[Congressional Record Volume 140, Number 142 (Tuesday, October 4, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 4, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
   INTRODUCTION OF THE ONE DOLLAR COIN AND COMMUNITY DEVELOPMENT ACT

                                 ______


                          HON. JOHN J. LaFALCE

                              of new york

                    in the house of representatives

                        Tuesday, October 4, 1994

  Mr. LaFALCE. Mr. Speaker, today I am introducing legislation to 
provide for the minting and circulation of one-dollar coins. This is a 
long overdue change which will result in substantial savings for both 
the Federal Government and the private sector. In addition, this 
particular bill will provide our Nation's underserved urban and rural 
communities with much of the funding necessary to address the many 
problems that they currently face due to a lack of financial resources. 
Chronic unavailability of credit, coupled with high unemployment and 
poverty rates, have precluded the potential for economic growth in many 
of our communities. My proposal, the ``One Dollar Coin and Community 
Development Act of 1994,'' will help fulfill President Clinton's 
promise to create a network of alternative lenders that will supply 
loans and banking services to qualified community development banks, 
credit unions, and loan funds.
  The introduction of a new dollar coin should prove to be a win-win 
situation for the United States. In addition to providing funds to low- 
and moderate-income communities in our society, the introduction of a 
new dollar coin will yield significant savings to both the Federal 
Government and private industry. According to a 1992 Federal Reserve 
study, the Government would save $395 million annually, or average, 
over the next 30 years. A portion of these savings represent printing 
and distribution savings which accrue because coins remain in 
circulation for 30 years at a production cost of 8 cents, while most 
bills must be reprinted every 17 months at a cost of 3.5 cents. 
Furthermore, in June 1992, the Congressional Budget Office [CBO] 
projected that a move to a dollar coin would result in deficit 
reduction of $470 million from 1993 to 1997 and an additional $580 
million from 1998 to 1999. According to that same study, the private 
sector will also realize substantial savings, amounting to $435 million 
annually. Some of these savings will result in higher profits, hence 
more tax revenue for the Government.
  The dollar coin also makes sense from a convenience standpoint. In 
today's economy, a dollar buys what a quarter did in the 1950's, the 
result being that it is difficult to have enough quarters in one's 
pocket to purchase a candy bar or make a long distance phone call. With 
increasing automation, and vending machines selling an array of 
consumer goods, the dollar coin is simply a more convenient way to pay 
for goods and services.
  The private sector has developed its own solution to this problem--
prepaid smart cards. Instead of having coins and bills many consumers 
carry a pocketful of cars, each designed for a specific use, such as a 
pay phone, transit system, or vending machines. The issuers of the 
smart card earn money on investments until the card's value is 
consumed, causing the Government to lose a portion of the coinage 
profits it makes from selling billions of coins to the public.
  I fully recognize that there have been problems with the dollar coin 
in the past. The Susan B. Anthony coin failed because consumers, given 
the choice between a note they already use and new coin, resisted 
change and continued to use the note. Furthermore, the Susan B. Anthony 
resembled the quarter far too closely. The Dollar Coin and Community 
Development Act addresses these problems by seeking the immediate 
elimination of the one-dollar note and changing the dollar coin's 
visual features to make its denomination much more readably 
discernible.
  By enacting this legislation, the United States will be joining other 
industrialized nations that have come to terms with past inflation and 
revamped their currency. Countries such as Canada, France, the United 
Kingdom, and Spain have successfully put high-denomination coins into 
circulation and phased out notes of the same values. All of these 
countries countered initial public resistance to the conversion by 
establishing a public awareness campaign which proved to be very 
effective. The resistance eventually dissipated over time.
  But the move to a dollar coin can have even greater benefits. 
Historically, many low- and moderate-income communities of the United 
States have been underserved by traditional lenders. As a result, 
essential community needs such as affordable housing, bridge and 
highway repair, and public transportation services have been deferred 
for lack of funding. I believe it is essential to restore and maintain 
the economics of these communities by developing a coordinated strategy 
that stimulates increased investment in low-income businesses, housing, 
commercial real estate, and other development activities. Toward that 
end, my legislation will further the goals of the Community Development 
Banking and Financial Institutions Act [H.R. 3474]. This act, recently 
signed by the President, will create a Community Development Financial 
Institutions Fund [CDFIF] that will be used to channel moneys, via 
community development financial institutions, to underserved geographic 
areas. Eligible institutions, will include low-income credit unions, 
community development corporations, housing revitalization lenders, as 
well as other community development banks.

  In order to provide additional funds for this endeavor, my proposal 
will utilize the difference between the face value of the coins and the 
cost of production--the coinage profit--to increase the lending 
capacity of the CDFIF. Traditionally, coinage profits are accounted as 
an off-budget receipt and used to finance the deficit. Under my 
proposal, coinage profits will continue to be utilized to finance the 
deficit.
  However, I believe that these profits can be utilized in a manner 
that will maintain their function of financing the deficit in addition 
to meeting the financial needs of underserved communities throughout 
the country. My proposal would channel coinage profits through a 
coinage reserve fund in the Treasury to the CDFIF which in turn will 
lend the money exclusively for community projects at an interest rate 
equal to that of a Treasury security. Any interest, dividends, and 
other earnings on investment will be paid to the Treasury to assist in 
reducing the deficit.
  The time has come for Members of Congress to recognize that our 
current system is antiquated. It is my hope that this proposal will act 
as a catalyst for future discussions and debate that will eventually 
lead to passage of this or similar legislation in the 104th Congress. I 
believe that the introduction of a new dollar coin, and increased 
funding for community development, warrants serious consideration from 
my colleagues in Congress and I hope, and believe, this bill will be 
considered seriously in the next Congress.
  The text of the bill follows:

                               H.R. ----

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``One Dollar Coin and 
     Community Development Act of 1994''.

