U.S. Mint: Commemorative Coins Could Be More Profitable (Chapter Report,
07/01/96, GAO/GGD-96-113).

Pursuant to a congressional request, GAO reviewed the U.S. Mint's
Commemorative Coin Program, focusing on the profitability and
proliferation of the coin program.

GAO found that: (1) Congress authorized 22 commemorative coin programs
from 1982 to 1995, and directed that part of the proceeds from 4
programs be used to reduce the national debt; (2) 19 of the
commemorative coin programs included surcharges that were to be paid to
coin sponsors; (3) the U.S. government earned $178 million from these
commemorative coin programs, while the sponsors earned $310 million; (4)
coin collectors believe there are too many commemorative coin programs,
coin prices are higher than customers are willing to pay, and some coin
themes are not readily accepted on the market; (5) coin sponsors still
receive profits from surcharges despite losses in some coin programs;
(6) the Mint lost more than $4 million on one commemorative coin program
in 1994; (7) the Citizens' Commemorative Coin Advisory Committee (CCCAC)
recommended 11 coin programs for 1995 to 1999, but Congress only adopted
one of the programs; (8) these recommendations included replacing the
surcharge on coins with a profit-sharing arrangement between the Mint
and the program sponsors and empowering the Treasury to select coin
themes; (9) these recommendations do not adequately address the
proliferation of coins, their high price, or unacceptability on the
market; (10) CCCAC also recommended that Congress authorize circulating
commemorative coins, which could provide $225 million in seigniorage and
save about $16 million on annual debt interest; and (11) Congress must
decide whether it wants to reduce the national debt or channel program
funds to coin sponsors before adopting a new commemorative coin program.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-96-113
     TITLE:  U.S. Mint: Commemorative Coins Could Be More Profitable
      DATE:  07/01/96
   SUBJECT:  Currency and coinage
             Profits
             Budget receipts
             Government sponsored enterprises
             Deficit reduction
             Budget deficit
IDENTIFIER:  U.S. Mint Commemorative Coin Program
             Olympic Coinage Program
             Numismatic Public Enterprise Fund
             Smithsonian Coin Program
             World Cup Coin Program
             World War II Coin Program
             Postal Service Commemorative Stamp Program
             
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Cover
================================================================ COVER


Report to the Chairman, Committee on Banking, Housing, and Urban
Affairs, U.S.  Senate

August 1996

U.S.  MINT - COMMEMORATIVE COINS
COULD BE MORE PROFITABLE

GAO/GGD-96-113

Commemorative Coins Could Be More Profitable

(240187)


Abbreviations
=============================================================== ABBREV

  ANA - American Numismatic Association
  CCCAC - Citizens' Commemorative Coin Advisory Committee
  CSAC - Citizens' Stamp Advisory Committee
  PEF - Numismatic Public Enterprise Fund

Letter
=============================================================== LETTER


B-265768

August 7, 1996

The Honorable Alfonse M.  D'Amato
Chairman, Committee on Banking, Housing, and Urban Affairs
United States Senate

Dear Mr.  Chairman: 

This report is in response to your request that we review the U.S. 
Mint's commemorative coin program.  It contains matters for
consideration by Congress regarding commemorative coins. 

Copies of this report will be distributed to the Ranking Minority
Member of this Committee, the Secretary of the Treasury, and
cognizant congressional committees.  Copies also will be made
available to others upon request. 

Major contributors to this report were John S.  Baldwin, Sr.,
Assistant Director, and Robert Homan, Evaluator-in-Charge. 

If you have any questions about this report, please call me on (202)
512-8387. 

Sincerely yours,

J.  William Gadsby
Director, Government Business
 Operations Issues


EXECUTIVE SUMMARY
============================================================ Chapter 0


   PURPOSE
---------------------------------------------------------- Chapter 0:1

Since 1990, Congress has authorized an increasing number of
commemorative coin programs that have provided over a hundred million
dollars to sponsoring organizations.  At the same time, the U.S. 
Mint, a unit of the Treasury Department that produces the nation's
coinage, reported it has incurred financial losses on some
commemorative coin programs.  In July 1995, the Chairman of the
Senate Banking, Housing, and Urban Affairs Committee asked GAO to
undertake a comprehensive review of the current commemorative coin
program, including issues such as profitability and proliferation. 
The Chairman asked GAO to (1) report on how much the sponsors and the
government have lost and gained from the program in recent years, and
(2) determine what options are available to ensure that the
commemorative coin program does not result in a loss to the
government and what specific mechanisms would be effective in
controlling the proliferation of programs. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:2

Every commemorative coin program is authorized by an act of Congress. 
Congress authorizes commemorative coins primarily as a means of
honoring certain events and individuals and raising funds for the
coins' sponsors.  On occasion, the proceeds from commemorative coin
sales are applied to the national debt.  Commemorative coins are
legal tender but are purchased and retained by collectors, rather
than used as a circulating medium of exchange. 

Commemorative coins are sold at several times their metal value.  For
example, although the 32 coins in the 1996 Olympic coin set have a
total metal value of $803, the pre-issue price is $2,261.\1
Nevertheless, they are profitable to the government only when their
selling price exceeds production, marketing, and other costs.  Coin
collectors purchase about 90 percent of commemorative coins, and some
collectors have recently called for a boycott of commemorative coins
because they are dissatisfied with the coin themes and high prices. 

From 1892, when Congress authorized the first commemorative coin,
through 1954, commemorative coins were sold to sponsoring
organizations, which resold them to the public at higher prices as a
means of fundraising.  During this period, the program experienced
several problems, including the authorization of more commemorative
coins than the market could absorb, the charging of exorbitant
prices, and the commemoration of events of only local or minor
significance.  According to the Mint, because of these problems,
Congress did not approve the issuance of any commemorative coins
between 1955 and 1981. 

In late 1981, Congress reactivated the program by authorizing the
George Washington commemorative coin.  At that time, Congress acted
in response to support expressed by coin collectors for issuing
commemorative coins with popular themes and required that the profits
be used to reduce the national debt.  The program for that coin was
also restructured so that the Mint, rather than the sponsors, sold
the coins directly to the public and profits were used solely to
reduce the national debt.  However, starting with the program for
1984, the authorizing legislation for most coin programs once again
allowed theme sponsors to receive financial benefits.  These benefits
took the form of a surcharge, which was a specific amount added to
the price of each commemorative coin.  The sponsors were paid the
surcharges regardless of whether the Mint profited from the sale of
their commemorative coins. 

In 1992, Congress established the Citizens' Commemorative Coin
Advisory Committee (CCCAC) with the objective of reducing the
proliferation of commemorative coins.  Congress charged CCCAC with
making annual recommendations regarding commemorative coin themes. 


--------------------
\1 The pre-issue price normally is offered during the first month of
a program.  According to Mint officials, with the exception of
Olympic coins, about 90 percent of coin sales are made within the
pre-issue period.  The face value of the 32 coins in the 1996 Olympic
coin set is $60. 


   RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3

From 1982 to 1995, Congress authorized 22 commemorative coin programs
and directed that part of the proceeds from 4 programs be used to
reduce the national debt.  For 19 commemorative coin programs
authorized since 1982, including all 12 programs since 1992, Congress
directed that coin prices include surcharges to be paid to sponsoring
groups.  In these situations, the program serves primarily as a
fundraiser for sponsors.  For the 22 programs, the government earned
about $179 million, while the sponsors earned about $310 million on
sales revenue of over $1.6 billion. 

However, during the 1990s, the Mint's commemorative coin program
experienced many of the same types of problems experienced from 1892
through 1954.  According to many coin collectors (who represent most
of the purchasers of commemorative coins), the Director of the Mint,
as well as a commemorative coin advisory committee, in recent years
the number of commemorative coins has proliferated and may have
saturated the market, coin prices have become higher than the
customers want to pay, and some coin themes were not well accepted in
the market. 

Legislation authorizing coin programs states that the Mint shall take
all actions necessary to ensure that the issuance of coins shall
result in no net cost to the government.  To comply with this, the
Mint establishes prices at the inception of each program based on
estimated costs (including surcharges) and estimated sales volumes. 
Under the existing program structure, surcharges are paid as coins
are sold, beginning with the first coins sold.  Therefore, if
estimates of costs are exceeded, or sales volumes are not realized,
losses may occur and sponsors of commemorative coin programs receive
the income from the surcharges even if the Mint loses money on the
programs. 

In 1994, the Mint lost over $4 million on one commemorative coin
program that is now closed to further sales, while the sponsor
received over $9 million.  In 1995, the Mint had three commemorative
coin programs, two of which are closed to further sales.  For one
program, the Mint reported that it lost $300,000 as of September 30,
1995,\2 while the sponsor received over $4 million as of March 31,
1996.  For a second 1995 program, as of March 31, 1996, the Mint
reported that it lost $400,000, while the sponsor received $6
million.  The third 1995 program is a 2-year program commemorating
the 1996 Olympics.  As of March 31, 1996, the Mint reported a loss of
over $3 million for the Olympic program, while the sponsor had
received $18 million.  The Mint attributed the loss to high start-up
costs incurred in 1995, which it expected to recover from 1996 sales
stimulated by the Olympic summer games in Atlanta, GA. 

CCCAC was established to make recommendations to Congress on
commemorative coin themes and to reduce the proliferation of
programs.  In 1994, CCCAC recommended 11 programs for 1995 through
1999, and Congress adopted 1 of them. 

CCCAC has also made several recommendations to reform the
commemorative coin program that have not been adopted.  These
recommendations included replacing the surcharges on coins with a
profit-sharing arrangement between the Mint and the sponsors and
empowering the Treasury Department to select coin themes.  While the
recommendations could prevent the payment of surcharges when the Mint
loses money, they may not adequately address other problems cited by
many coin collectors, the Mint Director, and the advisory
committee--namely the proliferation of coins, high prices, and coins
that are not well accepted in the market.  Although the House of
Representatives passed a bill in 1995 that would bar the payment of
surcharges to sponsors until the Mint recovers its costs, the Senate
has not yet acted on this legislation. 

CCCAC also recommended that Congress authorize circulating
commemorative coins, which are coins sold at face value with
distinctive designs that circulate and are used by the general public
for legal tender, as well as collected.  A circulating commemorative
coin program would be somewhat similar to the Postal Service's
commemorative stamp program.  The Postal Service bears all costs and
receives all benefits from the sales and collecting of commemorative
stamps.  With a circulating commemorative coin, the government would
bear all costs and receive all benefits.  GAO estimated this
alternative, if adopted, might provide annually about $225 million in
seigniorage (the difference between the face value of the coins and
their cost of production, which reduces government borrowing
requirements) and save about $16 million in annual interest on the
national debt. 

The legislatively stated purpose for the different coin programs has
varied over the years.  Authorizing legislation for commemorative
coin programs since 1982 has specified that proceeds from the coin be
designated either to reduce the national debt, to provide a means of
fundraising for sponsors, or both.  In deciding whether and how to
change the commemorative coin program, Congress has several options. 
If Congress decides its intent is to reduce the debt, the circulating
commemorative coin provides an additional option to accomplish that
purpose.  If Congress wishes to channel coin program funds to
sponsoring groups, the noncirculating commemorative coins achieve
that purpose.  However, under the "no net cost to the government"
requirement, the sponsors should not receive proceeds until the
government recovers its costs. 


--------------------
\2 More current profit or loss data from the Mint on this program are
not yet available. 


   PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4


      PROFITS ON INDIVIDUAL
      COMMEMORATIVE COIN PROGRAMS
      HAVE GENERALLY DECLINED AS
      THE NUMBER OF PROGRAMS HAS
      INCREASED
-------------------------------------------------------- Chapter 0:4.1

The government earned $178.6 million in profits on commemorative coin
programs from 1982 to 1995.  However, only $31 million of this was
earned from 1990 through 1995.  According to the Mint, as of May
1996, 21 of the 22 programs from 1982 through 1995 were closed to
further sales.  The 1996 Olympic program, which is a 2-year program
that started in 1995, is the only commemorative coin currently on the
market. 

Although the programs were intended to be operated at no net cost to
the government, prices established based on estimated costs and
estimated sales have not always resulted in cost recovery for the
government.  The Mint incurred losses totaling $4.9 million from four
programs in 1994 and 1995 that are now closed.  For 1994, the Mint
reported that it lost $4.1 million on the World Cup program and
$100,000 on the Capitol program.  For 1995, the Mint reported that it
lost $300,000 on the Special Olympics program, as of September 30,
1995,\3 and lost $400,000 on the Civil War program, as of March 31,
1996. 

