The US Mint Shipped Dollar Coins Free to Anyone Who Paid by Credit Card, to Get Americans Spending Them. Frequent Fliers Bought Them by the Box for the Air Miles and Deposited Them at the Bank Still in Their Mint Packaging.

In June 2008 the United States Mint began selling dollar coins to the public at face value. A box of 250 Presidential or Sacagawea dollars cost $250, the Mint paid the shipping, and the buyer could pay by credit card. The purpose was circulation. In 2005 Congress had passed the Presidential $1 Coin Act, which required the Mint to issue four new presidential coins a year from 2007 to 2016, on the theory, borrowed from the state quarters, that a series which changed frequently and had educational appeal would finally persuade Americans to carry dollar coins. NPR would later describe the result as the byproduct of "a third, failed congressional effort" to do so, after the Susan B. Anthony and the Sacagawea. A political deal struck to move the bill along also required that 20 percent of all dollar coins made carry Sacagawea, for whom there was very little demand.

There was not much demand for the presidents either. When each new coin was released, the Federal Reserve Banks ordered enough from the Mint to meet initial demand, and the banks then sent about 40 percent of them back, according to the Treasury. The Direct Ship program was meant to bypass that loop and put boxes straight into the hands of people who would spend them. According to the Wall Street Journal, most of its early customers were coin collectors, community banks and small businesses such as vending-machine companies and car washes. A smaller group had a different use for a box of money that arrived free, could be bought on a rewards card and could be paid for with itself.

The Arithmetic

The method required no special skill. Buyers charged the boxes to a credit card that earned frequent-flier miles, took the shipment to the bank, deposited the coins and used the deposit to pay the credit card bill. In December 2009 the Wall Street Journal, reporting on the practice, summarised the expenses: "Their only cost: the car trip to make the deposit." Richard Baum, a software-company consultant in New Jersey, ordered 15,000 coins. "I never unrolled them," he told the paper. "The UPS guy put them directly in my trunk." Patricia Hansen, a retiree in San Diego, ordered $10,000 worth. "My husband took them to the bank," she said. She earned 10,000 miles.

The government's side of the ledger was less tidy. The Mint told the Journal that it cost, on average, about $3 to ship each 250-coin box. The card fees were handled by a separate Treasury agency, which negotiated the government's credit-card costs, and a spokesman said no particular credit-card expense was charged to the Mint. By the Journal's count, mileage collectors had ordered more than $1 million in coins before the Mint started identifying them and cutting them off.

The Letters

The Mint had noticed. Its spokesman, Tom Jurkowsky, later told NPR that officials first saw something amiss in the summer of 2008, when a small number of customers were repeatedly ordering large numbers of coins. The top 20 customers had bought between $219,000 and $696,000 worth. The other clue came from the banks, which reported coins being deposited still in their U.S. Mint boxes. Officials then found internet chat rooms where the scheme was explained step by step.

The Mint wrote to the heaviest buyers asking whether their intended use complied with the program's purpose. Customers who did not answer were blocked. Fewer than 400 were, Jurkowsky told the Journal, and he set out the agency's legal position with some precision. "Is this illegal? No. Is it the right thing to do? No, it's not what the program is intended to do." The Mint imposed a limit of 1,000 coins every ten days. Speaking to NPR in 2011, Jurkowsky was more personal about it. "Do we feel a little bit violated? Yes, and that's why we aggressively sought measures to eliminate what we called an abuse."

The Card Ban

The limit became a schedule. In July 2011 NPR's Planet Money interviewed Jane Liaw, a 35-year-old public health researcher in San Francisco, who said she and her husband had used the coins "to go on trips around the world" and were planning trips to Greece and Turkey, "all on miles and points." She said she spent some of the coins at the farmer's market. Ben Schlappig, who wrote the travel blog One Mile At A Time, said he ordered at the Mint's limit and had bought "probably, maybe 30 or 40,000 worth." "Just last week I came back from a trip from Australia and Singapore and Malaysia all in first class, just on miles," he said, "partly thanks to the dollar coin program." By then the Mint had sent out 284 million dollar coins through Direct Ship.

On 22 July 2011 the Mint stopped accepting credit and debit cards for the program. Its statement listed the measures already tried, from restricting "chronic and repeated use of credit cards" to contacting frequent bulk buyers to check that the coins were for legitimate business purchases. "While these measures eliminated a significant amount of misuse in the program, we believe some abuse still exists," it said. Customers could still buy boxes at face value by wire transfer, cheque or money order. From 15 November 2011 the Mint added a $12.95 shipping and handling fee to each $250 box, ending the free shipping it had absorbed, as Coin World put it, "in order to get more dollar coins into circulation." The Direct Ship program was discontinued in early 2012.

The Vaults

The coins that did not go to frequent fliers had not gone into circulation either. In June 2011 NPR's Planet Money and Investigations teams reported that unused dollar coins worth more than $1 billion had piled up in Federal Reserve vaults, coins that had cost about $300 million to make. Reporters were taken into a vault at the Baltimore branch of the Federal Reserve Bank of Richmond holding 45 million of them, where the coins sat in clear plastic bags on metal pallets and a handwritten note on one row read: "Dollars ... 48 skids ... 6,720,000." The two staff minding the vault each held the key to one of the two padlocks on its gate. In a report to Congress the year before, the Federal Reserve had said the coins were being held "with no perceivable benefit to the taxpayer."

On 13 December 2011 the administration stopped making them. In a Treasury blog post, Deputy Secretary Neal S. Wolin announced that Secretary Tim Geithner was ordering the immediate suspension of Presidential $1 coin production for circulation. The Federal Reserve Banks held nearly 1.4 billion surplus coins, "enough to meet current levels of circulating demand for more than a decade," and the Mint had been on course to produce another 1.6 billion through 2016. Minting coins that end up in Fed vaults, Wolin wrote, "is simply not a prudent use of taxpayer resources." The change would save at least $50 million a year. Collectors could still buy future coins from the Mint at prices set so as not to cost taxpayers anything. The Treasury told Coin World that the suspension affected 26 full-time positions at the Denver and Philadelphia mints, to be absorbed through attrition.

Vice President Joe Biden announced the decision at a Cabinet meeting on the Campaign to Cut Waste. The next coin in the series was due in the spring of 2012. "As will shock you all, the call for Chester A. Arthur coins is not there," he said. "I don't mean to comment on his presidency, but it just is not very high."

The Treasury estimated it would take about ten years for the economy to absorb the stockpile. On 30 June 2025, more than thirteen years later, Federal Reserve Banks still held nearly $754 million in dollar coins, which the Fed calculated was enough to meet demand for nearly 12 years. Its annual report to Congress on the program also carries a footnote on the Direct Ship program. By the Mint's account, it notes, $77 million in Native American dollar coins went out through Direct Ship in 2011. The report lists them as issued directly to circulation.

Filed from public reporting:

• Wall Street Journal (via The E-Sylum) — "Miles for Nothing: How the Government Helped Frequent Fliers Make a Mint"
• NPR — "$1 Billion That Nobody Wants"
• NPR — "How Frequent Fliers Exploit A Government Program To Get Free Trips"
• CoinNews — "US Mint Eliminates Credit Card Purchases in $1 Coin Direct Ship Program"
• U.S. Department of the Treasury, Treasury Notes — "Reducing the Surplus Dollar Coin Inventory, Saving Taxpayer Dollars"
• NPR (via WWNO) — "White House Kills Dollar Coin Program"
• Coin World — "Geithner stops most Presidential dollar production"
• Board of Governors of the Federal Reserve System — "Annual Report to the Congress on the Presidential $1 Coin Program" (2025)