CoinWeek Podcast #49: Q&A with U.S. Mint Principal Deputy Director Rhett Jeppson
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Rhett Jeppson is the Principal Deputy Director of the United States Mint, a position he has held since January 2015. President Barack Obama nominated Jeppson to the position of Mint Director in July of that year, but partisan politics in the United States Senate has held up the nomination. In the interim, Jeppson has filled the role of Mint Director without the benefit of the formal title.
The United States Mint has gone without a Mint Director since Edmund C. Moy vacated the position in January 2011. In this episode of the CoinWeek Podcast, we sit down with Rhett to discuss his work at the Mint, the future of coinage, the Mint’s numismatic division, and what he’s valued most from his experience working with the men and women who make our nation’s coinage.
We also get a question in about the federal gold reserves at Fort Knox!
The following is a transcript of Charles and Rhett’s discussion:
Charles Morgan: Hi Rhett, thanks for joining me on the CoinWeek Podcast.
RJ: Hey, it’s good to be with you.
CM: So I wanted to ask you now that we are winding out the year, is this a busier time of the year than most for the United States Mint?
RJ: I don’t know if it is any more busy or less busy than any other time of the year. I think that we have a lot of activity going on in regards to transition… a lot of excitement and anxiety about that, but, you know… it’s about the same as any other time of the year.
CM: So getting the 2017 coins ready for production doesn’t really add to the work tempo, it’s pretty steady as she goes, I guess…
RJ: Yes. It’s pretty steady as she goes. We really like, on the circulating side, we really try to keep a constant level of production, so we watch the forecasts very closely and we have some bands we try to stay in. What we try and do is not follow with production, the demand, we try to stay at a constant level of production so that we have enough reserve, if you will, to meet the Fed’s demand by keeping a level and consistent production level, that way it keeps our costs down.
CM: For people who have never done your job–there have not been that many people in America that have been the Director of the Mint or the Principal Deputy Director of the Mint–what is a day in your work life like?
RJ: You know, boy, it’s a busy day. There are lots of interesting things that we get to do at the Mint. I tell ya, it’s been the privilege of a lifetime, really, to be here at the Mint for the past two years now. I wouldn’t say that any day, that there’s a certain rhythm to it. A lot of different things. We manage, essentially, three business lines with numi, bullion, and the circulating line. And then also, I think that protection is also a business line for us as well as we are entrusted with national assets at the mint. And so, it can vary across any of the issues that would come up in those lines in any given day.
CM: A few months ago you had a symposium, where members of the collector and dealer community met in Philadelphia. And it seemed like the Mint was trying to suss out a few key details to help out its numismatic division. What was your main takeaway from that event?
RJ: Well, the big take away I have from the symposium was the need for us to have this ongoing dialogue and engagement with the numismatic community. You know, we’ve had some declines in the community in sales and volume lately, and I think that we can help turn that around by being pro-active and engaging with the community… but also that we have a cross section of mutual interest in making sure that we have a vibrant, healthy numismatic community and that there are opportunities for us from all the different aspects of that community to make sure that we are working together as best we can to ensure that that community is healthy and that we have a strong numismatic market.
CM: It seemed that one of the observations that I made when I was at the event was that it seems that you really do have a conflict between the collector community – who can purchase the material directly from the United States Mint – and a segment of the rare coin industry’s dealer community that tries to act as an interlocutor, which tries to be an interlocutor… you know, basically buying material, further enhance its value or collectibility, and then also market that material. How does the Mint strike a balance between these two different types of buyer?
RJ: It’s one of the things that the Mint has tried to take as even handed an approach as possible. So, if you looked at all of the product on the numismatic side, we sell almost exclusively through the website. We do have a bulk dealer program, but it’s only on really certain products. But the bulk dealers do buy 30% of what’s out there. So they are a big important community to us as well.
But, if you’ll notice that any of the first day drops and things like that, we sell it only through the website, right now, and we put household order limits and we try to really make sure that our individual collectors have the opportunity to take advantage of these coins. I think that one of the thing that the Mint is, well, I know that one of the things that the Mint, we’re focused on right now is, “What is the right mintage limit?”, so that we can make sure that everyone who wants to buy one of what we produce can have that without a huge excess in melt. And that’s something that’s going to take us a little more time to dial in, but it’s really important to us. But just as important on the availability is making sure we have a product that resonates with the people, that we have good art, that we are in the size and price point where our collecting community can participate. Those are important as well to us.
