Dec 10, 2009 | BEP, currency, history, legal
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.
Sep 28, 2009 | BEP, coins, currency, US Mint
Over the last ten years, US coinage has seen many changes. Starting in 1999, the 50 State Quarters® Program and the DC and US Territories Coin Program has taught us about our country and entertained us with “interesting” designs. The Westward Journey Nickels, Presidential Dollars, and this year’s Lincoln Bicentennial One Cent Redesign have kept us examining our pocket change looking for something new.
US paper currency has also changed. But the changes are not what could be considered earth shattering. Rather than undergo a good design change, I had previously commented that the “[new] currency designs look like the Bureau of Engraving and Printing is dabbling in currency design after being mired using the same basic designs for over sixty years.” With little to no restriction on currency design, the BEP designs have gone from old to bland with no redesign planned for the one dollar bill that was designed in the 1920s!
An article that appeared in The Atlantic found a “image design consultant” who also thinks that the design of the dollar and its paper equivalents need to be upgraded.
Richard Smith, founder of the Dollar ReDe$ign Project thinks that as part of improving the US image, redesign its currency. Noting that a redesign may be looking backwards, Smith noted in an interview that “you need to go backwards to go forward.” (see video below) Without explaining this statement, Smith had to have been referring to the currency of the late 18th and early 19th century that produced phenomenal design.
Smith is approaching this issue from an image perspective. As a numismatist and a collector of Israeli paper currency, I am looking at the issue from a design perspective for making interesting collectibles.
Other countries seem to be able to handle change to their currency. In fact, the emergence of the Euro forced changes throughout Europe. Euro banknotes are printed in a variety of colors and representative designs that are accepted through out the European Union.
Also, the European Union and most other industrial countries does not issue their unit currency in paper. The United States continues to print the one-dollar note which I have written costs the government more to maintain.
Maybe if the numismatic angle is not working with the BEP, maybe the we could try the angle from the image consultant. Anything that could update the US staid currency design.
May 8, 2009 | BEP, video
If you have never been to a show where the US Bureau of Engraving and Printing shows off their “1 Billion Dollar Exhibit,” you may not have seen the demonstration of intaglio printing with on a spider press that dates from the Lincoln Administration.
The following video appears to be from the 2005 World’s Fair of Money held in San Francisco. It shows BEP specialist Mike Beck demonstrating the intaglio printing process while printing show souvenirs.
I first saw Mike Beck’s demonstration in 2007. He is very engaging and has a wonderful sense of humor. He is also very knowledgeable of the entire currency production process and the differences between the old and current processes. If you have a chance see Mr. Beck and the BEP exhibit, I encourage you to visit. It is worth your time.
Mar 21, 2009 | Baltimore, BEP, shows
This week I received a postcard in the mail announcing that the Whitman Baltimore Coin and Collectibles Expo will be held at the Baltimore Convention Center, March 26-28. The card announces that the official auction will be conducted by Bowers and Merena Auctions as well as on-site grading services by DGS, ICG, NCG, and PCGS.
The Bureau of Engraving and Printing will be at the show with its Billion Dollar Exhibit and the antique Spider Press. BEP will be selling the second print in the Lincoln Bicentennial Intaglio Print Series. If the past is any indication, BEP will be selling special versions of the print that was printed at the show on the Spider Press. The limited edition will be noted on the print and sold by daily lottery. You will have to be present to win.
In addition to the coins and currency will be able to Meet Mr. Lincoln presented by Lincoln re-enactor, Dennis Boggs. Boggs presents “presents an enlightening, informative, and educational look at the life of the 16th President as it might have been told by Abraham Lincoln himself.” Souvenir photos with Mr. Lincoln will be taken.
I will be there on Saturday. I will enter my thoughts via Twitter and can be read on this page or through my Twitter timeline.
Nov 4, 2008 | BEP, coins, legislative, US Mint
Citizens of the United States wake up this morning to what some has called the most exciting and exhausting election season since Dewy did not beat Truman. It also has to be the longest campaign after having started the day after the 2006 midterm election by our over-active press.
Numismatically, there should be few changes if any. Although there is a lot of passion for the presidential candidates, the only influence the president may have is the appointment of the directors of the US Mint and the Bureau of Engraving and Printing. Otherwise, congress must past the laws to command the US Mint to do its job. The president can veto any law, but is rarely done with numismatic bills.
Although most of the action is in congress, there is not much to watch from a numismatic perspective. Polls show that the Democrats will maintain control of Congress and possibly increase their lead. It is likely that the leadership will probably remain in place for the 111th Congress including Barney Frank (D-MA), Chairman of the House Financial Services Committee, the committee responsible for numismatic laws.
