For more than three decades, Uncle Sam has been immersed in an on-again, off-again crusade to get the American public to stop using dollar bills and learn to accept small base-metal $1 coins instead.

Right now, the tide of battle seems to favor paper over metal. But history suggests that the war is far from over, as the pro-coin forces mobilize for yet another assault on the status quo.

The battle lines were drawn back in 1979, when the U.S. Mint first issued the Susan B. Anthony dollar, a "clad" copper-nickel coin slightly larger than the Washington quarter but smaller than the Kennedy half dollar.

This "mini-dollar" coin had several potential advantages over the dollar bill and other alternatives, Mint officials claimed, including:

• Being much smaller than its base-metal predecessor, the Eisenhower dollar, it would be cheaper to produce and easier to carry around and spend — handicaps that severely limited public acceptance of the "Ike dollar" during its brief run from 1971 through 1978.

• It would be more convenient to use than dollar bills were, or combinations of lower-denomination coins, in vending machines — at a time when the items sold in those machines were becoming substantially pricier, requiring the insertion of higher sums of money.

• Best of all, replacing dollar bills with small dollar coins would save taxpayers tens of millions of dollars in production costs each year. That's because dollar coins — while somewhat more expensive to produce — would last far longer in circulation.

What bothers coin supporters the most is the fact that there has been ample precedent for successfully injecting small-size coins with high face value into daily circulation — but only if the corresponding piece of paper money is discontinued.

The people of Britain grumbled when their government stopped making 1 pound bank notes to accommodate the release of new "round pound" coins in 1983. Within a few years, the notes were all but forgotten and people were uncomplainingly spending — and accepting — the small, thick coins.

In 1987, Canada began issuing a small dollar coin featuring a likeness of the loon, a duck-like bird noted for its loud, distinctive cry. At the same time, it stopped printing $1 bills and started to pull the older notes out of circulation. The Loon dollar, affectionately known as the "Loonie," was an immediate hit and continues to enjoy widespread popularity and usage.

Advocates of U.S. mini-dollars argue that eliminating dollar bills would do more than just enable the coins to win the hearts and minds of American consumers. It would, they say, generate a windfall for the government — and, by extension, the nation's taxpayers.

The Government Accountability Office estimates that complete replacement of dollar bills with dollar coins could yield savings totaling $4.4 billion over the next 30 years. That estimate represents a downward revision from an earlier figure of $5.5 billion, but it still comes to roughly $125 million a year.

Even more savings would result from drawing down the huge inventory of dollar coins clogging the Federal Reserve's storage facilities. As of mid-2011, shortly before the end of full production, there were more than a billion presidential dollars and 200 million Native American dollars — stuffed in seemingly endless clear plastic bags — cramming the shelves of federal warehouses, at an ongoing annual cost of millions of dollars to the government.

The secret, it seems clear, is to stop making dollar bills when you start making dollar coins.

Would that approach work in the United States?

People wouldn't stand for it, the paper people say. To this, the coin crowd counters: How will we know unless — and until — we try?

About the Author: Mike Fuljenz
Mike Fuljenz is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of the NLG award winning Michael Fuljenz Metals Market Weekly Report. Discover more by Clicking Here Now.