copper-nickel half, which went on to become the best selling commem in the history of any country with over 7.8 million pieces produced.
But since then, the 230th anniversary of the Marine Corps, backdating Jefferson’s 250th, and having a slew of coins whose sole purpose was to generate revenue for a worthy organization came to pass. And by September 2012, DeMint and seven of his Senate colleagues had simply had enough.
The bill would stop coin surcharge fees from being directed to private entities. Instead, surcharges collected would be used to first pay for the coin program and remaining funds would be used for deficit reduction. Rep. Justin Amash R-Mich., is offering companion legislation in the House.
DeMint said, “Congress has done great work on eliminating earmarks, but commemorative coins have become a way for politicians to continue steering federal benefits to favored projects.”
“Congress can still issue commemorative coins, but the funds should go to deficit reduction instead of becoming a money-maker for private entities. If organizations wish to raise money for worthy causes, there are many ways available without the use of taxpayer resources.”
The Hill, a daily newspaper that circulates on Capitol Hill, reported in its Sept. 24 issue that “The Commemorative Coins Reform Act was introduced by Sen. Jim DeMint (R-S.C.) and Rep. Justin Amash (R-Mich.), partly in reaction to news that Sen. Mark Kirk (R-Ill.) successfully pushed through a few commemorative-coin bills that benefitted a lobbying firm connected to his former girlfriend.”
The Wall Street Journal reported last June 1 in a copyrighted story that Kirk had authored or sponsored up to 26 commemorative coin bills, many of which were for clients of Arcadian Partners, a lobbying group. The Journal story also reported that Arcadian was paid $54,000 by the March of Dimes to lobby for a commemorative coin, and also that Kirk’s former girlfriend had been employed at Arcadian.
The Congressional Medal of Honor Foundation confirmed in that story that it had hired Arcadian and worked with the former girlfriend on the 2009 commemorative coin proposal. Sales brought the foundation over $2 million.
And so on Sept. 21 DeMint and seven colleagues introduced a bill to shut it all down.
The bill may have stemmed the heat but points out a problem: of the nearly $500 million in surcharges raised since 1984, there are really no controls over the “earmark,” only hands outstretched looking for more.
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On October 15, 2012 Bonnie Rague
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