For the Olympics program, as of March 31, 1996, the Mint reported a
$3.2 million loss, which the agency attributed to high start-up
costs.  Mint officials said they expect to recover the initial loss
through sales in 1996 stimulated by the summer Olympic games in
Atlanta, GA. 

According to the Mint, the government also benefits from
commemorative coins through the recovery of the agency's overhead
expenses that otherwise would have been borne by other Mint programs,
such as circulating coins.  In commenting on a draft of this report,
the Mint estimated that since 1982, commemorative coin programs have
resulted in the absorption of $180 million in overhead costs. 
Further, the Mint indicated that since 1982, the sale of clad
commemorative coins generated an additional $6 million in
seigniorage.  The Mint also indicated that commemorative coin
programs have generated $157 million in proceeds from the sale of
silver from the nation's stockpiles over the past decade and $375
million in revenue from the sale of gold since 1984.  GAO did not
verify any of these amounts or determine whether the sale of silver
and gold was a net benefit to the government. 

From 1982 through 1989, Congress authorized an average of less than
one program per year.  However, from 1990 to 1995, Congress
authorized an average of 2.7 commemorative coin programs per year. 
Although the number of authorized commemorative coin programs
increased during the 1990s, the total number of commemorative coins
sold declined.  From 1982 through 1989, the Mint sold an average of
4.5 million coins per year; from 1990 through 1995, commemorative
coin sales averaged 2.8 million coins per year.  Further, from 1982
to 1989, average sales revenues were $186 million per program,
compared to $32.8 million per program from 1990 to 1995. 

Several contributing factors could account for higher sales for some
programs during the 1980s, compared to the 1990s, including the
themes and the number of competing coins on the market.  From 1982
through 1995, the commemorative coins with the highest sales revenues
had themes with broad appeal to the commemorative coin market, such
as the Olympic Games and the Centennial of the Statue of Liberty and
Ellis Island.  Also, no competing coin programs were started during
the same years.  By contrast, the two programs with the least sales
revenue had themes with seemingly narrower appeal, such as the
Special Olympics\4

and the United Service Organization,\5 and competed with at least one
other new coin on the market. 


--------------------
\3 More current profit data on the Special Olympics program are not
yet available from the Mint.  The $300,000 loss figure does not
include profits from 263,551 coins that were sold from October 1,
1995, through December 31, 1995.  The Special Olympics program was
closed to further sales on December 31, 1995. 

\4 The Special Olympics provides physical fitness training to
mentally retarded individuals. 

\5 The United Service Organization provides services to active duty
military personnel, such as emergency housing and food assistance. 


      SPONSORS RECEIVED MILLIONS
      IN SURCHARGES DESPITE MINT
      LOSSES ON SOME PROGRAMS
-------------------------------------------------------- Chapter 0:4.2

Because income from surcharges is paid to sponsoring organizations
beginning with the first coin sold, sponsors may receive substantial
funds at the same time the government records a loss on the program. 
In 1994, the Mint lost $4.1 million on the World Cup commemorative
coin program, while the sponsor received $9.3 million.  Also in 1994,
the Mint lost $100,000 on the Capitol program while the sponsor
received $5.2 million.  With respect to the 1995 programs, the Mint
reported that it lost (1) $300,000 on the Special Olympics program as
of September 30, 1995,\6

while the sponsor received $4.4 million as of March 31, 1996; (2)
$400,000 on the Civil War program, while the sponsor received $6
million as of March 31, 1996, and (3) $3.2 million on the 2-year
Olympic program, while the sponsor received $18 million, as of March
31, 1996. 

Some coin collectors have recently called for a boycott on the sale
of commemorative coins because they are dissatisfied with high
prices, which they attribute to surcharges.  For the 1993 World War
II program, for example, surcharges represented from 19 to 30 percent
of the coins' prices. 


--------------------
\6 More current profit or loss data from the Mint on this program are
not yet available. 


      CCCAC RECOMMENDED COIN
      PROGRAM REFORMS
-------------------------------------------------------- Chapter 0:4.3

In 1992, Congress expressed concern over the proliferation of
commemorative coins and authorized the establishment of CCCAC to make
annual recommendations on commemorative coin themes and designs. 
Congress directed CCCAC to recommend no more than two commemorative
coin programs per year unless "extraordinary merit" (not defined)
could be shown.  Of the 11 coin programs that CCCAC recommended in
1994 for the period 1995 through 1999, Congress adopted 1--the
Smithsonian coin.\7

CCCAC also made several recommendations to reform the commemorative
coin program, including (1) limiting the number of commemorative coin
programs to two per year; (2) restricting the authorized mintage
levels; (3) replacing surcharges with a profit-sharing arrangement
between the Mint and the sponsors, requiring that the Mint recover
its costs before sharing profits with the sponsors; and (4)
transferring authority to make selections of commemorative coin
themes from Congress to the Treasury Department.  Limiting the number
of coin programs to two per year may not result in increased coin
sales for individual coin programs.  Based on commemorative coin
sales from 1982 through 1995, the most successful years in terms of
total program sales were those when there was only one, not two or
more coins, on the market.  In addition to limiting the number of
coin programs per year, according to the Mint, restricting the supply
of coins creates potential for commemorative coins to retain their
value in secondary markets, rewarding collectors who bought them and
generating greater interest in subsequent commemorative programs. 

Congress has not followed CCCAC's recommendation regarding authorized
mintage levels, having authorized nearly 12 million coins for 1996,
even though an average of 2.8 million coins have been sold per year
from 1990 through 1995. 

A profit-sharing arrangement between the sponsor and the Mint could
prevent sponsors from receiving financial benefits while the Mint
experiences financial losses.  However, the Mint Director said that
even if a profit-sharing arrangement were implemented, it would not
necessarily resolve some coin collectors' concerns over high prices. 
The House of Representatives passed a bill in 1995 that would, among
other things, require the Mint to recover all of its costs before
sponsors received surcharges.  The Senate had not acted upon the
commemorative coin reform legislation as of June 1996.  Further,
since sponsors do not have to share in the costs of producing and
selling commemorative coins, they would continue to have no financial
risks under profit sharing.  Therefore, sponsors would continue to
have an incentive to solicit support for their

themes and causes, regardless of who had approval authority,
particularly if they had no financial risk. 

Finally, transferring authority to select commemorative coins from
Congress to the Treasury Department could help ensure the selection
of more profitable coins, provided that the Treasury Department (1)
based its selections on adequate market research and (2) coupled the
selection of popular themes to both lower coin prices and a limit on
the number of commemorative coin programs approved each year.  These
same conditions could be adopted by Congress.  It should be
recognized, however, that sponsors would continue to have an
incentive to solicit support for their themes and causes, regardless
of who had approval authority, particularly if they had no financial
risk. 


--------------------
\7 The committee made no recommendations on commemorative coin themes
in its 1995 report to Congress. 


      A CIRCULATING COMMEMORATIVE
      COIN COULD BE PROFITABLE
-------------------------------------------------------- Chapter 0:4.4

CCCAC also recommended that Congress authorize the Mint to produce
circulating commemorative coins, which are coins with distinctive
designs that are issued at face value.  In 1976, the Mint produced 83
percent more quarters commemorating the Bicentennial than its average
annual production from 1971 through 1981.  Further, when Canada
issued a circulating quarter in 1992, its production of quarters
during that year rose by 156 percent over the annual average of the
previous 5 years. 

Like circulating commemorative coins, Congress has also authorized
that certain events and individuals be commemorated on the nation's
stamps.  Commemorative stamps are sold at face value and are
profitable to the Postal Service when the public buys them but does
not use them for postage.  A citizens' advisory committee selects
commemorative stamps on the basis of extensive public suggestions on
themes they are interested in and makes its recommendations to the
Postmaster General for approval. 

If the government adopted a circulating commemorative coin program
that, for example, resulted in the production of 50 percent more
quarters than it produced in 1995, the government could generate
about $225 million in additional seigniorage for the 1-year period. 
This would result in about $16 million in interest savings on the
national debt. 


   MATTERS FOR CONGRESSIONAL
   CONSIDERATION
---------------------------------------------------------- Chapter 0:5

Congress may want to clarify its intent regarding the commemorative
coin program--specifically, in terms of whether it wants the program
to serve as a means of providing funds to the coins' sponsors, or
reducing the national debt, or both. 

For those situations where Congress wants the commemorative coin
program to be used as a means of supporting a sponsoring group, it
should consider reforming the program by making changes aimed at
reducing proliferation and preventing losses, such as limiting the
number of programs to one per year, restricting maximum authorized
mintage levels, requiring that the selection of themes be based on
market research, implementing a profit-sharing arrangement between
the Mint and the sponsors, requiring that all of the Mint's costs are
recovered before the sponsors receive financial benefits, and
requiring that the prices of commemorative coins be set at levels
where the market research indicates the highest sales potential. 

If Congress would like to derive more revenue for the government from
the sale of commemorative coins, it could authorize a circulating
commemorative coin program.  Because the quarter is the highest
denomination and the largest in size of the widely circulating coins,
it would be likely to generate the most seigniorage and best
accommodate a commemorative design on its reverse side. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:6

GAO requested comments on a draft of this report from the Director of
the Mint.  The Director provided written comments, which are
discussed in chapter 3. 

The Director said that the report was thorough and insightful.  He
asked GAO to add additional information about total financial
benefits that the government has received from commemorative coins,
including the 1996 Olympic program, and about CCCAC's effectiveness. 
The Director also asked GAO to eliminate the reform option of
reducing the number of commemorative coin programs and replace it
with the option of reducing mintage levels. 

GAO evaluated the Mint's comments and incorporated additional
information provided by the Mint in the report where appropriate.  In
response to the Mint's suggestion, GAO included reducing mintage
levels as an additional reform option, but believes it should be
coupled with a limit on the number of programs per year. 


INTRODUCTION
============================================================ Chapter 1


   BACKGROUND
---------------------------------------------------------- Chapter 1:1

Commemorative coins are produced by the U.S.  Mint, a unit of the
Treasury Department.  Every commemorative coin program is authorized
by an act of Congress.  Congress authorizes commemorative coins as a
means of honoring certain events and individuals and to raise funds
for the coins' sponsors and on occasion apply the proceeds from
commemorative coin sales to the national debt.  Authorizing
legislation for commemorative coin programs earmarked for 1982
through 1995 states that the Mint shall take all actions necessary to
ensure that the issuance of coins shall result in no net cost to the
government.\8 Although commemorative coins are legal tender at their
face value, they are not used as a medium of exchange, but are
purchased and retained by collectors.  According to the Mint, over 90
percent of commemorative coins are bought by coin collectors. 

Commemorative coins are manufactured at the Mint's facilities in San
Francisco, CA; Denver, CO; Philadelphia, PA; and West Point, NY. 
They typically are manufactured in half-dollar, 1-dollar, 5-dollar,
and 10-dollar denominations and are produced as clad materials,\9
silver, and gold.  The coins are sold mainly though the Mint's
mail-order service, but some are also sold through retail outlets. 

Congress also authorizes the Mint to manufacture medals to honor
historical events or individuals.  In contrast to commemorative
coins, medals are not legal tender. 

For 19 of the 22 commemorative coin programs for 1982 through 1995,
Congress directed that a portion of the coins' sales proceeds, namely
the surcharges that were specific amounts added to the price of
coins, be paid to the sponsoring organizations.  For four programs,
Congress directed that the surcharges be applied to reducing the
national debt.\10 The sponsors were paid the surcharges regardless of
whether the program was profitable to the Mint, and the sponsors did
not pay for any of the Mint's costs associated with producing and
selling the coins.  Surcharges for the 1995 commemorative coins
ranged from $2 to $3 for half-dollar coins, $7 to $10 for 1-dollar
coins, and $35 to $50 for 5-dollar coins. 


--------------------
\8 "No net cost to the government" is not further defined in the
legislation. 

\9 Clad materials consist of layers of copper and nickel bonded
together.  The Mint also uses clad materials to produce circulating
dimes, quarters, and half-dollars. 

\10 For one of the four programs, Congress directed that half of the
surcharges be provided to the sponsor and half for reducing the
national debt. 