Analysts suggest that Frank will win his 15th election and return to the House as chairman of the House Financial Services Committee. Numismatically, this means that the run the committee adopted that any commemorative coin bill must have 250 co-sponsors before it would be considered.
In other races, Virgil Goode (R-VA) is in a very tight race. Goode was eventually credited with inserting a measure in an omnibus budget act to move the motto “IN G-D WE TRUST” from the edge to the front of both dollar coins.
For those hoping that the new congress will eliminate the paper dollar, the 111th congress may not be your answer. With the exception of the retiring Rep. Tom Davis (R-VA), most of the Washington, DC area representatives in Maryland and Virginia will be returning to their seats the House meaning that there will continue to be local political incentives force the BEP to continue with printing $1 Federal Reserve Note.
Since this election does not matter numismatically, you may want to consider such “minor” issues such as the economy, healthcare, or international policy. But whomever you chose, VOTE!
Vote Early and Often!
Jul 22, 2008 | BEP, coins, currency, dollar, policy, US Mint
Since the introduction of the Presidential $1 Coin, many numismatic venues have discussed how to make the program more successful. Reports are being made that Gallup has been calling people asking questions that lead to the impression they are researching the circulation of dollar coins.
When asked about how to increase the circulation of the dollar coin, the dominant suggestion has been to remove the one dollar federal reserve note from circulation. It is thought that the move would force people to use the coin when the paper currency is no longer available.
There are many emotional arguments on both sides of the issue. Whether one is for or against the printing of the one-dollar note, the US may be the only nation to print its unit currency in paper. Looking beyond the emotional arguments, each side has dominant arguments to support their positions.
Those who want to eliminate the one-dollar note use at the cost of is production as the dominant reason. The Bureau of Engraving and Printing reports that 95-percent of all notes printed are used to replace notes that are taken out of circulation. Using BEP’s 2007 production numbers, 4,147,200,000 one-dollar notes were printed. With 95-percent being replacement notes, 3,939,840,000 notes were printed just to maintain circulation levels. With it costing 4½ cents to produce one note of any denomination, the cost to just replace notes removed from circulation was $177,292,800 in 2007.
Rather than printing paper dollars, if the US Mint strikes coins the cost to replace those 3.9 billion notes would cost 15.9-cents (according to the Mint’s 2007 Annual Report [PDF]) per coin. The total production cost would be $626,434,560.
But do not let the 353-percent increase fool you. The BEP predicts the life of a one-dollar paper note is three years while the US Mint predicts the life of any coin is 30 years. To help with the calculation, let’s assume the price of printing notes will stay constant. In order to keep the $3.9 billion of one dollar notes in circulation for 30 years, it will cost the BEP $1.77 billion dollars. Since the Mint will be striking new coins for circulation and (theoretically) not replacement coins, the US government would save about $1.15 billion over 30 years. The following table illustrates these costs:
| Denomination |
Production Total |
Number of Replacement Notes |
Cost of Production for Replacements |
Cost of Replacements over 30 years |
| Paper Dollar |
4,147,200,000 |
3,939,840,000 |
$177,292,800 |
$1,772,928,000 |
| Coin Dollar |
N/A |
3,939,840,000 |
$626,434,560 |
$626,434,560 |
While this might be a compelling argument to stop printing one dollar notes, such a move has political ramifications for some powerful members of congress. With over 1500 people working in the Eastern Currency Facility in downtown Washington, DC, they are represented by several leaders of both parties. Amongst the protectors of the employees in the facility include House Majority Leader Stenny Hoyer (D-MD), House Campaign Finance Leader Christopher VanHollen (D-MD), Former Chairman of the Government Reform Subcommittee Tom Davis (R-VA), Del. Eleanore Holmes Norton (D-DC), and the well respected Senator John Warner (R-VA). These powerful members of congress will not allow anything that will reduce the production capacity of the Bureau of Engraving and Printing and where constituents could lose jobs.
This does not take into consideration that the President of the United States is from Texas, location of the Western Currency Facility.
Before congress changes the law to stop the printing of the one-dollar note (31 U.S.C. §5115(a)(2)), the BEP will have to supplement production in order to protect jobs. The way this could be done would be to print foreign currency. However, it seems that the BEP is having problems selling their services to foreign governments.
While there are no official statements from the US or foreign governments, the dominant request is for the printing of polymer notes. According to unconfirmed reports, BEP is experimenting with different types of polymer substrate without notable success. If the BEP can adjust their equipment to print on polymer paper, they can solicit business from other countries to produce their currency. Once the BEP builds its portfolio, they are prepared to go to congress to recommend discontinuing production of the one-dollar note. Until then, the BEP will continue to produce one-dollar notes in order to keep workers employed in key congressional districts.