CM: I attended the World Mint Director’s Conference in Bangkok, I know the United States Mint had representation there. The U.S. Mint does try to collaborate with other leading Mints of the world. One of the things that I found interesting was that Simon Lake of the Royal Mint in the UK was warning the industry that it could be heading for harder times when the major developed world countries begin to phase out low-denomination coinage…
RJ: Yeah, you know I think that’s interesting, because it shows his perspective, because… one is, as you look, a lot of their revenue, and these other pseudo-private mints, like in the UK, so much of their revenue comes from producing coins for other countries. You know, we produced some coins in the past for other countries, but we don’t currently do that… so it’s really not a revenue stream at all for us and so, that would have zero impact on us.
CM: But we are probably going to be, if not immediately then in the near future, grappling with the elimination of at least the one cent coin… don’t you agree with that statement?
RJ: Well, I think that’s always been a topic of conversation with the penny, whether to continue to produce it. And, you know, and I will tell you, it tends to break down half and half. A lot of people want to keep Lincoln and then the value of the penny and what it represents in our nation and other people just see that it’s lost its utility. I mean, you’ve seen a lot of subjective essays and kind of studies on that, but we haven’t seen any, like, deep policy studies on what the elimination of the penny would do. You know, what are the secondary effects? What would it mean to our economy and the conscience of the consumer and stuff like that? So I don’t think there’s been anything done on that and the Mint… it’s not really in the Mint’s purview. We are not a policy organization. We’re a manufacturing organization.
Congress sets what denominations we make and their very prescriptive in that and we execute what we are authorized or directed to do. And so it’s not something that the Mint has been asked to weigh in on, nor would we have the skill set currently to weigh into that.
CM: Well, I don’t mean to sound like a history professor…
RJ: Yeah, sure.
CM: You know, in 1857, Congress eliminated the half cent… and I think based on an inflationary evaluation the half cent of 1857 probably had the equivalent purchasing power of 11 cents today. And if you look at the denominations that we have today [they] have not changed since the end of the 19th century, except that we’ve eliminated high-denomination coins–the gold denominations, which circulated as high as $20–and for all practical purposes, the half dollar is no longer a circulating coin. Does it concern you, not just as the Deputy Director, but as someone who cares about the Mint, that we haven’t really made a real effort to investigate and reform the coinage that we produce and use and that the coins we do have no longer have the purchasing power they once had?
RJ: Yeah, I mean that’s certainly true, everything you’ve said there. In the case of the dollars more recently, we have sufficient [stock], so the Secretary can suspend production, which has been the case. But there’s no doubt that the relative buying power of change has gone down. But we’ve seen, actually, the levels that we are producing… we are back to over 16 billion [coins] each year, and so for the most part, change is unidirectional except when we get an economic downturn. And quite frankly, the state of the economy has more impact on the amount of change we produce than anything else.
Janet Yellen said in ’09, that consumers were breaking back into their piggy banks. It’s absolutely true. People were returning coins. We have flow backs. So we went to about five billion coins. I think that the state of the economy, more than the relative value of the coin, has a bigger impact on what we actually produce.
CM: Do you feel that the innovation, or the gimmicky-ness, of world coin-producing mints has had a detrimental impact on the balance sheets of the U.S. Mint’s numismatic division? Since it seems that our coins tend to be a little bit more conservative and also you don’t have the luxury of coming out with 60-plus original coin products each year to compete.
RJ: Right. Here’s what I’d say. We are still, by far, the largest numismatic producer. And, when you look at countries that do have those authorities… you know, Canada, Australia, the U.K… and they do produce some great coins, but you are right, they do have some that are way outside what we’ll be authorized to do. I still think that we compete very well. People buy a lot of the produce we have because… it’s the same reason they hold U.S. currency: they want to hold something made by the U.S. This is the value of the United States, that still makes it the reserve currency. So, I think that impacts not only our bullion, why people pay a little bit higher premium for our bullion, but also why our collectibles, because it’s the United States, has our value in it and because of the quality and the purity of what we produce. It’s still the best in the world.
CM: So what has been your takeaway as Deputy Director of the United States Mint over the course of the past few years?
