As the hostilities began to build between the Union and Confederacy that lead to the Civil War, the US Mint began to lose control of branch mints in the areas that seceded from the union. When Louisiana voted to secede from the union on January 26, 1891, the prolific New Orleans Mint was taken over by the Confederate government. The New Orleans Mint had working dies, presses, and metals to coin their own money. With New Orleans being at the mouth of the Mississippi River, a major trading route, the Confederacy could use this to import metals from other parts of the world to fund their war effort.
Since the San Francisco Mint was too far away to be effective in helping fund the war effort, the Philadelphia Mint was secured to protect it from a possible takeover but did not have the capacity to produce as much coinage as necessary. In fact, the war caused a threat of metal shortages that lead to hoarding of all types of US coins.
With the need to fund the war effort and to prevent the counterfeiting of US coins, congress voted to allow the federal government to print paper currency for circulation. The authorization to print paper money was passed on July 17, 1861 and promptly signed by President Abraham Lincoln. On August 29, 1862, the Printing Bureau was started in the basement of the Treasury Building. When congress authorized the Office of the Comptroller of the Currency in 1863, the Printing Bureau was transferred to OCC and became known as the “Currency Department” or the “National Currency Bureau.” In 1875, legislation was passed to change the name to the current “Bureau of Engraving and Printing” with its own budget and appointed director.
As the government moved to standardize the look and issuance of banknotes, the BEP grew to be the largest printer of security documents in the United States. Originally, original large notes (189 × 79 mm or approximately 7.421 × 3.125 in.) were works of art that continue to be appreciated today. However, when the BEP went to the small sized currency we use today (155 × 66 mm. or approximately 6.14 × 2.61 in.) starting in 1928, the design settled into the one that would not be changed until the 1996.
Frankly, the design of small currency notes have been less than inspiring. In the book, 100 Greatest American Currency Notes by Q. David Bowers and David M. Sundman, the only small notes recognized are large denomination issues (such as the 1928 $1,000 Gold Certificate [#76]) or notes of historical importance (like the $1 Silver Certificate with the “HAWAII” over print [#65]). None were recognized for their designs. When the notes were redesigned in starting in 1996, the notes were given “modern” interpretations of their 1928 uninspired designs.
While each design change since 1996 was made to be able to incorporate new anti-counterfeiting features. But when the BEP make minor updates to the design of the Series 2004 $20 Federal Reserve Note, they entered a new era of adding color to US currency. The addition of color has little artistic meaning to the notes. In fact, it is as if the BEP is dabbling in color rather than adding color to enhance the notes’ look. The design of US currency is less than inspiring.
In an article in The Washington Post discussing a bureaucratic issue with the BEP they note that the bureau is planning to offer buyouts to 227 workers because orders for currency has dropped by 2 billion notes. The reduction is attributed to the economy and the increased use of credit cards. With the slowdown in currency production, now is the time to make make changes to the way the BEP works.
The Bureau of Engraving and Printing is run solely by the Department of the Treasury with no rules other than what Treasury deems as appropriate. While nearly everything the US Mint does is prescribed by law, the law governing what the BEP can do, 31 U.S.C. §5115 is 62 words long. Thus, this gives the Director of the BEP (currently Larry Felix) more autonomy of the BEP than the Director of the US Mint has over his bureau. According to the 2008 Plum Book [PDF], the Director of the Bureau of Engraving and Printing is a career government professional—which might explain why it is so well run in comparison to the US Mint which is run by a politician.
First change would be to change the law to make the lowest denomination of currency five dollars. It require congress to make a two word change to 31 U.S.C. §5115(a)(2). This will make the dollar coins more useful and cut production at the BEP by 45-percent.
Previously in this series, I proposed an organizational change for the US Mint that would create a board to oversee the Mint’s operations and subsequent changes to the management of the US Mint Public Enterprise Fund. This should be the same structure used for the Bureau of Engraving and Printing with the exception of bullion issues (obviously). As part of the reorganization, the same rules for coinage design should apply to the design of US currency with the U.S. Commission of Fine Arts and the final arbitrator of artistic design.
The BEP should be able to issue commemorative currency. Currently, the BEP uses “tricks” to manufacture collectible issues whether it is special packaging or using serial numbers to tie the notes to special events. In this plan, commemorative currency can be created by changing the reverse of our current designs or special issues in the same manner that the US Mint produces coins. One idea was The Liberty Bill Act promoted by the Liberty Middle School of Ashland, Virginia.
As part of the reorganization of the BEP, they must address the meaningful access to US currency. This is the study ordered [PDF] by the court in the suit filed by the American Council of the Blind to force the BEP print US currency more easily accessible by the blind and visually impaired. This report was published in July 2009 and there has been no comment from the BEP. It is time for the BEP to publish their recommendations.
Finally, the future is today. With production falling because of the use of credit cards and the declining economy, it is time to consider the era of the cotton-linen paper notes. The BEP should not only consider using polymer-based notes, but done so in a way to allow the BEP become a printer for the rest of the world. Polymer notes allows for the government to add new security features to the notes, but could be the basis to satisfy the court order regarding meaningful access. If the BEP embraces polymer notes, they can use the capacity not being used to print US currency to print currency for the rest of the world. While it may put the US in competition with Australia for polymer note printing, the BEP has two facilities that can out produce almost any other currency printer in the world. A little competition is good for everyone!
The last entry of the series will wrap up my thoughts on the reformation of America’s currency.