   HISTORICAL PERSPECTIVE
---------------------------------------------------------- Chapter 1:2

In 1892, Congress approved legislation authorizing the first
commemorative coin, which commemorated the Columbian Exposition. 
Congress authorized 157 commemorative coins that were issued from
1892 through 1954.  Until 1954, commemorative coins were sold to
sponsoring organizations, who then resold them to the public at
higher prices as a means of fundraising.  Over the years, the program
experienced several problems, including the congressional
authorization of more commemorative coins than the market could
absorb, the sponsors' charging of prices substantially above the
coins' face value, and the commemoration of events of local or minor
significance. 

During this period, Presidents Hoover, Roosevelt, and Truman
expressed disapproval over the use of commemorative coins.  In 1930,
President Hoover said that selling commemorative coins for a profit
and as a means to provide funding for celebrations was a misuse of
the coinage system, and because the coins did not circulate, they did
not serve the real function of coins.  Similarly, in 1935, President
Roosevelt said that "striking special coins in commemoration of
historical events and permitting the sponsoring organizations to sell
them at a profit is a misuse of our coinage system, which is assuming
increasingly dangerous proportions." In 1937, President Roosevelt
expressed concern about the "alarming increase" in the demand for
commemorative coin legislation, indicating that many of the coins had
no more than local significance.  In 1947, President Truman vetoed
legislation authorizing coins commemorating the state of Wisconsin's
entry into the Union, saying that if the legislation were approved,
it was not apparent on what grounds similar measures, no matter how
numerous, could be rejected.\11

According to the Mint, because of these concerns, no commemorative
coins were authorized for 1955 through 1981. 

In late 1981, Congress reactivated the commemorative coin program by
authorizing the George Washington commemorative coin.  In authorizing
this program, Congress acted in response to support expressed by coin
collectors for issuing commemorative coins with popular themes and
required that the profits from the sales of the George Washington
coin be applied to the national debt.  Commemorative coin programs
beginning in 1982 were restructured so that the Mint sold the coins
directly to the public, rather than through the sponsors.  Starting
in 1984, Congress authorized a commemorative coin sponsor to receive
surcharges on coin prices.  Congress has authorized an additional six
commemorative coin programs from 1996 through 2002 and authorized
that all surcharges be provided to the sponsors. 

Dissatisfaction with the commemorative coin program has prompted some
coin collectors to advocate a boycott on purchasing the coins.  One
collector who is advocating the boycott said that a call for a
boycott began in the late 1980s, when some coin collectors became
dissatisfied with the themes selected and high prices. 

In 1992, Congress expressed concern over the proliferation of
commemorative coins and authorized the establishment of the Citizens'
Commemorative Coin Advisory Committee (CCCAC) to make annual
recommendations to Congress on commemorative coin themes and designs,
with the objective of reducing the proliferation of commemorative
coins.\12

In addition, Congress passed a resolution in December 1993 indicating
that the House Committee on Banking, Finance, and Urban Affairs (now
House Committee on Banking and Financial Affairs) and the Senate
Committee on Banking, Housing, and Urban Affairs should not approve
more than two commemorative coin programs per year unless they
determined, on the basis of the CCCAC's recommendations, that
"extraordinary merit" existed for an additional commemorative coin
program, without defining "extraordinary merit." The law containing
that resolution authorized three new commemorative coin programs for
1994.\13

In August 1994, Treasury Secretary Bentsen wrote the Chairmen of the
Senate Banking Committee and the House Banking Subcommittee on
Consumer Credit and Insurance, asking for a moratorium on the
authorization of any additional commemorative coins until the CCCAC
issued its recommendations.  According to the Mint, Secretary Bentsen
called for the moratorium because five new commemorative coin
programs were included in a conference report of the Riegle-Neal
Interstate Banking and Branching Efficiency Act bill, which was
enacted in September 1994. 

A more detailed historical perspective on commemorative coins is
provided in appendix I. 


--------------------
\11 Despite the statements of disapproval by Presidents Roosevelt and
Truman, 61 commemorative coins were issued during their terms of
office.  No commemorative coins were issued during President Hoover's
term. 

\12 P.L.  102-390.  CCCAC members were appointed in November 1993. 

\13 The Veterans coin program, one of the three commemorative coin
programs authorized under P.L.  103-186, also consisted of three
separate coins commemorating prisoners of war, Vietnam veterans, and
women in military service. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
---------------------------------------------------------- Chapter 1:3

In July 1995, the Chairman of the Senate Banking Committee asked us
to review the U.S.  Mint's commemorative coin program.  The Chairman
was concerned about the recent proliferation of commemorative coin
programs, recent financial losses in the program, and the viability
and condition of the market for commemorative coins.  The Chairman
asked us to (1) report on how much the sponsors and the government
have lost and gained from the program in recent years, and (2)
determine what options are available to ensure that the commemorative
coin program does not result in a loss to the government and what
specific mechanisms would be effective in controlling the
proliferation of programs. 

To address both of these issues, we first reviewed the legislative
history of the commemorative coin program since its inception in
1892.  We focused on commemorative coins that were issued since 1982. 
We obtained and analyzed information from the Mint on the themes,
denominations, prices, surcharges, number of coins authorized, number
of coins sold, profits and losses to the government, surcharges paid
to sponsoring organizations, and marketing efforts.  In addition, we
interviewed officials involved in the commemorative coin program at
the Mint, including the Mint's Director, Deputy Director, Deputy
Chief Counsel, Marketing Director, Chief Financial Officer, Chief
Operating Officer, and accounting officials. 

To review the workings and recommendations of CCCAC, we reviewed
CCCAC reports and committee meeting minutes and interviewed two
committee members, including its chairman, who is also the Director
of the U.S.  Mint.  We also compared the programs that CCCAC
recommended to ones that Congress authorized and the number of
commemorative coin programs authorized since CCCAC was established. 
In addition, we interviewed the program officer for the Citizens'
Stamp Advisory Committee (CSAC) about the workings of CSAC.  We
compared and contrasted the two committees' operating procedures and
the commemorative coin and stamp selection criteria.  We did not
evaluate the profitability of the commemorative stamp program. 

We obtained the numismatic community's views about reforming the
commemorative coin program by interviewing officials from the
American Numismatic Association (ANA), which is the world's largest
numismatic organization, with 26,000 members.  We also interviewed an
advocate of a recent boycott of commemorative coins and reviewed the
numismatic trade press.  We also attended hearings held in July 1995
by the House Banking Subcommittee on Domestic and International
Monetary Policy regarding the commemorative coin program and reviewed
witnesses' testimony.  Witnesses who testified at this hearing
included the CCCAC Chairman, the ANA President, the editor of a
numismatic publication, and a New York coin dealer.  We also reviewed
a survey that ANA conducted in July 1993 of its members' views
concerning commemorative coins. 

At our request, the Royal Canadian Mint provided us with information
about its circulating commemorative coin program, including the
number of circulating commemorative coins produced. 

The U.S.  Mint also provided data on its 1976 circulating
commemorative coins, including the number minted and production
costs.  For comparison purposes, at our request, the Mint also
provided circulating coin production data from 1971 through 1981. 

We also toured the Mint's facility in Philadelphia, PA, one of the
Mint's facilities where commemorative coins are designed and made. 

To estimate seigniorage on a circulating commemorative quarter, we
subtracted the cost of producing a quarter in 1995 ($.036) from the
coin's face value ($.25), and multiplied this difference ($.214) by
the number of quarters produced in 1995 (2,100,000,000), plus an
expected volume increase of 50 percent, which equaled $224,700,000. 
We estimated the 50 percent volume increase on the basis of the U.S. 
experience with the 1976 Bicentennial quarter production and recent
Canadian experience with circulating commemorative coins. 

During the course of our review, we raised issues relating to the
Mint's cost accounting system.  We reviewed a report issued in June
1995 by the Treasury Department Inspector General's Office indicating
that the Mint's fund structure was inadequate and fragmented (see ch. 
2).  Although we discussed the Mint's cost accounting system with the
Mint's Director and Chief Financial Officer, our review was not
designed to verify the accuracy of the agency's cost data. 

We did our work from August 1995 through May 1996 in accordance with
generally accepted government auditing standards.  Our work was done
in Washington, D.C., and Philadelphia, PA.  We requested comments on
a draft of this report from the Director of the Mint.  His comments
are contained in appendix V and discussed and evaluated in chapter 3. 


THE MINT HAS LOST MONEY ON SOME
COMMEMORATIVE COINS IN RECENT
YEARS
============================================================ Chapter 2

In recent years, while Congress authorized an increasing number of
programs, the Mint's profits on individual commemorative coin
programs have generally declined, and the Mint incurred losses on
some programs.  Sponsors received millions of dollars from
surcharges, even when specific programs resulted in losses to the
Mint.  According to many coin collectors, the Director of the Mint,
and a commemorative coin advisory committee, in recent years the
number of commemorative coins has proliferated and may have saturated
the market, coin prices are higher than the customers want to pay,
and some coin themes have not been well accepted in the market. 


   NUMBER OF PROGRAMS
---------------------------------------------------------- Chapter 2:1

Congress has authorized an increasing number of commemorative coin
programs since the program was revived in 1982.  For 1982 through
1989, Congress authorized an average of less than one program per
year.  However, for 1990 to 1995, Congress authorized an average of
2.7 commemorative coin programs per year.  Figure 2.1 shows the
number of coin programs authorized for each of the years 1982 through
1995. 

   Figure 2.1:  Number of
   Commemorative Coin Programs
   Authorized for Years 1982
   Through 1995

   (See figure in printed
   edition.)

Source:  U.S.  Mint. 

At the time of our review, Congress had also approved 6 commemorative
coin programs for 1996 through 2002, with authorized mintage levels
totaling over 13 million coins.  Legislation was pending to approve
17 additional programs; if enacted, these additional programs would
result in the authorization of nearly 16 million coins.  Additional
data on these future and proposed programs are listed in appendix II. 

Since the commemorative coin program was revived in the early 1980s,
Congress has generally authorized significantly more coins than have
been sold.  For 1982 through 1995, Congress authorized 190.8 million
commemorative coins, or an average of 13.6 million coins per year. 
Only 52.1 million coins were sold during this period, or an average
of 3.7 million per year. 

The Mint does not manufacture the entire mintage that Congress
authorizes, but produces the levels it believes can be sold.  Mint
officials said they do not keep records on the total number of
commemorative coins produced for each program.\14 Available Mint data
indicated that 1.4 million coins remained in its inventory from 12
closed programs since 1990.  It would cost the Mint about $168,000 to
melt down 1.4 million coins. 


--------------------
\14 According to the Mint, 20 to 30 percent of commemorative coins
are rejected during the production process. 


   COIN SALES
---------------------------------------------------------- Chapter 2:2

From 1982 through 1995, the Mint sold an average of 3.7 million coins
per year, but the number of coins sold in recent years has been
lower.  From 1982 through 1989, the Mint sold an average of 4.5
million coins per year, compared to 2.8 million coins per year from
1990 through 1995.  The programs with the highest number of coins
sold since 1982 were the Statue of Liberty and Ellis Island coin,
issued in 1986, with sales of about 15.5 million; and the George
Washington coin, issued in 1982, with over 7.1 million coins sold. 
The two programs that sold the least number of coins were the U.S. 
Capitol coin, issued in 1994, with 347,911 coins sold; and the
Special Olympics coin, issued in 1995, with 441,747 coins sold. 
Figure 2.2 shows the trend in commemorative coin sales since 1982. 

   Fig.  2.2:  Number of
   Commemorative Coins Sold From
   1982 Through 1995

   (See figure in printed
   edition.)

Note:  Some coins are sold for more than one year.  All sales are
combined above in the first program year.  No new programs were
started in 1983 and 1985. 

Source:  U.S.  Mint. 

According to the Mint, as of May 1996, 21 of the 22 commemorative
coin programs were closed to further sales.  The 1996 Olympic coin
program is the only commemorative coin currently on the market.  With
the exception of the Olympic coins, Mint officials said that
generally 90 percent of coin sales occur within the pre-issue period,
which is normally during the first month of the program. 


      PRICES AND SURCHARGES
-------------------------------------------------------- Chapter 2:2.1

Commemorative coin prices are based on surcharges and the costs of
metal, labor, packaging, advertising, general and administrative
overhead costs, and an expected Mint profit of about 7 to 8 percent
of the total price.  Mint officials said that manufacturing costs
have been very consistent over recent years, and that allocation of
general and administrative costs is based on how many coins the Mint
expects to sell. 

