Expensive Money

At birth, the probability of life of a human being is 56 years. Ten years ago, it was 51 years.* At birth, the probability of life of a dollar bill is seven months. Ten years ago, it was one year. The Treasury Department is worrying about this difficulty and, last week, announced its preliminary plans for doing something about it.

The Reason. The Treasury has guessed at the reasons for the decreased life of paper money. They are chiefly two: 1) The dollar is worth now less than two thirds its pre-War value. Consequently, people have to carry about a third again as many bills to purchase the same things, and many a dollar bill now has to be handled where silver change sufficed before; 2) the growth of the automobile industry has meant that garage men and gasoline vendors with oily hands touch much more money. There is nothing like oil to weaken the fibre and make a bill flabby, dirty.

The Problem. There are between four and five billion dollars worth of paper money in circulation in the U. S. A good part of this is in small bills. Whenever one of these bills has to be replaced, it costs the Government a cent and a half. If every one-dollar bill has to be replaced every seven months--and each one costs the Government more than two cents a year--the Government practically pays 2% interest on all the one-dollar bills in circulation. If two-dollar bills were used to replace one-dollar bills, only half as many would be needed and the cost would be 1% a year. Already the Bureau of Printing and Engraving is running to capacity and no more bills can be turned out without enlarging the plant.

The Solution. In several ways, the expense of one-dollar bills could be decreased :

1) Silver dollars, which last indefinitely, could be used, but the public will not have them (TIME, Apr. 20, BUSINESS). The Government tried several months ago to pass them out, but without success.

2) Bills of higher denomination could be used, especially two-dollar bills. If a person makes a small purchase with a five-dollar bill, he gets small change and four one-dollar bills. If he got silver change and two two-dollar bills, the paper money expense would be cut nearly in half.

3) Some small saving to the Government can be made by having only one kind of one-dollar bills instead of four as at present (greenbacks, silver certificates, National Bank notes, Federal Reserve Bank notes).

4) By getting a more durable paper money, it may be possible to lengthen its life. A chemical treatment has been found to triple, approximately, the wearing qualities of a bill, but this has to be done after printing. A way is being sought to apply this treatment in manu facture to the paper which is used for money and to change the manner of manufacture so that the greatest tensile strength of bills will be lengthwise instead of sidewise. Experiments are being made with paper of materials other than linen.

*Official statistics for 1910 and 1920 of the Birth Registration states. (According to Dr. Charles H. Mayo, the probability of life of a human being in the U. S. is 58 years.)