By David Provost for CoinWeek …..
Author’s Note: My intention for this series of “stories” is to present lesser-known information about the US commemorative coins series derived from my original research in the records of Congress and/or the reports and correspondence of the individual coin sponsors. The information presented will not simply be a reworking of the information presented in the standard reference works on the series. I sincerely hope you enjoy the backstories presented in this series and I welcome your comments and suggestions.
Part I of this article on Los Angeles Olympics Coins can be found here.
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With the first hearing on the Olympic Coin Act of 1981 (S.1230) completed, it was time for its supporters and detractors to build their respective cases among their colleagues in Congress, the Treasury Department, and the coin collecting community/general public.
Representative Frank Annunzio (D-IL11), leader of the opposition to S.1230, regularly took to the House floor to discuss the proposed Olympic coinage, taking every opportunity to lobby against the Senate bill and seek support for HR.3879, his own bill. In contrast to the privately marketed 29-coin program introduced by Senator Alan Cranston (D-CA), Annunzio’s bill called for a single silver dollar to be issued and marketed by the United States Mint/Treasury Department.
To keep his call for a “better” Olympic coin bill current in the minds of his colleagues, Annunzio initiated a campaign of regular updates to the House with stories from the numismatic press or letters of support he received. On July 20, 1981, he addressed the House regarding an editorial published in the August 1, 1981 edition of Numismatic News. The editorial was critical of S.1230 (and, by extension, its House companion bill HR.3958) for its large number of proposed coins, its specification of a private marketer for the coins, and its creation of “artificial” denominations. The editorial echoed the comments made by Numismatic News publisher Chester “Chet” Krause during the July Senate hearing on the proposed coinage.
The “artificial denominations” objection was raised in response to S.1230’s proposed striking of a silver $10 coin on a planchet of the same specifications traditionally used for the US silver dollar, a $50 gold coin using a US gold quarter eagle ($2.50 coin) planchet, and a $100 gold coin using a planchet previously reserved for the US gold half eagle ($5.00). The News argued that the proposed inflated denominations created the potential for their face value to match or exceed their bullion value and thus increase the likelihood of the coins entering commercial channels – a wholly unwanted and problematic outcome for a coin intended to be “collected” not circulated.
The editorial expressed its belief that Annunzio’s HR.3879 was a better “starting point” for a successful Olympic coin bill, and noted that “Annunzio’s bill addresses nearly all of the problems that we see in S.1230. Its reduced scale would avoid, to a large extent, the problems of diminishing returns characteristic of the numerous issues of the Moscow and Montreal programs; it avoids renewing the practice of giving nongovernment groups marketing control of numismatic coinage issues (avoiding abuse potential), and it avoids the legal tender problems that are sure to arise with the creation of artificial denominations.”
While clearly opposed to S.1230, the editorial also questioned whether Annunzio’s bill could be successful in raising the desired funds for US Olympic athletes. The Numismatic News maintained that a program featuring just a single silver dollar design would not attract enough of the public’s attention to meet sales goals. The paper went on to argue that the proposal Krause offered during the Senate hearing that called for three half dollars and one gold coin was a better solution.
The publication also provided Annunzio with a different kind of ammunition for his fight against the private marketing of the coins in a follow-up article published on September 19. It outlined accusations of impropriety by a subsidiary of Lazard Freres & Company, one of the partner companies signed by the Los Angeles Olympic Organizing Committee (LAOOC) to market its coins; Occidental Petroleum was the other partner in the “Coin Group”. The article reported on accusations made during a session of the Greek Parliament concerning how Lazard-Numarco Distributing Company was awarded the contract to market Greece’s commemorative coins for the 1982 Pan-European Games without competing bids being properly considered as a result of personal relationships Numarco leadership had with officials within the Greek government.
Annunzio argued that such accusations would “undermine the integrity of the sale” of the Los Angeles Olympic coins and raise concerns over potential marketing abuses like those often associated with the classic series of US commemorative coins:
“No commemorative coins have been struck in the United States in the last 25 years, largely because of abuses in the private marketing of such coins,” stated Annunzio. He continued, “These abuses have included price manipulation, misleading advertising, favoritism in distributing the coins, and lack of accounting of the proceeds from the sale of the coins. I cannot but foresee that history would repeat itself should we permit these coins to be marketed under the provisions of the Lazard-Occidental bill.”