RJ: Oh, gosh. There’s been so many… but I think that two things have really stuck in my mind that are really bright as I come towards the transition with the administration here. Number one is the history of the Mint. The Mint next year will be 225 years old. And if you look at the origins of the Mint… you know, there was the mintage study that Hamilton authored and then the Mintage Act of 1792 and Hamilton was involved in that and Jefferson was involved in that… and you see the history of our Founding Fathers involved in creating this institution.
If you look at the fact that the ability to mint coins is enumerated in the Constitution as a prescribed power of Congress. So, I think that’s why you see that Congress still has such control, as it should be, over what we produce. To see and be part of that tradition and heritage is so fascinating to me to go back and look at how we have represented our values as Americans on the coins that we have produced.
You know, it’s interesting that in 225, we’ll issue a new Liberty coin and we’ll do that with a very similar image on the medal… and it incorporates those elements that are described in the Mintage Act of 1792, where we were told to use the word LIBERTY and symbols emblematic of Liberty. And so, we still do that today. And so I think that we, looking back 225 years, it still touches on the direction we received from the Founding Fathers. As a history nut and a major in college, I tell ya, that, I just find that fascinating. It really excites me.
The other part that I’d tell you, is that it’s been a real opportunity to lead the women and men at the United States Mint. We’ve got great people and such a wide variety of skill sets. You know, artists, engravers, metallurgists, accountings, you know. Web designers. And so, I think that for an organization of about 1,700 people, we have as broad a variety of people and skill sets as you will find. And then, when you consider that the Mint, unlike any other federal agency that I know of, we’re about, half of our folks are wage-grade employees. And to see the tremendous craftsmen they are and the quality of the work they produce and the pride they put into that just makes me really proud to be associated with these people.
So, you know, it’s been nothing short of just an absolute privilege to be here and be part of the Mint and to be part of that history and to be part of that great workforce.
[Editor’s Note: During my multiple trips to the United States Mint, I have found the Mint staff, from security to press operators and floor foreman to top level management, to be absolutely courteous and professional. —Charles]
CM: If you don’t mind, I’d like to put you on the spot with two questions that I think our readers would really like to know…
RJ: I’ll tell you, just like I tell my employees at the town hall, I’ll tell ya… I’ll give you my opinion, I’ll tell you, I don’t know if I don’t know and I’ll give you my answer if I got it… so… give it a shot…
CM: Ok, so the first one is… have you taken a trip to Fort Knox?
RJ: I certainly have. I’ve been there a couple of times. I try to get to each of our facilities and do a town hall with every one of the shifts every six months. I’d like to do it more often, but absolutely, I’ve been there.
CM: So then, you can attest to all of the conspiracy theorists out there, that the United States government keeps tons and tons of gold in there.
RJ: I can tell you that, yes, we protect the national assets–which include gold–and do so with a great deal of vigilance.
CM: My second question is, if Congress came to you and said, Rhett, it’s time that we produce a higher denomination coin and we’d like to get your input, what new denomination should we strike and who should be on the coin?
RJ: You know, we’d have to go back and look at that, before I could tell you what I’d actually tell Congress… and we’d do a technical evaluation. But as I look around the world, I see that a lot of other developed countries, they use… I’ve lived in Europe for a long time and they used the one euro and the two euro denomination. But their culture is a little bit different than ours. You’ll still see a lot of people within their wallet, will have a change pocket and so the way they use coins is different than we do. But I think it would be a very interesting study for us to go back and look at that and have that conversation. If Congress decides to move in that direction, obviously, we will execute whatever they direct us to do. It would be interesting to engage with the members in a dialogue about what the right direction would be if they choose to go that way.
CM: Based on what you’ve seen in Europe and Canada, both have a two euro or two dollar coin, do you think the introduction of a coin like that in the United States would have a positive impact on the circulation viability of our one dollar coin?
RJ: I wouldn’t even venture a guess on that as to how that would play out. You know, I will tell you, from the Mint’s perspective, it would be great for seignorage I can tell you that much! But, uh, I just really don’t know how Americans would feel about a coin of that value. You know, I’m sure you would find plenty who like it and plenty who don’t. I don’t think there’s been any real studies, to the best of my knowledge, on that.
CM: Well, Rhett, I appreciate your time today and thank you for joining me.
RJ: No, hey, listen, we appreciate you making time for us and it’s always good to talk to you. It was great to see you up in Philly and I look forward to seeing you at some of the other events that we’ve got coming up to celebrate our 225th Anniversary next year.
CM: I appreciate that. Thank you very much.
RJ: You bet. Talk to you later.
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