To determine what portion of prices is represented by surcharges, we
asked the Mint to break out the costs of a typical commemorative
coin.  The Mint provided information regarding the 1993 World War II
commemorative coin program, which consisted of clad, silver, and gold
coins.  As shown in figures 2.3, 2.4, and 2.5, the surcharges ranged
from 19 to 30 percent of the pre-issue prices, marketing costs ranged
from 13 to 25 percent, and packaging costs ranged from 3 to 26
percent for these coins.  The combination of surcharges, marketing,
and packaging represented 73 percent of the clad coin's price, 64
percent of the silver coin's price, and 35 percent of the gold coin's
price.  Metal costs were about 1 percent of the clad coin price, 12
percent of the silver coin price, and 45 percent of the gold coin
price. 

The ratio of price to face value was 18 to 1 for the clad coin, 27 to
1 for the silver coin, and 37 to 1 for the gold coin.  These ratios
demonstrate why commemorative coins are collected and not circulated. 

   Fig.  2.3:  Price Breakdown of
   the World War II 50- Cent Clad
   Coin

   (See figure in printed
   edition.)

Note:  Total pre-issue price for the coin was $9.00. 

Source:  U.S.  Mint. 

   Figure 2.4:  Price Breakdown of
   the World War II 1-Dollar
   Silver Coin

   (See figure in printed
   edition.)

Note:  Total pre-issue price for the coin was $27.00. 

Source:  U.S.  Mint. 

   Figure 2.5:  Price Breakdown of
   the World War II 5-Dollar Gold
   Coin

   (See figure in printed
   edition.)

Note:  Total pre-issue price for the coin was $185.00.  Total exceeds
100 percent because of rounding. 

Source:  U.S.  Mint. 

According to ANA, many coin collectors are dissatisfied with the high
prices of commemorative coins, which they attribute to surcharges. 
Similarly, the Mint Director, who approves commemorative coin prices,
said the surcharges are making the coins too expensive.  He added
that commemorative coin prices are determined largely through the
authorizing legislation, which specifies the amount of the
surcharges. 

ANA officials said they favored eliminating the surcharges.  They
said that while the average coin collector spends $2,500 per year on
coin collecting, it now costs about $3,500 to purchase all
commemorative coins offered each year.\15 The officials added that
commemorative coin prices are too high to allow typical collectors to
afford them.  For example, the pre-issue price for the 32-coin 1996
Olympic coin set, which has a metal value of $803 and a face value of
$60, is $2,261. 


--------------------
\15 ANA officials said that collectors spend about $2,500 per year on
collecting all types of coins, not only commemorative coins.  The
officials did not have data on what percent of the $2,500 was spent
on commemorative coins. 


   MARKETING EFFORTS
---------------------------------------------------------- Chapter 2:3

The Mint is charged with marketing the commemorative coins that
Congress has authorized.  The Marketing Director for the Mint said
that his department is in the difficult position of creating a market
for coins that may have little or no demand.  He said that the Mint
must act as both a retailer and a fundraiser.  Moreover, he said that
the Mint often has very little time to conduct market research before
a commemorative coin program is launched, sometimes only a month or
two.  The Marketing Director said that it would be helpful if the
commemorative coin program operated under a 5-year plan, which would
help give the program some continuity. 

From 1982 to 1989, average sales revenues were $186 million per
program, compared to $32.8 million per program from 1990 to 1995. 
Several contributing factors could account for higher sales revenues
for some programs during the 1980s, compared to the 1990s, including
the types of themes and the number of competing coins on the market. 
From 1982 through 1995, the two programs with the highest sales
revenues had themes with broad appeal to the commemorative coin
market, such as the Olympic Games and the Centennial of the Statue of
Liberty and Ellis Island, and occurred during years when no competing
commemorative coin programs were started.  By contrast, the two
programs with the least sales revenues--the Special Olympics\16 and
the United Service Organization\17 coins--had competition from at
least one other commemorative coin on the market, and the themes of
those programs had seemingly narrower appeal to the commemorative
coin market. 

In June 1993, ANA conducted a survey of its members on their level of
satisfaction with commemorative coin themes and the number of
programs.  The survey indicated that 50 percent of the respondents
were somewhat dissatisfied or very dissatisfied with commemorative
coin theme selections, compared to 35 percent who were somewhat
satisfied or very satisfied.  Fifteen percent had no opinion or did
not respond to the question.  With regard to the number of programs,
the survey indicated that 33 percent said commemorative coins should
be issued every few years, 30 percent said that one or two coins
should be issued each year, 19 percent said that more than two coins
should be issued every year, 5 percent said that commemorative coins
should not be issued, and 15 percent had no opinion or did not
respond to the question. 

The Mint, rather than the sponsors, pays all of the marketing costs
of commemorative coins.  Outside contractors assist the Mint with the
technical and creative aspects of advertising and direct mail.  The
Mint's primary marketing tool is direct mail, and it has about 1
million people on its mailing lists.  It also advertises in
numismatic and specialized publications and uses telemarketing,
international marketing, and bulk and retail sales to market the
coins.  The 1996 Olympic coins are being sold by retailers, as were
the Statue of Liberty coins.  The Mint Director said the distribution
system for the 1996 Olympic coin program will be dismantled at the
program's conclusion.  The Marketing Director said that it is
difficult to sell coins to customers who are not part of the core
group of collectors.  However, he added that because the number of
coin collectors is declining, the Mint is attempting to reach new
customers. 


--------------------
\16 The Special Olympics provides physical fitness training to
mentally retarded individuals. 

\17 The United Service Organization provides services to active duty
military personnel, such as emergency housing and food assistance. 


   PROFITS
---------------------------------------------------------- Chapter 2:4

From 1982 through 1995, sponsors were paid $309.6 million in
surcharges, while the Mint earned $114.6 million in profit from
commemorative coins and the Treasury received almost $64 million in
surcharges for debt reduction.  From 1982 through 1989, the Mint
realized an average profit of about $15.8 million per commemorative
coin program.\18 However, from 1990 through 1995, the Mint realized
an average profit of $3.3 million per program, including losses
totaling $4.9 million for four closed programs from 1994 to 1995.\19

Because the sponsors do not bear any of the costs associated with the
production and selling of coins, sponsors received millions of
dollars in recent years, while the Mint paid for all production and
marketing costs and incurred financial risk on those programs.  Mint
officials said that if a coin program is too small, start-up costs
could absorb all of the revenues, resulting in no profits. 

For 1994, the Mint reported losing $4.1 million on the World Cup
program, which is now closed to further sales, while the sponsor
received $9.3 million.  Also for 1994, the Mint reported losing
$100,000 on the Capitol program, while the sponsor received $5.2
million.  In 1995, the Mint had three commemorative coin programs,
two of which are closed to further sales (Special Olympics and Civil
War).  For the Special Olympics program, the Mint reported that it
lost $300,000 as of September 30, 1995,\20

while the sponsor received $4.4 million as of March 31, 1996.  For
the Civil War program, as of March 31, 1996, the Mint reported that
it lost $400,000, while the sponsor received $6 million.  The third
1995 program is a 2-year program commemorating the 1996 Olympics.  As
of March 31, 1996, the Mint reported a loss of $3.2 million for the
1996 Olympic program, while the sponsor had received $18 million. 
The Mint attributed the loss to high start-up costs incurred in 1995,
which it expected to recover from 1996 sales stimulated by the
Olympic summer games in Atlanta, GA, which will end in August 1996. 

In its June 21, 1996, comments on a draft of this report, the Mint
indicated that at that time the 1996 Olympic program showed a $2.7
million loss and had absorbed $14 million in fixed overhead for the
Mint, generated $13.8 million in revenues for the Treasury from the
sales of gold and silver from the nation's stockpiles, and generated
$25 million in surcharges for the 1996 Olympics.  The Mint also
indicated that the revenue figures included cash-in-hand receipts and
excluded $28 million in sales of Olympic coins for which it had
contracts.  We did not verify the Mint's figures or determine whether
it was beneficial to sell the nation's silver and gold stockpiles. 

Table 2.1 and figure 2.6 show the profits reported by the Mint from
commemorative coin programs from 1982 through 1995. 



                               Table 2.1
                
                Financial Results of Commemorative Coin
                    Programs From 1982 Through 1995

                                                                  Mint
                                                                profit
                                                                     /
                                                                (loss)
                                                                   (in
                                                                millio
Year                                                               ns)
--------------------------------------------------------------  ------
1982                                                             $14.4
1984                                                              10.3
1986                                                              28.6
1987                                                              34.6
1988                                                               1.0
1989                                                               6.0
1990                                                             (1.1)
1991\a                                                            12.7
1992\a                                                             8.6
1993\b                                                             6.8
1994\d                                                           (3.4)
1995\a                                                          (3.9)\
                                                                     c
======================================================================
Total                                                           $114.6
----------------------------------------------------------------------
\a There were three coin programs this year. 

\b There were two coin programs this year. 

\c The 1995 figure includes a preliminary $3.2 million loss for the
2-year Olympic program as of March 31, 1996, which the Mint expected
to recover through sales stimulated by the 1996 summer Olympic games. 
The 1995 figure also includes a $300,000 loss for the Special
Olympics program as of September 30, 1995, that does not reflect the
sale of 263,551 coins from October 1, 1995, through December 31,
1995.  The Special Olympics program was closed to further sales on
December 31, 1995. 

\d There were four coin programs this year. 

Source:  U.S.  Mint. 

   Figure 2.6:  Mint Profits on
   Commemorative Coin Programs
   From 1982 Through 1995

   (See figure in printed
   edition.)

Note:  The 1995 data include a $3.2 million loss for the 2-year
Olympic program as of March 31, 1996, which the Mint expects to
recover, plus a $300,000 loss for the Special Olympics program that
does not reflect the sale of 263,551 coins. 

Source:  U.S.  Mint. 

Four of the five programs that generated the largest profits to the
Mint occurred before 1990, when the number of commemorative coin
programs offered was one per year.  By contrast, all six programs
with a loss to the Mint occurred during the 1990s.  The sales and
financial performance of the 22 programs from 1982 through 1995,
including program sponsors and how much they received, coin sales,
the amount of money that was designated for reducing the national
debt, and profit to the Mint, is shown in appendix III. 

Mint losses incurred by individual programs are charged against the
Numismatic Public Enterprise Fund (PEF), a revolving fund that
Congress established in 1992 for the Mint's numismatic products. 
Recent losses on some programs have been offset by profits on others,
but such losses have reduced funds available for transfer from PEF to
the Treasury.\21 If the Mint experiences losses on programs that are
not offset by profits on others and the fund is depleted, the Mint
would have to ask Congress for an appropriation to cover the loss or
authority to borrow funds from the Treasury. 

While the Mint experienced losses on some programs, the sales
benefited the government through the receipt of surcharges to the
Treasury designated for debt reduction.  For example, while the 1990
Eisenhower coin showed a $1.1 million loss to the Mint, the Treasury
benefited from $9.7 million that was received in surcharges. 
Similarly, the 1991 United Service Organization program broke even
for the Mint, but the Treasury received $1.6 million in surcharges. 

In addition to the surcharges applied against the national debt, the
Mint believes that the commemorative coin program also benefits the
government in other ways.  During July 1995 testimony before the
House Banking Subcommittee on Domestic and International Monetary
Policy, the Mint Director said that PEF and ultimately the U.S. 
Treasury benefited from commemorative coin programs that showed a
loss because they helped cover the overhead expenses of other Mint
programs.  For example, the 1994 World Cup program lost $4.1 million. 
However, the Mint reported that if there had been no World Cup
program, $6.1 million in the Mint's overhead expenses would have been
borne by other Mint programs, such as circulating coins. 

In commenting on a draft of this report, the Mint estimated that
since 1982, commemorative coin programs have resulted in the
absorption of $180 million in overhead costs.  We asked the Mint how
its overhead expenses are allocated and whether commemorative coin
programs cause additional overhead costs.  The Mint indicated that
commemorative coin programs do generate some overhead costs that
would otherwise be avoided if the programs were not undertaken. 
However, the Mint believes that commemorative coin programs absorb
more overhead expenses than they generate, but it was not able to
quantify the amount generated by the commemorative programs. 

Further, the Mint indicated in its comments on a draft of this report
that since 1982, the sale of clad commemorative coins generated an
additional $6 million in seigniorage.  This represents an average
seigniorage of about $273,000 per program for the 22 commemorative
coin programs from 1982 to 1995.  Starting in 1996, the Mint is no
longer recording seigniorage from commemorative coins because the
Mint's new revolving fund does not recognize seigniorage, according
to a Mint official. 