Annunzio continued his attacks on S.1230 on September 24, 1981, voicing concerns on multiple provisions within the bill. He objected to the fact that the LAOOC’s private Coin Group marketers could enjoy a profit of up to $94 million through the sale of US legal tender while the United States Federal Government derived minimal if any financial benefit. He was also opposed to the Federal Government not having the authority to monitor and audit the coin-related activities of the LAOOC or its Coin Group, including the distribution of the funds raised through their sale.
Another significant sticking point for Annunzio was the level of secrecy surrounding the coin program and the terms of the marketing agreement between the LAOOC and its Coin Group. As an example, he noted that his requests for a copy of the marketing agreement had gone largely unanswered for over three months.
He was, however, able to obtain a copy of the Letter of Understanding between the groups and took strong exception to their planned manipulation of the distribution of the coins. He quoted from the document, “it is crucial that the supply of coins remain slightly below demand so that secondary market prices appreciate progressively. This is the ultimate test which gives credibility to the concept of product scarcity and insures [sic] the long-term success of a program.” Annunzio considered this to be “as close to price fixing as I’ve seen committed to paper” and questioned whether it was appropriate for the LAOOC or the US Olympic Committee (USOC) to be engaged in such activities.
Annunzio also argued his position through an economic comparison of S.1230 vs. HR.3879. Using “best case” scenarios for each bill, he projected gross sales of $1.538 billion for S.1230 (assuming a complete sell-out), with $762 million in expenses (e.g., purchase of gold/silver, cost of minting, packaging, marketing, and distribution). Of the $520 in gross margin remaining, the Coin Group would receive $312 million to cover its expenses ($217 million) and profits ($94 million) with the LAOOC receiving $104 million and the USOC receiving $97 million after paying $7 million in royalties for overseas sales.
For HR. 3879, Annunzio projected $625 million in gross sales and expenses of $375 million. The remaining $250 million would be split evenly between the USOC and the US Treasury – $125 million each. In the best-case scenario, Annunzio argued, the USOC stood to gain $28 million with his bill.
The analysis highlighted a key financial difference between S.1230 and HR.3879 – Annunzio was interested only in supporting the USOC and Olympic athletes and providing an economic benefit to the Federal Government with the surcharges garnered from coin sales. He was not supportive of providing funds to the LAOOC for the staging of the Games, preferring they raise such funds via other avenues.
While Annunzio was on the attack in the House, the lead Senate sponsors of S.1230 worked to address several of the concerns raised by US Treasurer Angela (“Bay”) M. Buchanan during its July hearing (suggestions made by other witnesses during the hearing were largely ignored). To help ensure their ultimate acceptance by all parties involved, the Treasury and the LAOOC both engaged in the process of revising the bill’s provisions, and the updated bill reflected the agreed-upon changes.
The amended bill was considered by the Senate on December 9, 1981. It included:
- A reduction in the number of designs for the copper-nickel $1.00 coin from five to one and a slight reduction in its maximum mintage from 30 million to 25 million. This reduced the overall program from 29 coin designs to 25. No mintage changes were proposed for the silver or gold coins.
- A change to the specifications for the silver and gold coins. The silver $10 coins were changed from 26.73 grams of 0.900 fine silver to 33.625 grams of 0.925 fine silver; a net increase in silver weight of 7.05 grams (29.3%).
- The fineness of the gold coins was not changed, but their size and weight were adjusted. The $50 gold coins were changed from a weight of 4.18 grams and a diameter of 18 millimeters to 4.937 grams and 19 millimeters. The $100 gold coins were adjusted from 8.359 grams and 21.6 millimeters to 9.874 grams and 23 millimeters. The change in specifications for the gold coins added 18% more gold to each denomination.
- By creating precious metal planchets previously unused by US coinage, it was hoped that the objections raised concerning the assignment of new denominations to traditional US coinage specifications would be quieted.