If BEP starts to use polymer notes, it would raise the eyre of Senator Edward M. (Ted) Kennedy, the powerful senior Democrat from Massachusetts. Amongst Sen. Kennedy’s constituents are the employees of Crane & Company from Dalton, Massachusetts. Crane & Comapny has been the exclusive supplier of currency paper to BEP since 1879. Although BEP tried to open the competition for purchasing currency paper used in printing currency (see GAO Report GAO-05-368 [PDF]), the cost of entry into the market has prevented other manufacturers from competing for the business. If BEP would stop printing over 4 million one dollar notes without replacing it with similar paper production, the Massachusetts-based company could lose significant business.
Regardless of the measures taken by the US Mint to increase the circulation of the one-dollar coin, public perception is that the one-dollar paper note is easier to use than the coin. Unless key congressional leaders agree that ending the printing of the one-dollar note is in the best interests of everyone, including their political careers, the political reality is that printing of the one-dollar note is here to stay until a significant event causes a change in policy.
Jul 19, 2008 | BEP, currency, video
I went to see my orthopedist on Friday for a post-operative check up. While the visit went well, the office building where he is located is a very long walk from the front door to the elevator. Rather than make this my Friday to get my new iPhone 3G (I still want one) I have been recovering from that shlep.
While surfing the Internets, I was looking for interesting video. Other than the usually list of follies, viral videos, and cuts of previous on air performances (“needs more cowbell!”), I found something numismatic I wanted to share.
The Bureau of Engraving and Printing calls this B-Roll video of the printing of the new $5 notes. “B-Roll” is a television term for background video that is interspersed with another story. It received its name from the days of editing video segments on film where the primary story with the reporter talking was on the “A” or primary roll of film while the background information was on the B-Roll. The term has survived through the video and now digital era. Eventually, it is placed in the archive and later called “stock footage.”
If you are interested, you can find the B-Roll information in the Media Center on the BEP New Money website.
May 30, 2008 | BEP, currency
A few weeks ago, I wrote about not finding new coins or the new $5 note in circulation. Since that posting, I found a few additional Oklahoma state quarters and New Mexico quarters. Added to the hunt for new money was a Series 2006 $5 Federal Reserve Note handed to me in change.
This is the first time that I have a note in hand. Like the other note designs, it has a hint of color that makes it look like the addition of color was a mistake. As an artistic composition, it is as ugly as the other “new” notes while individual elements, such as the portraits, show remarkable artwork.
New currency designs look like the Bureau of Engraving and Printing is dabbling in currency design after being mired using the same basic designs for over sixty years. I do not know why BEP never changed the designs for so long since they are not regulated in the same manner as the US Mint. BEP does not have to consult with the Committee of Fine Arts on the designs.
Prior to the 1920’s, BEP created some fascinating currency designs that currency collectors desire. In the book 100 Greatest American Currency Notes by Q. David Bowers and David M. Sundman, they list phenomenal notes and designs that included designs created by the BEP. Bowers and Sundman called the $1,000 “Grand Watermelon” Note as the greatest note produced in the United States. Named because the zeroes on the reverse look like watermelons, with only seven known notes that have survived, the Grand Watermelon is consider the penultimate prize for currency collectors. In December, 2006, Heritage Auction Galleries sold one for $2,225,000.
Currency used to be topical, modern, and represented a theme of the time. The Series 1901, $10 Legal Tender “Buffalo Note” is ranked sixth by Bowers and Sundman. With portraits of Merriwether Lewis and William Clark surrounding an American Bison, the note was issued to celebrate the American west and the trail blazed by Lewis and Clark. This is my favorite note.
For some reason, the BEP stopped creating classics. When given the opportunity to create new classics, the BEP went for plain and bland. When I wrote about the new polymer 20 New Israeli Shekelim notes. Aside from the polymer material, this colorful note whose dominant green color honor’s Moshe Sharrett, Israel’s first ambassador to the United Nation. The reverse features Jewish Brigade volunteers and parts of his first speech to the UN.
The 20 NIS note is beautiful, colorful, and very patriotic for Israel. With the potential that BEP has to change US currency to accommodate the visually impaired, why not take the opportunity to issue modern classic designs?
Images courtesy of Heritage Auction Galleries and the Bank of Israel.
May 7, 2008 | BEP, cents, coin design, coins, currency, gold, Israel, legislative, US Mint
It has been a week since my last post and I thought an update was in order. I will follow up with a post for some of these at another time. This will give me something to do while proctoring the final exam in an information security course I am teaching this semester.
I recently received four polymer 20 New Israeli Shekelim notes from a dealer in Israel. These notes are the first that Israel is producing on polymer “paper” that was developed by the The Reserve Bank of Australia. Israel is another in the growing list of countries to start using the polymer material. The notes include the same security features as rag-based notes and include a new clear window with a watermark that is said to be extremely difficult to counterfeit. While the polymer substrate costs little more and the production is only marginally more expensive, the benefit will come from the reduction in counterfeiting and the durability of the note. Polymer will last three-to-six times longer than rag-based paper.