The Mint in its comments also indicated that commemorative coin
programs have generated $157 million in proceeds from the sale of
silver from the nation's stockpiles over the past decade and $375
million in revenue from the sale of gold since 1984. 

The Mint indicated that despite the controversy associated with the
practice of adding surcharges to the price of commemorative coins,
considerable good has come from the funds raised for philanthropic
purposes, including providing support for training U.S.  Olympic
hopefuls, to preserve national landmarks such as the Statue of
Liberty, and for a visitors center at the U.S.  Capitol. 

In June 1995, a Treasury Department Inspector General report on the
Mint's fiscal year 1994 financial statement indicated that the Mint
had an inadequate and fragmented fund structure, including weaknesses
in the cost accounting system for numismatic programs.  As a result,
the report stated, "the risk that controls will not detect potential
misstatements is greatly increased, accounting was complicated, and
the Mint's true operating cost could be understated."\22 Although our
review was not designed to verify the accuracy of the Mint's cost
accounting system, we asked Mint officials about the status of the
agency's efforts to resolve the problems cited by the Inspector
General.  A Mint official said that problems associated with a
fragmented fund structure were resolved when legislation was enacted
in November 1995 amending the revolving fund statute to include
receipts and expenditures of circulating coins.\23 A May 1996
Treasury Inspector General report on the Mint's 1995 financial
statements indicated that efforts to achieve full integration of the
Mint's financial management system have been cumbersome and delayed. 


--------------------
\18 This excludes the $64 million that the Treasury earned from
surcharges on commemorative coins for debt reduction during this
period. 

\19 These are the World Cup, Capitol, Civil War, and Special Olympics
programs.  The $4.9 million figure includes a $300,000 reported loss
for the Special Olympics program that does not reflect sales of
263,551 coins. 

\20 More current profit data from the Mint on this program are not
yet available. 

\21 31 U.S.C.  5134.  In 1995, PEF generated $362.9 million in earned
revenue, which resulted in a profit of $4.7 million.  Before
enactment of PEF in 1992, the Mint's profits were directly deposited
to the Treasury's General Fund. 

\22 Audited Fiscal Year 1994 Financial Statements of the United
States Mint, U.S.  Department of the Treasury Office of the Inspector
General, June 14, 1995 (OIG-95-089). 

\23 P.L.  104-52. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 2:5

Since 1982, the commemorative coin program appears to have
experienced many of the same problems that occurred before 1955,
including the authorization of more coins than the market would
absorb, the authorization of an increasing number of programs,
concern over high prices, and the authorization of some coins that
were not as popular with coin collectors as some past coins.  As the
number of commemorative coin programs has increased since 1990, sales
have decreased, and several programs have been unprofitable to the
Mint.  Also, under the existing programs, sponsors have been paid
surcharges regardless of whether a specific coin program experienced
a profit or loss. 


OPTIONS FOR IMPROVING THE
COMMEMORATIVE COIN PROGRAM
============================================================ Chapter 3

To help reduce a proliferation of commemorative coins and government
losses, CCCAC has recommended the commemorative coin program be
changed by limiting the number of commemorative coin programs per
year, restricting the maximum authorized mintage levels, implementing
a profit-sharing arrangement between the Mint and the sponsors, and
transferring the authority to select themes to the Treasury
Department.  If adopted, these recommendations could help reduce the
number of commemorative coins and prevent the payment of surcharges
to sponsors while the Mint lost money.  However, they would not
reduce the possibility of government losses primarily because
commemorative coin prices would not necessarily be lower and sponsors
could continue to solicit support for the approval of themes that
might be unpopular in the commemorative coin market.  Congress has
adopted 1 of CCCAC's 11 recommended coin themes. 

CCCAC also recommended that Congress consider authorizing circulating
commemorative coins.  This approach could result in millions of
dollars in additional profits to the government. 


   CCCAC RECOMMENDATIONS
---------------------------------------------------------- Chapter 3:1

Congress authorized the establishment of CCCAC in 1992, directing it
to make recommendations to Congress regarding future commemorative
coin themes.  In its two annual reports in 1994 and 1995, CCCAC
recommended 11 new commemorative coin themes for 1995 through 1999
and made recommendations on how to reform the commemorative coin
program.  CCCAC's major reform recommendations included (1) limiting
the number of commemorative coin programs per year, (2) restricting
the authorized mintage levels, (3) replacing surcharges with a
profit-sharing arrangement between the Mint and the sponsors,
requiring that the Mint recover its costs before sharing profits with
the sponsors, and (4) transferring authority to make selections of
commemorative coin themes from Congress to the Treasury Department. 


      LIMITING THE NUMBER OF
      PROGRAMS PER YEAR
-------------------------------------------------------- Chapter 3:1.1

In its 1994 report, CCCAC indicated that it supported a 1993 Sense of
Congress Resolution,\24 which recommended that no more than two
commemorative coin programs be approved per year, unless, based on a
CCCAC recommendation, "extraordinary merit" existed for an additional
program.  The resolution did not define "extraordinary merit" with
respect to authorizing new programs, leaving the term open to
interpretation. 

Congress does not appear to have followed the 1993 congressional
resolution to limit the number of commemorative coin programs.  In
the same legislation containing the resolution to limit the number of
programs to two per year, Congress approved three new programs for
1994. 

Limiting the number of coin programs to two per year may not
eliminate losses to the Mint or increase sales.  From 1982 to 1995,
the four programs that sold the most coins did not compete with any
other new programs.  In addition, it appears from the evidence we
reviewed that to be successful, among other things, coin themes
should have broad appeal to coin collectors, and limiting the number
of programs to two per year would not itself ensure that selected
themes would be popular. 


--------------------
\24 P.L.  103-186. 


      RESTRICTING THE AUTHORIZED
      MINTAGE LEVELS
-------------------------------------------------------- Chapter 3:1.2

In addition to supporting Congress' resolution to limit the number of
coin programs per year, CCCAC recommended restricting the maximum
authorized mintage levels of commemorative coins.  According to
CCCAC, lower mintages would create the potential for commemorative
coins to retain or increase their value in the secondary market,
which would reward purchasers and thus generate greater interest in
subsequent programs.  CCCAC recommended that the maximum mintages per
program be limited to 750,000 for clad half-dollars and 500,000 for
silver dollars.  It also recommended that a 5-dollar gold coin be
included in a program only when a commemorative theme has "special
significance" and that the mintage be limited to 100,000.  CCCAC did
not define the term "special significance."

Congress did not follow CCCAC's recommendation regarding authorized
mintage levels with respect to the 1996 Olympic coin program. 
Although in 1995 Congress approved a measure to decrease the maximum
authorized mintage level for the 1996 Olympic coin program by over
4.6 million coins, an average of 6.7 million coins remained
authorized for each of the program's 2 years, including 600,000 gold
coins.\25

According to the Mint, restricting the supply of coins creates
potential for commemorative coins to retain their value in secondary
markets, rewarding collectors who bought them and generating greater
interest in subsequent commemorative programs. 


--------------------
\25 In December 1995, Congress passed P.L.  104-74, which reduced the
maximum mintage level for the Olympic program from 17,950,000 to
13,300,000 coins. 


      TRANSFERRING THEME SELECTION
      TO THE TREASURY DEPARTMENT
-------------------------------------------------------- Chapter 3:1.3

As a means of improving the quality of themes recommended, CCCAC also
recommended that Congress authorize the Treasury Department to select
coin themes while retaining congressional oversight over the
execution of commemorative coin programs. 

Congress has not transferred authority to make commemorative coin
theme selections to another body.  Although Congress directed CCCAC
to make commemorative coin theme recommendations to it, as of May
1996, Congress had adopted only 1 of the 11 themes that CCCAC
recommended for 1995 through 2002.  In comments on a draft of this
report, the Mint Director said that the fact that the Smithsonian
coin program has been the only commemorative coin bill to be enacted
since the moratorium request in August 1994 demonstrates that CCCAC
is now being heard by Congress, considering that CCCAC stated in its
two reports to Congress that the Committee's first priority was to
restrain the proliferation of commemorative coin programs. 

It appears that transferring authority to select commemorative coin
themes from Congress to the Treasury Department is one way Congress
could help reduce the number of programs and losses to the Mint,
provided that the Treasury Department (1) based its selections on
adequate market research and (2) coupled the selection of popular
themes to lower coin prices and a limitation on the number of
commemorative coin programs approved each year.  However, we also
note that Congress could do this as well.  Further, CCCAC's proposal
does not indicate whether the Treasury Department, which does not
have a system in place to predict what themes would be popular with
coin collections, would be able to control prices.  Also, Congress
could achieve the same end by requiring the Treasury Department to
recommend programs for approval on the basis of market research.  The
costs of such market research would have to be considered along with
the expected benefits. 


      REPLACING SURCHARGES WITH
      PROFIT-SHARING
-------------------------------------------------------- Chapter 3:1.4

CCCAC attempted to address the Mint's declining profits from
commemorative coins by recommending that Congress eliminate
surcharges, replacing them with a profit-sharing arrangement between
the Mint and the sponsors and requiring that the Mint recover its
costs before sharing profits with the sponsors.  CCCAC said this
proposal would help prevent the Mint from incurring future financial
losses by allocating funds to sponsors only when the programs
operated at a profit.  Further, the CCCAC Chairman said that coin
collectors might be more receptive to profit-sharing than surcharges,
which collectors regard as an unnecessary tax.  The CCCAC Chairman
said that he thought the profits could be divided between the
sponsors and the Mint in a 70:30 or 80:20 ratio in favor of the
sponsors, depending on market demand, marketing costs, and program
size. 

In December 1995, the House of Representatives passed a bill that
would, among other things, bar the payment of surcharges to sponsors
until the Mint recovers all of its costs associated with the
program.\26 The bill would not eliminate the collection of surcharges
and would not require profit-sharing once the Mint recovered its
costs.  The Senate has not yet taken any action on legislation to
reform the commemorative coin program. 

In July 1995 testimony before the House Banking Subcommittee on
Domestic and International Monetary Policy, the Mint Director said
that he would like to end the practice of adding surcharges to the
price of commemorative coins, even though considerable good has come
from the funds raised for philanthropic purposes.  He said that
demand for new programs has increased as more organizations have
discovered that coin programs produce revenues more quickly and
reliably than the congressional appropriations process.  The Director
added that as long as funds for private purposes are raised through
commemorative coin programs and their approval remains with Congress,
the risk of continued proliferation remains high regardless of any
reform measures adopted.  Since sponsors do not share in the costs of
producing and selling commemorative coins, it is likely that they
would continue to solicit support for the approval of coins to
support their causes. 

Moreover, the Mint Director told us that eliminating surcharges in
favor of sharing profits with the sponsors may not result in lower
commemorative coin prices, since coin prices would include profits
for the sponsors.  Because some coin collectors, who represent most
buyers of commemorative coins, are dissatisfied with high prices, it
appears that coin sales may not increase without lowering prices. 


--------------------
\26 H.R.  2614.  The House bill would also increase accountability
over commemorative coin surcharges.  Current law requires recipients
of coin surcharges to report expenditures to the Mint and GAO each
calendar quarter in which surcharges are received and a final
expenditures report within 1 year of the last date that the
commemorative coin may be sold.  In addition, GAO is required to
submit a "financial accounting statement" based on each sponsor's
reports, along with any audit conducted, within 1 year of the last
date that coins may be sold.  The general objective of these
provisions is to disclose the amounts of surcharges expended and
whether such expenditures were for authorized purposes.  This
objective would be frustrated if sponsors spend part of the
surcharges after the reporting date--1 year after the last date that
coins may be sold under governing legislation.  The House bill would
require sponsors to obtain annual independent audits of surcharges
until surcharges were fully expended.  To avoid duplication and
unnecessary expenses, the House bill would authorize sponsors that
obtain annual audits for other purposes to satisfy the surcharge
audit requirement in connection with such other audits. 


      CIRCULATING COMMEMORATIVE
      COINS
-------------------------------------------------------- Chapter 3:1.5

In addition to its recommendations to reform the existing
commemorative coin programs, CCCAC endorsed the issuance of a
circulating commemorative coin, which would be legal tender issued
with a distinctive design, but without a surcharge and sold at face
value.  CCCAC indicated that a circulating commemorative coin would
produce seigniorage\27 for the U.S.  Treasury.  Under CCCAC's
recommendation, the Secretary of the Treasury would select the
denomination, when to issue the coin, and its design.  Congress has
not adopted this recommendation.  To authorize a circulating
commemorative coin, Congress would need to amend a law originally
enacted in 1890, which states that a coin's design may be changed
only once within 25 years from the first adoption of the coin's
design.\28

Our analysis shows that by issuing circulating commemorative coins,
the Mint could still commemorate events and individuals and make
millions of dollars in additional profits.  We estimated that a
circulating commemorative coin program involving the quarter could
generate $225 million per year for the government in additional
seigniorage, assuming that quarter production would rise by 50
percent. 

