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Abolish Paper Money and Eliminate Most Crime By Stuart M. Speiser American Bar Association Journal Jan. 1975 p. 47 – 49


Crime does pay—but only in cash! By abolishing paper money most of the crime and corruption in the United States can be eliminated. A payment card system is no longer a mere science fiction concept, for the technology to create a system that can root out the profit motive in crime exists today.

PAPER CURRENCY is the lifeblood of crime and corruption in the United States. Without paper money it would be virtually impossible for criminals and corrupt officials to profit from illegal activities. If all substantial transfers of money were recorded in bank transactions, nobody could conduct profitable illegal activities without creating highly visible permanent evidence of the illegal activities or of income tax evasion or both. With the chances for profit from illegal activities so slim, it is difficult to visualize large numbers of persons running the risks of imprisonment. Crime would be reduced dramatically to the point where today’s police forces could effectively control it.
Fortunately, technology has advanced to the point that today there is a substitute for paper money: a “payment card” system keyed to bank accounts.
Each person wishing to spend money other than coins, which would remain in circulation, would be required to have a bank account. The bank or the federal government would issue to each depositor a United States payment card similar to plastic credit cards. In addition to the necessary codings, each card could contain the photograph and fingerprint of the depositor if this were considered desirable.
Every business establishment, including taxicabs, would be equipped with a terminal in which the payment card could be inserted. This terminal would take the place of and probably be cheaper than the cash register. A customer purchasing a pair of shoes at a retail store would present the card to the salesman or cashier, who would “ring up” the amount on the terminal. The terminal would make a visual display of the charge so that the customer could sec the exact amount being deducted from his bank account. The customer would then insert the card into the terminal and the computer system would record the entire transaction giving a record of the name of the sales establishment, and immediately transferring the amount from the customer’s bank account to the bank account of the retail store. In the event that the customer did not have the amount in his account, the terminal would so indicate.
There are many sophisticated modifications of this system that could be developed, but the above gives the basic outline of how most transactions could be handled. Of course, there would be a continuing need for the use of checks in larger transactions. The checking system would be continued, since checks are rarely used in criminal transactions.
It probably would be desirable to have payment cards tied in with the telephone system. This would enable each depositor to determine his bank balance at any time by simply inserting his card In the telephone and dialing the proper number. The telephone system also should be equipped to make payments and transfers, so that two individuals dealing with each other in a transaction that might otherwise require paper currency could simply go to the nearest telephone and transfer money from one account to another.
Newspapers, snacks, local transportation, and other inexpensive items can be purchased by coins, which would remain in circulation in small denominations, or tokens. However, it would be desirable for taxicabs to be equipped with mobile terminals for payment cards, since they are the target of many robberies,
Advantages Outweigh Inconveniences
No doubt this system would cause a few minor inconveniences to people who are accustomed to using paper money. If we scan all our uses of paper money today, however, it is obvious that the major legitimate use is for retail sales transactions. Even in retail sales, a very large dollar volume is handled by charge accounts, checks, and credit cards. Certainly this is true of the purchase of automobiles, major appliances, transportation, and other high price-tag items. Probably the major legitimate use of paper money is for the purchase of food. Fortunately, the supermarkets which do most of the nation’s retail food business are ideally equipped for handling a payment card system. and they would welcome the chance to eliminate the accumulations of cash that make them a prime robbery target.
We have taken for granted the use of paper money.
However, it is clear that for the convenience of being able to use paper money for smaller retail purchases. the nation is paying the tremendous price of permitting crime and corruption to grow Like a cancer. The convenience of being able to pay for a basket of food in paper money is not worth the destruction of our society. The retail establishments that have to handle cash, thus setting up their employees as targets for crime, are gradually eliminating the convenience of cash anyway. Bus drivers, for example are refusing to function as coin changers. and riders must have exact fares or tokens in many places. Many gasoline stations will not take cash after dark, and as crime spreads they will probably stop taking cash at any time. Many retail stores have one-way safes that cannot be opened conveniently in order to avoid setting up their employees as crime targets.