According to unconfirmed reports, the Bureau of Engraving and Printing is experimenting with different types of polymer paper for both US and foreign production. If the BEP can adjust their equipment to print on polymer paper, they can solicit business from other countries to produce their currency. Once the BEP builds its portfolio, they are prepared to go to congress to recommend discontinuing production of the one-dollar note. Until then, the BEP will continue to produce one-dollar notes in order to keep workers in key congressional districs in the Washington, DC and Fort Worth, TX areas employed. Remember, 95-percent of the BEP’s production are for one-dollar federal reserve notes.
The spot price of gold continues to drop as the dollar gains against the Euro and the Pound. Prices are returning to pre-2008 levels. However, buyers of gold collectors coins from the US Mint has not seen their prices reduced. While the Mint repriced gold and platinum coins in February and March, the Mint has not lowered their prices with the market. The one-ounce American Gold Eagle proof coin is still $1,199.95, the new price given in February. With gold closing at $876.88 today, the $327.07 premium is 36.8-percent higher than the spot price. This will cause problems for those who buy at thiese prices when reselling these coins.
While we are talking about gold, the Original Saint-Gaudens Double Eagle Ultra-High Relief Bullion Coin Act was simultaneously introduced in both the House (H.R. 5614) and Senate (S. 2924). These identical bills will allow the Mint to strike high-relief $20 gold pieces using the Augustus Saint-Gaudens original 1907 design. The date will be in roman numerals and the motto “In God We Trust” will be added over the rising sun as it appeared in 1908. The coin will be on a double-thick, 24-karat gold planchet (sometimes called a piefort) 27 millimeters in diameter.
The US Mint finally posted its online product schedule for the rest of the year. The only thing that jumps out at me is that the 2008 American Buffalo 24-karat gold proof coin is not listed.
On Tuesday, the House of Representatives began to debate H.R. 5512, the Coin Modernization and Taxpayer Savings Act of 2008. The primary provisions of the bill will allow the US Mint to determine the size and composition of US coins without having to ask congress for permission. It also specifies that following 2009, the one-cent coin would be “be produced primarily of steel and treated to impart a copper color to its appearance similar to one-cent coins produced of a copper-zinc alloy.” Debate was cut off on procedural grounds by Republican lawmakers who oppose the bill.
It was just another uneventful week!
Mar 27, 2008 | BEP, currency, legal
During a discussion of inexpensive solutions for ways to make authentication into government systems stronger and accessible for the public at a low cost, we were told that the mechanism selected had a version in Braille to allow participation by the blind. Because the program was sponsored by the Department of the Treasury, it was considered ironic that Treasury was concerned about this blind in this program but does not make that same consideration for our currency.
The issue with accessibility of currency has long been an issue, especially since the passages of the Americans with Disabilities Act (Public Law 101-336, signed by President George H.W. Bush). Unfortunately, the Bureau of Engraving and Printing has interpreted Title III (Public Accommodation) as not applying to US currency. Even as the BEP has added new security features and the look to our currency, no changes were made for the blind.
In 2002, the American Council of the Blind (ACB) brought a lawsuit against the Treasury Department demanding that US currency be designed to be accessible to visually impaired people. The court ruled in favor of the ACB complaint in 2006. Treasury was supposed to respond to the order in 30 days from the review. No public statement has been made by Treasury.
From the BEP’s founding in 1861 through the mid-1920s, the bureau had a history of frequently changing currency designs and even changed its size around the turn of the century. Beginning in the 1920s, currency design did not change until the mid 1990s when new security features had to be added curb counterfeit problems.
Advocacy groups continue to petition BEP to make the currency more accessible to the visually impaired. BEP has even been provided with studies of describing the features used by over 100 countries to include the visually impaired. The Reserve Bank of Australia has researched and developed the use of polymer notes with special security features with consideration for the visually impaired with great success.
Rather than implement one of existing technologies that are being used by over 100 countries and the European Union, BEP designers chose to increase the size of the “5” on the reverse of the new $5 note so that it would be visible to those with limited sight capabilities. Allegedly, the intaglio printing used on the note is supposed to help the blind. What the BEP does not mention is that once the note wears, the benefits of the intaglio printing disappear.
The BEP does not have the same design restrictions that is placed on the the US Mint (31 U.S.C. §5112). BEP can change the notes at any time for any reason. The only restriction on US currency is that the denominations must begin with one dollar (31 U.S.C. §5115(a)(2)). So why does BEP continue to discriminate against one class of Americans while continuing to producing an ugly product?
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