We based our estimated seigniorage on the Mint's 1995 production of
about 2.1 billion quarters, each generating seigniorage of 21.4
cents.  We estimated seigniorage by subtracting the cost of producing
a quarter in 1995 ($.036) from the coin's face value ($.25).  We then
calculated the additional seigniorage by multiplying the number of
quarters produced in 1995 (2,100,000,000) by the volume increase
(.50), times the seigniorage on each quarter ($.214), which equals
$224,700,000. 

A 50-percent increase in the production of quarters would appear to
be a conservative estimate, based on the experience involving the
production of Bicentennial circulating commemorative quarters issued
in the United States in 1976, which was 83 percent higher than the
average quarter production of the previous 5 years and the subsequent
5 years.  Further, our 50-percent estimate of increased production is
considerably less than the 156-percent increase in quarter production
that Canada experienced when it issued a commemorative quarter in
1992, compared to the average of the previous 5 years. 

A circulating commemorative quarter, as opposed to other
denominations, may generate the most savings because quarters are the
most widely circulated coins; are the largest size of the widely
circulating coins and could thus better accommodate a commemorative
design on the reverse side; and would be likely to generate the most
seigniorage and, thus, interest savings.  Although seigniorage itself
has no impact on the size of the current budget deficit under budget
rules, it does substitute for borrowing from the public and thus
lowers interest costs to the government.  At current 30-year annual
borrowing rates of about 7 percent, generating $225 million in
seigniorage would reduce interest costs by about $16 million
annually.\29

In recent history, the U.S.  Mint has not attempted to issue
commemorative coins that would circulate over several consecutive
years.  However, the Mint's experience with the Bicentennial coins,
especially the quarter, and Canada's experience with circulating
commemorative quarters suggest that the public may be receptive to
circulating commemorative coins and that coinage demand could
increase with the issuance of circulating commemorative coins. 

The ANA President suggested issuing circulating commemorative coins
that would commemorate the 50 states, perhaps issuing 5 per year. 
Thus, over a 10-year period, all the states could be commemorated. 
He said that a circulating quarter, half-dollar, or dollar coin
should be considered, but quarters, since they are widely used, would
attract the most attention.  He also said that because the
half-dollars are not widely circulated, they would likely be
retained.  If more coins were retained, relatively more seigniorage
would be generated. 

Like circulating commemorative coins, Congress has also authorized
that certain events and individuals be commemorated on our nation's
stamps.  Commemorative stamps are sold at face value and are
profitable to the Postal Service when the public buys them but does
not use them for postage.  A citizens' advisory committee selects
commemorative stamps on the basis of extensive public suggestions on
themes they are interested in and makes its recommendations to the
Postmaster General for approval.  A detailed description of the
commemorative stamp advisory committee's selection criteria,
including a comparison to CCCAC, is provided in appendix III. 


--------------------
\27 Seigniorage is the difference between a coin's face value and
cost of production. 

\28 31 U.S.C.  5112(d)(2). 

\29 $225,000,000 x .07 = $15,750,000. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 3:2

The Mint's recent commemorative coin program reflects a set of
problems similar to those that the Mint Director reported were
experienced from 1892 to 1955.  When the commemorative coin program
was revived in 1982, Congress intended that the George Washington
program and three subsequent programs serve as a means of reducing
the national debt.  However, instead of using proceeds for debt
reduction, the primary intent of most of the recent programs has been
to raise funds for coin program sponsors. 

To help minimize the potential for future losses, Congress could
guard against (1) the selection of themes that are unlikely to have
broad appeal to the commemorative coin market, (2) the production of
more commemorative coins than the market can absorb, (3) higher
prices than the market can bear, and (4) the payment of surcharges to
sponsors when the government is losing money.  CCCAC's
recommendations to reform the commemorative program appear to address
some of these issues.  For example, limiting the number of programs
and coins to be minted could help reduce the number of coins offered. 
In addition, authorizing the Mint to implement a profit-sharing
arrangement between the Mint and sponsors could prevent the payment
of surcharges to sponsors when the government is losing money. 

However, even if these recommendations were adopted, they would not
ensure that commemorative coin themes and prices would be determined
on the basis of market research.  We believe that to be successful,
commemorative coin prices need to be at levels that make them
attractive to coin collectors and have themes that are selected on
the basis of market research.  The costs of such research would have
to be considered as well as the benefits.  However, because sponsors
do not share in the financial risks and costs, they will continue to
solicit support for their causes, whether the approval authority
rests with Congress or the Treasury Department. 

Of CCCAC's recommendations, one would seem to address some of the
program's problems while also helping to reduce the national debt.  A
circulating coin program would lower commemorative coin prices by
removing the surcharges, marketing, and packaging costs.  It also has
the potential to generate $225 million per year in seigniorage.  If
this recommendation were implemented, a circulating commemorative
quarter, as opposed to other denominations, might be the best coin to
use because quarters are the most widely circulated coins, are the
largest size of the widely circulating coins and could thus better
accommodate a commemorative design on the reverse side, and would be
likely to generate the most seigniorage. 


   MATTERS FOR CONGRESSIONAL
   CONSIDERATION
---------------------------------------------------------- Chapter 3:3

Congress may want to further consider its intent regarding the
commemorative coin program--specifically in terms of whether it wants
the program to serve as a means of providing funds to the coins'
sponsors, or reducing the national debt, or both. 

For those situations where Congress wants the commemorative coin
program to be used as a means of supporting a sponsoring group, it
could consider reforming the program by making changes aimed at
reducing proliferation and preventing losses, such as limiting the
number of programs to one per year, restricting maximum authorized
mintage levels, requiring that the selection of themes be based on
market research, implementing a profit-sharing arrangement between
the Mint and the sponsors, requiring that all of the Mint's costs be
recovered before the sponsors receive financial benefits, and
requiring that the prices of commemorative coins be set at levels
where the market research indicates the greatest potential for sales. 

If Congress would like to increase government profitability on all
commemorative coins or for those situations where it would like to
apply the proceeds of a commemorative coin program to debt reduction,
it could authorize a circulating commemorative coin program.  Because
the quarter is the highest denomination and the largest in size of
the widely circulating coins, it would likely generate the most
seigniorage and best accommodate a commemorative design on its
reverse side. 


   AGENCY COMMENTS AND OUR
   EVALUATION
---------------------------------------------------------- Chapter 3:4

We requested comments on a draft of this report from the Director of
the Mint.  The Director provided written comments, which are
contained in appendix V. 

The Director said that the report was thorough and insightful.  He
asked us to add additional information about total financial benefits
that the government has received from commemorative coins, including
the 1996 Olympic program, and about CCCAC's effectiveness.  The
Director also asked us to eliminate the reform option of reducing the
number of commemorative coin programs and replace it with the option
of reducing mintage levels.  We evaluated the Mint's comments and
incorporated the additional information provided by the Mint in the
report where appropriate. 

The Mint indicated that, in addition to the program profits generated
from commemorative coins, the government also benefited from
seigniorage, the sale of gold and silver from the nation's
stockpiles, and the absorption of overhead costs.  We added this
information to pages 6 and 31-32 of the report. 

The Mint also asked us to cite the program profits and surcharges
deposited to the Treasury from commemorative coins.  These figures
were provided on pages 5-6 and 27-32 and shown in table III.1. 

The Mint also asked us to include updated information about the
financial performance of the 1996 Olympic program, which we did on
page 28. 

In addition, the Mint cited a number of philanthropic uses for the
surcharges, which we included on page 32. 

The Mint also asked us to recognize the CCCAC's efforts in persuading
the 1996 Olympic program sponsor and Congress to reduce the
authorized mintage levels for the program.  While CCCAC may have had
some effect on persuading Congress to approve a measure in 1995 to
reduce the maximum authorized mintage level for the 1996 Olympic coin
program, an average of 6.7 million coins remained authorized for each
of the program's 2 years.  By contrast, during the 1990s, the Mint
has sold an average of 2.8 million coins per year. 

The Mint also noted what it believed to be an implication in the
report that Congress ignored a call by the Secretary of the Treasury
in August 1994 for a moratorium on the authorization of any
additional commemorative coin programs until CCCAC issued its
recommendations by authorizing five additional programs the following
month.  According to the Mint, the Treasury Secretary called for the
moratorium because these five programs were already included in the
conference report of the Riegle-Neal Interstate Banking and Branching
Efficiency Act bill.  We added this information on page 16. 

The Mint also indicated that CCCAC played an instrumental role in
restraining the proliferation of commemorative coin programs by
requesting a moratorium on additional programs in a letter to the
House and Senate Banking Committees in August 1994.  As evidence, the
Mint stated that since that time, only one commemorative coin
program, which was recommended by CCCAC, has been passed by Congress. 
While CCCAC may have played a role in persuading Congress to not pass
more than one commemorative coin program since August 1994, we note
that other contributing factors could also have been involved.  For
example, during the 104th Congress, the House Banking and Financial
Services Committee adopted a new rule requiring that before hearings
may be held on proposed commemorative coin legislation, the bill must
be cosponsored by at least two-thirds of the House of
Representatives, and it must be recommended by CCCAC.  Similarly, the
Senate Banking, Housing, and Urban Affairs Committee adopted a new
rule requiring that at least two-fifths of the Senate cosponsor any
commemorative coin legislation before it will be considered.  In
addition, Senate Banking Committee staff indicated to us that the
Committee did not consider any commemorative coin legislation in 1996
pending receipt of this report. 

The Mint also expressed concern over the draft report's statement
that as of May 1996, Congress had adopted only 1 of the 11 themes
that CCCAC recommended for 1995 through 2002.  According to the Mint,
this statement could be read to suggest that CCCAC was not being
effective in its advisory role to Congress and that themes other than
those recommended by CCCAC have been adopted by Congress.  We added
to p.  36 that, according to the Mint, the fact that the Smithsonian
coin program has been the only commemorative coin bill to be enacted
since the moratorium request in August 1994 demonstrates that CCCAC
is now being heard by Congress, considering that CCCAC stated in its
two reports to Congress that the Committee's first priority was to
restrain the proliferation of commemorative coin programs. 

The Mint also asked us to consider including reducing the authorized
mintage levels, rather than the number of programs per year, as a
reform option.  We included reducing mintage levels as an additional
reform option, but believe it should be coupled with a limit on the
number of programs per year.  When we stated that prices of
commemorative coins should be set at levels where market research
indicates the highest sales potential, we were suggesting that
authorized mintages be set at reasonable levels.  Even if mintage
levels for numerous commemorative coin programs were low, coin
collectors may not be able to afford to purchase coins offered from
multiple programs.  As discussed on p.  35, past history shows that
the programs that sold the most coins did not compete with any other
concurrent programs.  Thus, we believe that to be most effective,
both mintage levels and the number of programs should be lower than
in the past several years. 

The Mint also asked us to delete a statement in the draft that
because the Mint does not produce all commemorative coins authorized,
higher authorizations than sales do not seem to be an operational
problem.  We agreed to delete the statement after considering the
Mint's position that restricting the supply of coins creates the
potential for commemorative coins to retain their value in secondary
markets, which could reward collectors who bought them and generate
greater interest in future programs. 


HISTORICAL PERSPECTIVE ON
COMMEMORATIVE COINS
=========================================================== Appendix I

In 1892, Congress initiated a commemorative coin program by
authorizing the U.S.  Mint, a unit of the Treasury Department
responsible for producing circulating coins, to issue a half-dollar
coin commemorating the Columbian Exposition.  For 1892 through 1954,
Congress authorized the Mint to produce 157 commemorative coins
commemorating 53 different events, occasions, or individuals.  The
157 commemorative coins included 1 quarter, 142 half-dollars, 1
silver dollar, 9 gold dollars, 2 $2.50 gold pieces, and 2 $50 gold
pieces. 

Congress was urged to approve legislation authorizing these
commemorative coins by private groups who sponsored specific
celebrations or events.  After the coins were minted, the Mint sold
them at face value to the sponsoring organizations, who then resold
the coins to the public.  Beginning with the 1892 Columbian
Exposition commemorative coin, Congress allowed sponsors to sell the
commemorative coins for more than their face value as a means of
raising money for their causes. 

