Anyone who has ever traveled to Britain knows the re-assuring jangle of a 1[pound] coin. It's weighty stuff, nearly twice the heft of an American quarter, and six times as valuable. It's got a gilt-colored exterior and a serene-looking Queen Elizabeth II on the face. It's a thick coin, about three stacked quarters high, and the British Royal Mint has dressed up the edge with fancy-looking Latin inscriptions ("Spend me wisely," they seem to say). The pound feels like real money. It feels great.
Americans are about to get their own version of this metallic frisson. A smooth-edged, golden-hued $1 coin is working its way into circulation. By year's end the U.S. Mint hopes to have about 1 billion of the dollar coins bouncing in our pockets. And unlike the Susan B. Anthony dollar of the 1980s--a wimpy, woefully misshapen quarter--the new Sacagawea dollar has the gravity and import of the pound. It looks and feels like something you might see in an Old West saloon, perfect for a nation that worships its frontier past. (It's no accident that an Indian princess and scout decorates the face.)
But if the new coins feel so good--and fill such a giant need in our world of $1 vending machines--why has the Treasury spent $45 million advertising them? Why is the U.S. Mint distributing 5,000 of them in cereal boxes as a marketing gimmick? Because even in money, there is no such thing as a sure thing. How we feel about what we carry in our pockets says an awful lot about what we carry in our hearts and our minds. Last year a coalition of 11 European countries rolled out a brand-new currency called the euro. And though euro coins won't be available until January 2002, the currency has proved a loser on foreign-exchange markets, where it is traded electronically. Continental bankers hoped the euro would compete with the dollar as an international currency of choice. Instead, the euro has fallen more than 20% against the dollar, a poorer showing than even the most pessimistic predictions. Betting on what kind of money people want to use is a dangerous way to invest.
The most common conceit about our future, of course, is that the kind of cash we will most want to use will be digital. But the paperless wallet has proved as practical as the paperless office. In late 1997, two New York City banks tried an experiment on the Upper West Side of Manhattan. They spent millions installing special digital-cash-card machines in all kinds of retail sites--hairdressers, retail stores, even taxicabs. Then they distributed--for free--smart digital cards. Surely, if digital cash was this easy to use, people would stop using the green stuff. Wrong. It was just too hard to change people's habits. When it comes to cash, people don't want gimmicks. They want something that is universally accepted, convenient and easy. Bank researchers figured out the real problem was that wiring even 30% of the "spend points" in the area wasn't enough. They would need blanket coverage to make e-cards into everyday currency.