     SEC. 2 ONE DOLLAR COINS.

       (a) Color and Content.--Section 5112(b) of title 31, United 
     States Code, is amended--
       (1) in the 1st sentence, by striking ``dollar,''; and
       (2) by inserting after the 4th sentence, the following new 
     sentence: ``The dollar coin shall be golden in color, have an 
     unreeded edge, have tactile and visual features that make the 
     denomination of the coin readily discernible, be minted and 
     fabricated in the United States, and have such metallic, 
     anticounterfeiting properties as United States clad coinage 
     in circulation on the date of the enactment of the One Dollar 
     Coin and Community Development Act of 1994.''.
       (b) Design of Dollar Coin.--Section 5112(d)(1) of title 31, 
     United States Code, is amended by striking the 5th and 6th 
     sentences and inserting the following new sentence: ``The 
     Secretary of the Treasury shall select an appropriate design 
     for the obverse side of the dollar.
       (c) Effective Date.--Not later than 18 months after the 
     date of enactment of this Act, the Secretary of the Treasury 
     shall place into circulation 1 dollar coins authorized under 
     subsection (a)(1) of section 5112 of title 31, United States 
     Code, which comply with the design requirements of 
     subsections (b) and (d)(1) of such section, as amended by 
     subsections (a) and (b) of this section. The Secretary may 
     include such coins in any numismatic set produced by the 
     United States Mint before the date the coins are placed in 
     circulation.

     SEC. 3. CEASING ISSUANCE OF ONE DOLLAR NOTES.

       (a) In General.--After the date that coins described in 
     section 2(c) are first placed in circulation, no Federal 
     reserve bank may order or place into circulation any $1 
     Federal reserve note.
       (b) Redemption of $1 Notes.--
       (1) In general.--Section 5119(b)(1) of title 31, United 
     States Code, is amended by adding at the end the following 
     new subparagraph:
       ``(F) Federal reserve notes in the denomination of $1.''.
       (2) Effective date.--
       (A) In general.--The amendment made by paragraph (1) shall 
     take effect on the date on which coins minted pursuant to the 
     amendments made by section 2 are first placed in circulation.
       (B) Notice of effective date.--The Secretary of the 
     Treasury shall publish a notice in the Federal Register of 
     the date on which the amendment made by paragraph (1) takes 
     effect in accordance with subparagraph (A) of this paragraph.
       (c) Exception.--The Secretary of the Treasury shall produce 
     only such Federal reserve notes of 1 dollar denomination as 
     are required from time to time to meet the needs of 
     collectors of this series. Such notes shall be produced in 
     sheets and sold by the Secretary, in whole, or in part, at a 
     price that exceeds the face value of the currency by an 
     amount that, at a minimum, reimburses the Secretary for the 
     cost of production.

     SEC. 4. RESERVE FUND FOR CIRCULATING COINAGE.

       (a) Establishment.--Section 5111(b) of title 31, United 
     States Code, is amended to read as follows:
       ``(b) Coinage Funds.--
       ``(1) Coinage metal fund.--The Secretary of the Treasury--
       ``(A) shall maintain a coinage metal fund in the Department 
     of the Treasury; and
       ``(B) may use the fund to buy metal to mint coins.
       ``(2) Circulating coinage reserve fund.--
       ``(A) Establishment.--The Secretary of the Treasury shall 
     maintain a circulating coinage reserve fund in the Department 
     of the Treasury.
       ``(B) Credits and debits.--The Secretary shall--
       ``(i) credit the coinage reserve fund with the amount by 
     which the nominal value of the coins minted and placed into 
     circulation under this subchapter (other than numismatic 
     items) exceeds the cost of the metal; and
       ``(ii) charge the account with--
       ``(I) the waste incurred in minting the coins referred to 
     in clause (i); and
       ``(II) the cost of distributing the coins, including the 
     cost of coin bags and pallets.
       ``(C) Availability of funds for community development.--
       ``(i) In general.--Effective for any fiscal year only to 
     the extent and in such amounts as are provided in advance in 
     appropriation Acts, the Secretary may lend excess amounts in 
     the circulating coinage reserve fund to the Community 
     Development Institutions Fund for the provision of financial 
     assistance by such Fund through deposits, credit union 
     shares, and loans in accordance with section 108 of the 
     Community Development Banking and Financial Institutions Act 
     of 1994.
       ``(ii) Terms and conditions.--Any loan by the Secretary to 
     the Community Development Institutions Fund in accordance 
     with clause (i) shall bear such rate of interest and be 
     subject to such other terms and conditions as the Secretary 
     determines to be appropriate.
       ``(D) Investment of balance in account.--Subject to 
     subparagraph (C), the Secretary of the Treasury shall invest 
     excess amounts in the circulating coinage reserve fund in--
       ``(i) instruments issued by the Secretary under chapter 31; 
     and
       ``(ii) other instruments to the extent, and in such 
     amounts, as may be authorized by law.
       ``(E) Payment to general fund.--Interest, dividends, and 
     other earnings on investments of the circulating coinage 
     reserve fund, including interest on loans to the Community 
     Development Financial Institutions Fund, shall be paid into 
     the general fund of the Treasury to assist in reducing the 
     deficit.''.
       (b) Termination of Coinage Profit Fund.--The coinage profit 
     fund is hereby abolished and any balance in the account as of 
     such termination shall be transferred by the Secretary to the 
     circulating coinage reserve fund established pursuant to the 
     amendment made by subsection (a) as soon as practicable after 
     the date of the enactment of this Act.

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