In 1925, the House Committee on Coinage, Weights, and Measures went
on record as not favoring legislation authorizing additional
commemorative coins because of " .  .  .  the great number of bills
introduced to commemorate events of local and not national interest,
and because such quantities of coins so authorized had to be taken
back by the government, melted, and reminted."\30 Further,
then-Secretary of the Treasury Andrew W.  Mellon recommended in 1926
that the coins should not be commercialized to finance any project or
to commemorate any event other than those of national importance to
all the people. 

In 1930, President Hoover vetoed a bill authorizing the coinage of
silver 50-cent pieces to commemorate the 75th anniversary of the
Gadsden Purchase.\31 In his veto message, President Hoover said that
selling commemorative coins for a profit and as a means to provide
funding for celebrations was a misuse of the coinage system and
because the coins did not circulate, they did not serve the real
function of coins.  Further, President Hoover said that: 

     "The very number of events to be commemorated, and past
     experience, indicates how difficult it is to draw the line and
     how such a practice, once it is recognized, tends constantly to
     grow.  It is not apparent on what grounds similar measures, no
     matter how numerous, may be rejected.  Yet their enactment in
     such numbers must bring further confusion to our monetary
     system."

President Hoover's veto had the effect of discouraging further
commemorative coin legislation until 1933.  However, from 1933 to
1935, Congress approved nine new commemorative coins, prompting
President Roosevelt to write the Chairman of the Senate Committee on
Banking and Currency in 1935, reiterating many of the concerns raised
by President Hoover.  President Roosevelt wrote that: 

     "These coins do not have a wide circulation as a medium of
     exchange, and, because of the multiplicity of designs arising
     from the issuance of such coins, they jeopardize the integrity
     of our coins and cause confusion.  Accordingly, I think the
     practice of striking special coins in commemoration of
     historical events and permitting the sponsoring organizations to
     sell them at a profit is a misuse of our coinage system, which
     is assuming increasingly dangerous proportions."\32

In 1937, President Roosevelt signed legislation authorizing two
commemorative coins, but the legislation also contained the following
reform elements:  (1) their issuance was to be limited to 1 mint to
be selected by the Mint Director; (2) at least 25,000 commemorative
coins had to be issued at any one time; (3) each coin was to have but
1 authorized design; (4) each coin was to bear the date of the year
in which it was authorized; and (5) all coins were to be issued
within 1 year from the date of enactment of the authorizing act. 

However, in 1937, President Roosevelt again wrote the Chairman of the
Senate Banking and Currency Committee about the "alarming increase"
in the demand for legislation authorizing the issuance of coins
commemorating events, "many of which are of no more than local
significance." The President also cited a law originally enacted in
1890 stating that

     " .  .  .  no change in the design or die of any coin shall be
     made oftener (sic) than once in 25 years from and including the
     year of the first adoption of the design, model, die, or hub,
     for the same coin .  .  .  "

In 1939, Congress approved a bill repealing all pending
authorizations of commemorative coins after concerns were raised
about abuses in the program.\33 A congressional report accompanying
the repeal legislation indicated that the number of commemorative
coin programs had exploded and no controls existed over what dealers
could charge for the coins, resulting in increased possibilities for
counterfeiting and detracting from the fundamental purpose for which
money is issued, namely, to provide a medium of exchange.  Further,
the report indicated that "no country in the world permits such abuse
of its coinage as has been permitted in this country." The report
also cited the 1890 law barring the change in coinage more than every
25 years, saying that it had been " .  .  .  honored in the breach
more than in the observance."

In 1946, the House Committee on Coinage, Weights, and Measures
reported that while it recommended authorization of legislation
commemorating Booker T.  Washington, it was

     " .  .  .  fully cognizant of, and in general accord with, the
     attitude of the Treasury Department regarding the too
     promiscuous issuance of commemorative coins in commemoration of
     events of local or minor importance and the resultant abuses
     possible or attendant thereto.  Therefore, it feels that every
     bill of this nature should be carefully considered and judged
     solely on its individual merits."\34

Also in 1946, President Truman approved the legislation authorizing
coins commemorating Booker T.  Washington and the 100th anniversary
of the admission of Iowa into the Union.  However, the following
year, President Truman vetoed bills that would have authorized
50-cent pieces to commemorate the 100th anniversary of the admission
of Wisconsin into the Union.  In a statement disapproving the bill,
President Truman said that if the legislation were to be enacted, it
was not apparent on what ground similar measures, no matter how
numerous, could be rejected. 

In 1948, President Truman vetoed another bill that would have
commemorated the 100th anniversary of the organization of Minnesota
as a Territory of the United States.  In his veto message, President
Truman, as had Presidents Hoover and Roosevelt, recommended that
commemorative medals, rather than commemorative coins, be issued for
events of national importance.\35 Nonetheless, President Truman
approved a commemorative coin with the profiles of Booker T. 
Washington and George Washington Carver, which was issued from 1951
through 1954. 

Congress did not approve legislation authorizing the Mint to produce
any commemorative coins from 1955 through 1981.  According to a Mint
official, Congress was reluctant to approve any commemorative coin
legislation during that period because the market was saturated with
commemorative coins and because of the past abuses that had occurred
in the program.  According to ANA, abuses that had occurred included
(1) the authorization of many commemorative coins reflecting local,
rather than national, interests; (2) the sale of commemorative coins
by private organizations at exorbitant prices, with the federal
government having received none of the profits; and (3) a requirement
that the Mint strike coins bearing different dates and marks.\36

The commemorative coin program was reactivated in late 1981 when
Congress approved legislation authorizing the George Washington coin. 
A Mint official said that the commemorative coin program was
reactivated because the numismatic community expressed support to
Congress for issuing commemorative coins with certain popular themes. 
The legislative history regarding the George Washington coin
indicated that its congressional sponsors were interested in
authorizing the coin as a means of reducing the national debt.\37 In
May 1981 testimony before the House Banking Committee, the ANA
President said he supported the George Washington coin because it
avoided the past abuses by (1) using a theme that was of national,
rather than local, interest; (2) requiring that the Treasury receive
the sales proceeds, including the profits, rather than private
organizations; and (3) issuing the coin only during 1 year. 


--------------------
\30 House Report No.  1342, 69th Cong., 2d Sess., 1925. 

\31 The Gadsden Purchase was a tract of land, now part of Arizona and
New Mexico, that was purchased by the United States from Mexico in
1853. 

\32 Although the Mint has issued some circulating commemorative
coins, such as those produced from 1975 through 1977 to commemorate
the U.S.  Bicentennial, commemorative coins are not generally
circulated. 

\33 P.L.  76-278. 

\34 House Report No.  2506, 79th Cong., 2d Sess., 1946. 

\35 According to a Mint official, the only major difference between
commemorative coins and medals is that while the coins are legal
tender, medals are not. 

\36 The wording of many commemorative coin bills allowed the same
coin to bear several different dates.  Further, mint marks
identifying where each coin was struck created a variety of coins. 

\37 In 1981, when the legislation was being considered, the national
debt was nearly $1 trillion.  As of February 1996, the national debt
was nearly $5 trillion. 


FUTURE AUTHORIZED COMMEMORATIVE
COIN PROGRAMS AND PROPOSED
PROGRAMS
========================================================== Appendix II

Congress has authorized six commemorative coin programs for 1996
through 2002.  Legislation is also pending in Congress to authorize
17 new commemorative coin programs.  Tables II.1 and II.2 list the
future authorized programs and the proposed programs, respectively. 



                               Table II.1
                
                   Future Commemorative Coin Programs
                               Authorized

                                                       Number of coins
Year    Program                       Denomination(s)       authorized
------  ----------------------------  ---------------  ---------------
1996    Centennial Olympic Games-        $.50, $1, $5     10,600,000\a
         Second Year
1996    Smithsonian Institution\b              $5, $1          750,000
1996    National Community Service                 $1          500,000
1997    U.S. Botanic Garden                        $1          500,000
1998    Robert F. Kennedy                          $1          500,000
2002    U.S. Military Academy                      $1          500,000
======================================================================
Total                                                       13,350,000
----------------------------------------------------------------------
\a In December 1995, Congress approved a measure to decrease the
authorized mintage level for the 1995-1996 Olympic coin program from
17,950,000 to 13,300,000.  That measure was approved by the President
in December 1995 (P.L.  104-74). 

\b This program was authorized by Congress in December 1995 and was
approved by the President in January 1996 (P.L.  104-96). 

Source:  P.L.  102-390, P.L.  103-328, and P.L.  104-96. 



                               Table II.2
                
                 Legislation Proposed for Commemorative
                   Coin Programs Pending in the 104th
                                Congress

                                          Dates of         Maximum no.
Proposed coin themes                      issuance            of coins
----------------------------------------  -------------  -------------
Bicentennial of United States Gold        1995                  25,000
 Coinage\a
Black Revolutionary War Patriots          May 1995-            500,000
                                           May 1996
Connecticut Old State House Bicentennial  1996                 700,000
Franklin Delano Roosevelt\b               1997                 100,000
Franklin Delano Roosevelt\b               1997                 500,000
George C. Marshall                        1997               1,200,000
George Washington                         1999                 100,000
James Madison                             2001                 800,000
National Law Enforcement Officers         1997                 500,000
 Memorial
Smithsonian Institution\b,c               Aug. 1996-           900,000
                                           Aug. 1997
Smithsonian Institution\b                 Aug 1996-            900,000
                                           July 1997
Theodore Roosevelt                        1998               5,250,000
Thomas Edison                             1997                 700,000
Thurgood Marshall                         1 year, 90           500,000
                                           days after
                                           enactment
United Nations and President Truman       1 year,              425,000
                                           starting
                                           in 1996
United Nations 50th Anniversary           June 1995-           600,000
                                           Dec. 2002
U.S Buffalo Nickel                        1998-2000          1,000,000
U.S. Navy Blue Angels                     1996                 500,000
Yellowstone National Park                 1997                 500,000
======================================================================
Total                                                       15,700,000
----------------------------------------------------------------------
\a While the House bill commemorates the Bicentennial of United
States Gold Coinage, the Senate bill commemorates the Bicentennial of
the United States. 

\b Bills for these coin programs have different sponsors. 

\c This bill was introduced by a Member of Congress who has since
retired.  In addition, in December 1995, Congress approved another
measure authorizing a Smithsonian commemorative coin. 


SALES AND FINANCIAL PERFORMANCE OF
COMMEMORATIVE COIN PROGRAMS FROM
1982 THROUGH 1995
========================================================= Appendix III

From 1982 to 1995, the Mint had 22 commemorative coin programs.  The
sales and financial performance of those programs, including
surcharge recipient organizations and how much they received, number
of coins sold, the amount of money that was designated for reducing
the national debt, and profit to the Mint, is provided in table
III.1. 



                                       Table III.1
                         
                             Mint Data on Sales and Financial
                            Performance of Commemorative Coin
                           Programs From 1982 Through 1995, by
                                         Program

                                                                    Surcharges
                                                 Sales  Surcharges  paid for     Mint net
                                               revenue  paid to     debt           profit
                                                   (in  sponsors    reduction         (in
                    Recipient      Number of  millions  (in         (in         millions)
Year  Program       organization  coins sold         )  millions)   millions)          \a
----  ------------  ------------  ----------  --------  ----------  ----------  ---------
1982  George        Federal        7,104,502     $71.8  N/A         N/A\b         $14.4\b
      Washington    Treasury
      250th
      Birthday

1984  Olympic       Los Angeles    5,045,474     315.3  $73.5       N/A              10.3
      Games         Olympic
                    Organizing
                    Committee

1986  Centennial    Statue of     15,491,169     290.0  83.2        N/A              28.6
      of the        Liberty-
      Statue of     Ellis Island
      Liberty and   Foundation
      Ellis Island  Inc.

