• Gazette 2.0

Everything has a price, so what’s the cost of money?


By Tara Bailey


-Did You Know?-


Did you know that currency is defined as a system of money used in a country? The British Pound is the official currency of the United Kingdom (GBP), which they use in Great Britain and its territories. It divides the British Pound into 100 pence. Exactly like the U.S. dollar split into 100 cents. The singular form of pence is “penny,” which Americans borrowed from Britain.


Before the American Revolutionary war in 1775, they denominated cash in colonies in pounds, shillings and pence. Colonial cash varied in worth within the 13 colonies.

The Massachusetts pound did not measure the Pennsylvania pound. In contrast, the colonial pounds were less in value compared to the British pound sterling. Over time the colonial currency transitioned through several stages of development during the colonial and post-revolutionary eras.


Did you know historians consider the Civil War to be the first great modern war? It was the first war after the industrial revolution. The Union invented innovations such as the telegraph, railroad system, photography and modern weapons. Advance innovation was not the sole factor for the Civil War to be considered the first modern war. The significant cost of the war estimated at $5.2 billion dollars solidified that title.


The government had to come up with novel ways to pay for this expensive war. One remedy was to print paper money, commonly known as “greenbacks.” Like any national crisis, uncertainty causes product inflation and panic-buying. Parallel to the COVID-19 pandemic where people charged $24.95 for a bottle of hand sanitizer and hoarded toilet paper and paper towels. People in the 1860s stockpiled coins. Dissimilar to the coin shortage in 2020, where the decline of coins in circulation was caused by people not spending them regularly at businesses; many of which were temporarily or permanently closed.


Did you know during in the 1800s coins were made from gold and silver? The value of gold and silver did not change. Coins were the only semblance of normality in the economy. Consequently, people hoarded coins. The U.S. Department of Treasury antidote was issuing the first paper currency in 1862. Seventy years prior, private citizens and banks issued the first paper money. The first paper notes were in the denominations of 1 cent, 5 cents, 25 cents, and 50 cents. Later in 1862, the U.S. Treasury issued the first one-dollar bill as a legal tender note.


Did you know the Federal Reserve is not in charge of printing money? The authority of printing currency belongs to the Treasury Department’s Bureau of Engraving and Printing (BEP). They design and manufacture all paper money in the U.S. (The U.S. Mint produces all coins.)

The job of the Federal Reserve Board is to forecast the demands of new currency and place an order with the Department of Treasury Bureau, which charges the board for the cost of production.


More money, more problems. In some measure, how much money is it costing the government to produce cash? To produce a $1 bill, it cost 7.7 cents per note. $5 bill costs 15.5 cents per note, $10 bill costs 15.9 cents per note. The $20 and $50 both costs16.1 cents per note, and the $100 bill costs a staggering 19.6 cents per note. The 2020 currency operating budget is $877.2 million.


Did you know the Bureau of Engraving and Printing estimated to produce 38 million notes a day with a face value of $541 million? Contrarily, it does not mean there are $541 million more notes in circulation. 95% of notes printed each year are used to replace damaged bills in circulation. Depending on the denomination of the note, a $1 bill lasts on average 18 months; $5 bill, two years; $10 bill, three years; and $50 and $100 bill, last nine years.


While the individual note costs a fraction of what it is worth to produce, the costs add up. This does not include the raw materials of ink used each day.


After all that time, money and effort, is it even worth printing money? In today’s time, how often do you carry paper money in your purse, wallet, or pocket?

With the invention of debit cards, it has become a hassle to get paper money. To get cash, one must go to their financial institution ATM or find an ATM that will not surcharge you to the brink of bankruptcy.


Never in history has it been easier to purchase items without using printed money. With a swipe/insert of a card, push of a button, or holding up your phone, all these transactions completed virtually. People cannot even purchase items off the internet, book an UBER, or rent a car without debit/credit cards. Transferring money between people and institutions has become a virtual bravado among PayPal, Venmo, Zelle, Cashapp, Chime, and more online banks popping up daily.


People can make the argument that digital cash has made print money obsolete. This could not be further from the truth. There will always be people who do not trust financial institutions, but trust putting money in their mattress or burying it in their backyard. The saying “I have to see the money, to believe there’s money,” is this population’s motto.


Lest we forget the grandstanding of having a wad of cash in one’s hand to measure their worth instead of investing it into a portfolio. Having a cashless economy is possible, but it will be unlikely to happen. Having Benjamin Franklin’s face in one’s hand will always reign supreme. So, the question is, is money worth the cost? Yes, it is.

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