Chapter Ten Money and Banking

Some Money Facts

Dollar bills get their start as sheets of paper produced by a private printer, Crane and Company, in Dalton, Mass.

A Sheet of Very Special Paper

Since 1879 Crane has made the paper for American currency, which is a special recipe of

75% cotton,

25% linen,

embedded with and red and blue synthetic fibers.

Since the addition of security features like the metallic strip in 1990, the denomination is built into the paper.

In 1996 the Bureau added a watermark, color-shifting ink, and security features machines could read.

Money needed to get fancier to thwart a new army of counterfeiters armed with color copiers and printers.

“It’s a security paper,” says Claudia Dickens, a spokesperson for the U.S. Bureau of Engraving and Printing. “They can only print it for us.”

Paper Becomes Currency

The paper for every dollar bill is transformed into currency at only two printing facilities, one in Washington, D.C. and one in Fort Worth, Texas.

The government prints 35 million bills every day, worth about $635 million.

Into Public HandsThe Fed, which functions like a bank for banks, delivers the new money to 10,000 banks around the country, which disperse it to the public.

Once the cache leaves the bank’s hands, it goes everywhere.

In fact, two-thirds of U.S. currency circulates overseas.

If you want to find out where that bill in your pocket has been, log onto WheresGeorge.com, a website that tracks bills movements. http://www.wheresgeorge.com/

If you ever notice a bill stamped with the site’s address, you can enter the serial number and see where it’s been and then get word when it lands with another web-savvy spender.

Only a fraction of Americans enter the bills, so even the most watched bill, a 1999 single, has only been spotted 15 times and hasn’t been seen since March 26, 2005.

Where’s George?

Getting Dirtier Than You ThinkIn 1997 the Argonne National Laboratory found that 78% of bills from Miami, Houston, and Chicago carried trace amounts of cocaine.

Later tests have found similar results.

Cocaine on cash is so commonplace that the courts have ruled that police can no longer use a drug-sniffing dog’s signal to nab a suspect or to confiscate money because it’s deemed money drug-related.

In 2001 Dr. Peter Ender of Wright Patterson Air Force Base Medical Center showed that 87% of bills he collected from a local high school food stand were contaminated with germs that could make the weak sick and that 7% carried germs that could make anyone sick.

Australia is leading the charge to use a plastic currency that is supposed to be inhospitable to both germs and counterfeiters and four times as durable as paper notes.

Polymer banknotes.

Began 1988

Completed 1996

First country to have all plastic money

Australia now prints the rubbery-feeling bills for 22 other countries.

Mingling With Fakes

The Secret Service estimates that less than one out of every 10,000 bills is a fake.

The agency was founded in 1865 to stop counterfeiting, which then accounted for up to an astounding half of all bills in circulation.

The Federal Reserve checks for counterfeits.

But it only finds 20%

while the public and banks find 80% of counterfeits.

Condemning the Dollar Bill

When banks have too much cash on hand, they send the excess to the Fed for credit to their reserve accounts (likewise, when banks need more cash, they borrow it from their Fed accounts).

The Fed checks returning bills to see if they’re too worn or dirty.

Bills are condemned by precise standards: if they’ve lost 25 percent or more of the ink on the front or 40 percent or more on the back; if there’s a hole bigger than 19mm or if there’s a tear 6mm or longer.

Small bills ($5, $10, and $20) made before 1996 are shredded, too.

The number of years a bill circulates before it dies varies greatly.

The $10 bill is the shortest lived at 18 months.

Singles last 22 months

$20’s typically live for 25 months

A $100 bill average is 60 months.

End