- The marketing contract for the coin program would be re-opened for bidding with defined selection criteria and the Treasury Department would be included in the selection process. The Treasury was also given the power to not implement the program if it felt the re-bid and selection process did not follow the agreed-upon criteria.
- The Comptroller General of the United States was given the authority to audit the documentation of the LAOOC, the USOC, and its selected marketing partner regarding the sale and distribution of the coins and the use of funds generated by their sale.
The changes to the bill were made with an eye toward compromise with Annunzio. Senator Cranston expressed his hope that the bill could be passed by both chambers and signed into law by President Ronald Reagan before the end of the year, thus enabling the first series of coins to be minted and delivered by July 1, 1982. Failure to do so, he believed, would “seriously endanger the financial returns to the LAOOC from the coin program.”
The Senate approved the bill without further amendment and sent it to the House for consideration. The House, however, did not act upon the bill before adjourning for its year-end recess. It also did not move quickly on the bill once its new session began in 1982, holding referral of the bill to the House Committee on Banking, Finance and Urban Affairs until March 2, 1982. The delay was a clear indication that Annunzio intended to use all means at his disposal to ensure that he had the time he needed to develop and gain support for a coinage bill that he believed benefited US Olympic athletes “without ripping off the American people and the American government.”
In another attempt for compromise with Annunzio, Representative Fernand Joseph St Germain (D-RI), an original supporter of S.1230, introduced a bill (HR.6058) calling for a 17-coin program on April 1, 1982. The lower coin total (17 versus 25) would be achieved via reductions in the number of series for the silver and gold coins. The reductions were mostly a reflection of the calendar versus an acknowledgment that a smaller program was better. With the passage of a bill likely to still be months off, there was no longer an opportunity to release a coin series in 1982; a reduction in their total number was a simple matter of logistics. Interestingly, the coin size/weight/fineness specifications in the bill reverted back to those found in the original version of S.1230 and not those included in the amended bill passed by the Senate.
HR.6058, like S.1230 before it, included language specifying the selection of a private marketing firm to conduct the sale and distribution of the coins. In the weeks prior to HR.6058’s introduction, however, the Coin Group, which now also included the Franklin Mint as a partner, announced that unless Congress passed a coin bill by March 31, 1982, they would withdraw from the program. Annunzio was happy to go before the House to announce:
“I note that today is April 1, a day past the self-imposed deadline of the coin marketers. We have not passed a bill, and since I am certain that the coin group is composed of honorable men who keep their word, or at least make good on their threats, we no longer have to worry about private profit interests.”
It would not, however, be the last time the private coin marketers were heard from.
Annunzio followed the St Germain bill with a revised version of his original “single silver dollar” bill (HR.3879). The new bill, HR.6069, was introduced on April 5, 1982. It continued to call for a single dollar with a maximum mintage of 50 million, but it included significant changes to the distribution of the surcharges from sale of the coins.
Dropped was the provision to give 50% of the surcharges collected to the general fund of the Treasury for reduction of the national debt. Added was a provision to split the surcharges 70/30 between the USOC and the LAOOC. This change in stance for Annunzio signaled his new willingness to provide direct support to the LAOOC – the sponsors of the original coinage legislation – for the staging of the Games as long as the US Mint/Treasury was responsible for the sale and distribution of the coins versus private marketers. It was a sign he was ready to negotiate.
A half dozen Olympic Coin bills were under discussion in early April 1982, the fates of which would be debated in a series of hearings held by the House Subcommittee on Consumer Affairs and Coinage. The Hearings, chaired by Annunzio, were held on April 6, 21, and 29 plus May 11 and 12. More than two dozen witnesses provided live testimony and over 200 statements, letters and telegrams would be entered into the official record of the proceedings.
It was a scope of discussion never before seen in regards to US commemorative coinage.
In the third and final installment of this story, I’ll cover the sometimes contentious House hearings, along with the Senate’s follow-up, and outline the final compromises that led to the passage of the program with which today’s collectors are familiar.
© Copyright D. Provost 2021. All rights reserved. Used with permission.