1987  U.S.          Federal        4,064,629     256.4  N/A         52.7             34.6
      Constitution  Treasury
      Bicentennial

1988  Olympic       U.S. Olympic   1,895,112     111.1  22.9        N/A               1.0
      Games         Committee

1989  U.S.          U.S. Capitol   2,040,640      71.2  14.6        N/A               6.0
      Congress      Preservation
      Bicentennial  Commission

1990  Eisenhower    Federal        1,386,130      40.0  N/A         9.7             (1.1)
      Birthday      Treasury
      Centennial

1991  Mt. Rushmore  Mt. Rushmore   1,941,519      62.7  12.1        N/A\c            10.3
      50th          National
      Anniversary   Memorial
                    Society of
                    Black Hills

1991  Korean War    Korean War       831,537      22.5  5.8         N/A               2.4
      38th          Veterans
      Anniversary   Memorial
                    Fund

1991  United        United           446,233      12.0  1.55\d      1.55\d            0.0
      Service       Service
      Organization  Organization
      50th          and Federal
      Anniversary   Treasury

1992  Olympic       U.S. Olympic   1,478,354      46.6  9.2         N/A               1.8
      Games         Committee
                    and Los
                    Angeles
                    Olympic
                    Organizing
                    Committee

1992  White House   White House      499,654      13.4  5.0         N/A               0.8
      200th         Endowment
      Anniversary   Fund

1992  Christopher   Christopher    1,122,105      36.3  7.6         N/A               6.0
      Columbus      Columbus
      Quincentenar  Fellowship
      y             Foundation

1993  Madison-      James          1,515,454      46.8  9.2         N/A               3.5
      Bill of       Madison
      Rights        Memorial
                    Fellowship
                    Trust

1993  World War II  Battle of     1,054,447\    32.2\e  7.8\e       N/A             3.3\e
      50th          Normandy               e
      Anniversary   Memorial;
                    World War II
                    Memorial

1994  World Cup     World Cup     1,548,237\    45.4\e  9.3\e       N/A           (4.1)\e
      USA           USA Inc.               e

1994  Thomas        Thomas           599,832      18.7  6.0         N/A               0.2
      Jefferson     Jefferson
      250th         Memorial
      Birthday      Foundation;
                    Corporation
                    for
                    Jefferson
                    Poplar
                    Forest

1994  U.S.          Vietnam        840,531\e    22.9\e  8.2\e       N/A           0.6\e,f
      Veterans      Veterans
      (Prisoner of  Memorial;
      War; Women    POW Museum;
      in Military   Women in
      Service;      Military
      Vietnam       Service for
      Veterans)     America
                    Memorial

1994  U.S. Capitol  U.S. Capitol   347,911\e    12.7\e  5.2\e       N/A           (0.1)\e
      Bicentennial  Preservation
                    Commission

1995  Olympic       U.S. Olympic  1,564,520\  70.0\e,g  18.0\e,g    N/A         (3.2)\e,g
      Games         Committee;           e,g
                    Atlanta
                    Committee
                    for the
                    Olympic
                    Games

1995  Anniversary   Civil War     889,544\e,  32.0\e,g  6.0\e,g     N/A         (0.4)\e,g
      of Civil War  Trust                  g
      Battlefield
      Preservation

1995  Special       Special       441,747\e,  11.0\e\,  4.4\e\,g    N/A         (0.3)\e,f
      Olympics      Olympics               g         g
                    Internationa
                    l

1982                              52,149,281     1,641  $309.55     $63.95         $114.6
-
1995
-----------------------------------------------------------------------------------------
\a Before 1992, when Congress established PEF, profits from
commemorative coins were deposited into the Treasury.  After 1992,
profits were deposited into PEF. 

\b Although the legislation authorizing the George Washington coin
specified that surcharges on the coins be used for debt reduction,
Mint data did not separate the portion representing surcharges from
program profits. 

\c Congress originally required that half of the surcharges from the
Mt.  Rushmore coin be used for reducing the federal debt.  In 1994,
Congress amended the law, requiring that the first $18,750,000 in
surcharges be provided to the sponsor, with the remainder to be used
for debt reduction.  Because less than $18,750,000 was earned in
surcharges, all of the surcharges were paid to the sponsor. 

\d Congress required that half of the surcharges were to be provided
to the sponsor and half deposited to the federal Treasury for debt
reduction. 

\e According to the Mint, these figures are unaudited and subject to
change. 

\f As of September 30, 1995.  More current profit data are not yet
available from the Mint.  Does not include profits earned from the
sale of 1,279 coins sold for the Veterans program from October 1,
1995, through December 31, 1995, and 263,551 coins sold for the
Special Olympics program during the same period. 

\g As of March 31, 1996. 


COMPARISON OF COMMEMORATIVE STAMP
AND COIN PROGRAMS
========================================================== Appendix IV

Like commemorative coins, Congress has authorized that certain events
and individuals be commemorated on our nation's stamps.  The sale and
selection of commemorative stamps are handled differently from
commemorative coins, however.  While Congress selects commemorative
coin themes, the Postmaster General selects commemorative stamp
themes, based on the recommendations of an advisory committee.  In
addition, although sponsoring organizations are authorized to receive
the surcharges placed on commemorative coins, the U.S.  Postal
Service retains all proceeds from the sales of commemorative stamps. 
Further, commemorative stamp prices are set at their face value, not
at prices that are many times their face value. 


   SELECTION PROCESSES FOR
   COMMEMORATIVE STAMPS AND COINS
-------------------------------------------------------- Appendix IV:1

In contrast to commemorative coins, which are sold at prices that are
many times their face value in part because they include surcharges
for sponsoring organizations, commemorative stamps are sold at face
value.  While commemorative coins are considered collectibles,
commemorative stamps are used for both postage and collecting. 
Moreover, commemorative coin program sponsors benefit from the sales
of coins without sharing any of the financial risks, while the Postal
Service assumes all of the risks and benefits from the sales of
commemorative stamps. 

In 1957, the Citizens' Stamp Advisory Committee (CSAC) was
established to eliminate political involvement in the selection of
commemorative stamps.  Before then, according to the CSAC program
officer, Congress determined which commemorative stamps should be
issued. 

CSAC and CCCAC differ with regard as to how they receive public
input.  The public makes suggestions to CSAC regarding commemorative
stamp themes though the mail, which can give an indication of themes
that may interest purchasers.  It receives about 40,000 mailed
suggestions per year, but groups are not permitted to make
presentations to the committee.  By contrast, CCCAC permits potential
sponsors to make presentations to the committee but does not
regularly receive mailed suggestions and gets little information on
the themes that interest commemorative coin collectors.  For example,
in recent years, CCCAC has received 381 mailed suggestions in
response to solicitations placed in numismatic publications.  Further
comparisons of CSAC and CCCAC selection criteria are shown in table
IV.1. 



                               Table IV.1
                
                      Comparison of CSAC and CCCAC

CSAC                                      CCCAC
----------------------------------------  ----------------------------
Established in 1957.                      Established in 1993.

15 members selected by the Postmaster     7 members selected by the
General.                                  Treasury Secretary.

Committee meets quarterly.                Committee meets
                                          approximately bimonthly.

The public makes suggestions regarding    The public is permitted to
commemorative stamp themes through the    make presentations to the
mail. Groups are not permitted to make    committee regarding future
presentations to the committee.           commemorative coin programs,
                                          but is not limited to those
                                          programs recommended by
                                          CCCAC.

Committee makes recommendations on        Committee makes
commemorative stamp themes to the         recommendations on
Postmaster General, who decides whether   commemorative coin themes to
to adopt or veto them.                    Congress, which decides
                                          whether to adopt them.
                                          Congress also receives
                                          recommendations directly
                                          from coin sponsors.

Committee does not allow outside groups   Congress allows sponsors to
to receive financial compensation from    receive surcharges on
the sale of commemorative stamps.         commemorative coin sales.
----------------------------------------------------------------------
Sources:  CSAC and CCCAC. 

CSAC and CCCAC have established some similar criteria in selecting
themes for new commemorative stamp and coin programs.  According to
the CSAC criteria, only events and themes of widespread national
appeal and significance will be considered for commemoration. 
Similarly, CCCAC criteria specify that "[h]istorical persons, places,
events, and themes to be commemorated should have an enduring effect
on the Nation's history or culture" and that their scope should be
national or international.  According to both CSAC and CCCAC, themes
should not be selected that commemorate (1) a living person, (2) a
theme already selected in the past 10 years, and (3) commercial
enterprises and products.  Further, the CSAC criteria indicate that
stamps shall not be issued to honor cities, towns, municipalities,
counties, primary or secondary schools, hospitals, libraries, or
similar institutions.  CCCAC criteria also indicate that state or
regional anniversaries with little or no national significance and
local institutions, such as governments, universities, and public and
private schools, should not be considered. 

A significant difference between the two sets of criteria is that
CSAC does not allow stamps honoring fraternal, political, sectarian,
or service/charitable organizations that exist primarily to solicit
and/or distribute funds, while CCCAC criteria do not address this
issue.  Further, while CSAC criteria indicate that events of
historical significance be considered only on anniversaries in
multiples of 50 years, CCCAC criteria indicate that historical events
should generally be considered for commemoration "on important or
significant anniversaries." A detailed comparison between the two
sets of criteria is provided in table IV.2. 



                                    Table IV.2
                     
                       Comparison of Selection Criteria for
                          Commemorative Coins and Stamps

CSAC                                     CCCAC
---------------------------------------  ---------------------------------------
No living person shall be honored by     No living person should be honored by
portrayal on U.S. postage.               commemoration on U.S. coins.

No stamp shall be considered for         Commemorative themes and designs should
issuance if one treating the same        not be considered if one treating the
subject has been issued in the past 10   same subject has been issued in the
years. The only exceptions to the rule   past 10 years.
will be those stamps issued in
recognition of traditional themes such
as Christmas, the U.S. flag, express
mail, love, etc.

Events of historical significance shall  Historical events should generally be
be considered only on anniversaries in   considered for commemoration on
multiples of 50 years.                   important or significant anniversaries.

Only events and themes of widespread     Historical persons, places, events, and
national appeal and significance will    themes to be commemorated should have
be considered for commemoration. It is   an enduring effect on the nation's
a general policy that U.S. postage       history or culture. Their significance
stamps primarily feature American or     should be national or international in
American-related subjects. Stamps shall  scope. Events to be commemorated should
not be issued to honor fraternal,        have national or international
political, sectarian, or service/        significance and draw participation
charitable organizations that exist      from across America or around the
primarily to solicit and/or distribute   world. The following themes are
funds. Nor shall stamps be issued to     considered inappropriate for
honor commercial enterprises or          commemoration: state or regional
products. Stamps shall not be issued to  anniversaries with little or no
honor cities, towns, municipalities,     national significance; local
counties, primary or secondary schools,  institutions such as governments,
hospitals, libraries, or similar         universities, and public and private
institutions. Stamps shall not be        schools; commercial enterprises and
issued to honor religious institutions   products; and organizations,
or individuals whose principal           individuals, and themes principally
achievements are associated with         sectarian in nature.
religious undertakings or beliefs.

Commemorative stamps honoring
individuals usually will be issued on,
or in conjunction with, significant
anniversaries of their birth, but no
postal item will be issued sooner than
10 years after the individual's death.
The only exception to the 10-year rule
is the issuance of stamps honoring
deceased U.S. Presidents, who may be
honored with a memorial stamp on the
first birth anniversary following
death.

Stamps with added values, referred to
as "semi-postals," shall not be issued.
Due to the vast number of worthy fund-
raising organizations in existence, it
would be difficult to single out
specific ones to receive such revenue.
There also is a strong U.S. tradition
of private fund-raising for charities,
and the administrative costs involved
in accounting for sales would tend to
negate the revenues derived.

Requests for observance of statehood
anniversaries will be considered for
commemorative stamps only at intervals
of 50 years from the date of the
state's first entry into the Union.

Requests for commemoration of
significant anniversaries of
universities and other institutions of
higher education shall be considered
only in regard to Historic Preservation
Series postal cards featuring an
appropriate building on the campus.

                                         Commemorative coins should be issued in
                                         the appropriate year of commemoration.
                                         Coins should be dated in the year of
                                         their issuance.

                                         Commemorative coinage designs should
                                         reflect traditional American coin
                                         iconography as well as contemporary
                                         developments in the arts.

                                         Designs should be determined in
                                         consultation with sponsoring
                                         organizations but should not be
                                         determined by legislation.

                                         Commemorative coinage should not be
                                         required to contain logos and emblems
                                         of nongovernmental organizations as
                                         part of the design.

                                         Legislation authorizing the production
                                         of coins should be enacted no less than
                                         9 months prior to the date on which the
                                         coins may first be available to the
                                         public.
--------------------------------------------------------------------------------
Sources:  CSAC and CCCAC. 




(See figure in printed edition.)Appendix V
COMMENTS FROM THE MINT
========================================================== Appendix IV



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)

*** End of document. ***