On the money


THE TREASURY is re- vamping our paper currency in an effort to foil the burgeoning ranks of counterfeiters who use the latest in photocopying and desktop publishing technology to turn a bogus buck. All we can do is wish the Treasury good luck. Counterfeiters have always been with us -- and ingeniously brazen, to boot.

" 'Tis Death to Counterfeit" said a warning printed right on some of this nation's first paper currency, the Continental. Such a dire consequence didn't deter many counterfeiters. They continued printing phony Continental notes, copying as meticulously as possible their own supposed death warrants, until a more persuasive preventive prevailed: the law of supply and demand. The notoriously unstable Continentals were so unpopular that the expression "Not worth a Continental" was commonly applied to anything of dubious value.

The history of American paper currency features a broad, bewildering array of bank notes, gold and silver certificates, treasury and federal-reserve notes, bills for amounts as small as three cents, and denominations issued by individual states and local banks, among others. It has fostered an extensive band of knowledgeable collectors, as devoted as any who pursue coins or stamps.

Beginning in 1690, the Massachusetts Bay Colony, New Hampshire, Rhode Island, Connecticut, New York, New Jersey, North and South Carolina and Florida all issued paper money to defray the costs of various colonial wars, according to Marc Hudgeons, author of "The Official Blackbook Price Guide of United States Paper Money." Such currency usually was viewed suspiciously (with reason) and often lost value.

The fledgling United States was no more successful with its hapless Continental, first issued in 1775. Revolutionary War veterans frequently were paid with this worthless currency. George Washington denounced it: "I know of no greater evil for ** the working man than paper currency."

The Bank of the United States continued issuing paper money, however, until Andrew Jackson revoked its charter in 1837. From then until the Civil War, only "Hard Money" -- gold and silver coins -- was accepted by the general public. Business and banking booms required paper currency, and plenty of private ++ bank-note printers supplied it. While the federal government stayed out of the currency business, each state controlled the issuance of paper money within its borders. Railroads, canal companies and insurance firms were among those that produced it.

During the Civil War, the Union and the Confederacy both issued paper money. Congress authorized the printing of $60 million in "Demand Notes," with the reverse side printed in green ink -- hence the still-common term, "greenbacks."

One of the first federal dollar bills produced during the Civil War bore the portrait of the secretary of the treasury, Salmon P. Chase, who was accused -- probably correctly -- of seeking to advance his own presidential ambitions by putting his picture on the most common note. (The $10 bill featured a portrait of his boss, President Lincoln.)

Here's -- keep the change

The Chase controversy was mild compared to the brouhaha in 1866, when Congress briefly authorized the issuance of fractional paper money, ranging from three to 50 cents. It decreed that portraits of explorers Lewis and Clark appear on the five-cent note. Instead, the head of the Bureau of Currency, Spencer M. Clark, put his own picture on the money -- so outraging Congress that it passed a law forbidding placement of the likeness of any living person on U.S. currency.

That law does not apply to coins. This year, the Mint marked the 25th anniversary of the Special Olympics by issuing a handsome, pure-silver dollar bearing a portrait of its founder, Maryland's Eunice Kennedy Shriver, making her the first living American woman to appear on a coin. Part of the proceeds from its sale benefit the Special Olympics.

The penalties for counterfeiting were engraved on the back of the dollar bill as late as 1917. In recent years, more high-tech methods have been used to thwart counterfeiters and their fancy copiers, scanners and printers. For example, in 1990, polyester security strips with the letters and numbers USA 50 or USA 100 were inserted on $50 and $100 bills. Copiers can't pick them up.

Now the Treasury will adopt the first major redesign of paper currency in 66 years to combat foreign counterfeiters, whose activities have been growing. Early next year, Ben Franklin's portrait on the $100 bill, the counterfeiters' favorite, will be shifted toward the left, making room for a second, watermarked version of Ben's likeness that will be extremely tough to copy and only visible when held up to the light.

Similar design changes are planned for other paper currency -- although redesign of the one-dollar bill may be an academic exercise. Legislation pending in Congress would replace the dollar bill with a gold-colored coin. Proponents (who include vending machine and mining companies) say that while a dollar bill costs just 3.8 cents to make, it lasts an average of only 18 months; a dollar coin might cost eight cents to make but would last 30 years. The supposed savings would be $456 million a year.

Opponents of the proposal (including paper and ink companies, Bureau of Engraving and Printing employees, consumer advocates and bankers) say the public doesn't want a dollar coin. For proof, they cite the failed Susan B. Anthony dollar (1979-1981). More than 300 million of them gather dust in Federal Reserve vaults.

The Father of Our Country may have had mixed feelings about the ongoing dollar coin vs. dollar bill debate. True, he hated paper money -- but if the coin advocates win, Washington's benign visage could vanish from our wallets after more than a century.

Neil A. Grauer, a Baltimore writer and caricaturist, is the author of "Remember Laughter: A Life of James Thurber."

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