I have discussed the payment card idea with knowledgeable technicians and have been assured that it is entirely feasible and within the capability of existing technology. T.R.W. Inc. of Cleveland, for example manufactures a terminal system, which is now installed in many retail establishments, for the insertion of credit cards that are presented for retail purchases. It is used to verify the validity of the credit card and the amount of maximum credit available to the purchaser. There are similar terminals that go beyond verification and actually charge the amount of the purchase against the credit balance in the account, thus performing the same function as the payment Card. The Citicard system of the First National City Bank and the Convenience Cash cards and machines of the Chase Manhattan Bank are examples of functioning cards that could be adapted to the payment card system.
There would be problems with lost cards, but there are plenty of problems with lost cash and even more problems with the billions of dollars in cash involved in robberies each year. Computer systems are not foolproof, but computers are used today by credit card companies and banks to handle most major financial transactions. When the tremendous financial and social benefits are considered, it certainly is worth whatever effort is necessary to perfect the computer system and to develop a reasonable system for handling lost cards.
Efforts would be made to cheat and sabotage the payment card system. The necessary effort to guard against these possibilities is a far better investment than our present annual expenditure of billions of dollars in fruitless attempts to control crime and corruption. At the very least, the payment card system would give law enforcement officials the upper hand. sinc it would force criminals to surface financially in some form regardless of any elaborate cheating schemes.
It is readily apparent that the elimination of paper money will remove the incentive for most major crime and corruption involving financial gain. In practically every instance of robbery burglary and street mugging, the object of the crime is to obtain possession of paper currency from the victim or to obtain other properly the criminal can then turn into paper money by some form of ‘fencing.” It nobody is carrying paper money on the street there will be little incentive for muggers.
Other major money-based crimes, such as illicit drug sales, kidnapping for ransom, bank robbery, graft, bribery, and corruption of government employees, would fade into oblivion once the profit motive is removed.
The payment cards themselves would not furnish a target for profitable theft. As soon as a card is lost or stolen, the owner would report it by telephone. This would hold up all payments for which the card is presented. The only way, therefore, in which a thief could use a stolen card, would be to put his victim out of the way for a time so that the stolen card would not be reported immediately. In this case there is almost always some relative or other person who would report the victim missing within a day or Iwo. The police would be alerted to notify the computer network of all missing person reports, and payments against their payment cards would be held up. Persons who attempted to use stolen payment cards would run a continuing risk of identifying themselves as criminals by presenting the payment card in a retail establishment.
Underground Will Be Forced to Surface
If the payment card system gets into effect, each person will have to deposit all his currency in a bank account in order to get credit for t. If criminals try to anticipate this by moving their money into other forms of property, at least this will have the effect of forcing them to surface to a position in which law enforcement officers have a much better shot at them than they do under the present cash system. If a drug dealer buys real estate he is going to be forced to disclose more completely his financial position on his income tax returns. This, in turn, can lead to a net worth type of Internal Revenue Service investigation that often can trace the source of the funds to an illegal or unreported financial transaction.
The collection of income taxes would multiply dramatically under this system, since there would be no way to avoid the creation of a permanent record of the receipt of income. For example all of the billions of dollars collected by bookmakers in cash would have to be accounted for. Either the bookmakers would have to pay taxes on their profits or they would be forced out of business, and the money now spent on illegal gambling would go into government-sponsored gambling establishments or other legitimate channels.
Beyond these financial benefits there would be tremendous gains in public confidence. Indeed, the payment card system could well bring a dramatic rebirth of morality and confidence that we need so badly. When we know that our politicians, public officials, and policemen cannot be bribed or influenced by money, then we will know we are at last on the way back toward a worthwhile society.
A common initial reaction to the payment card idea is that it might lead to massive invasion of privacy, since bank employees and others would have access to records of virtually every dollar spent. This is not the case. Federal legislation establishing the payment card can and should make it a crime for any bank employee or other person to divulge any information relating to payment cards and bank accounts. This will actually enhance privacy. Bank employees today give out reams of information about bank accounts. The payment card legislation could afford bank accounts the same protection and privacy as income tax returns.
In order for the payment card system to be effective there must be federal legislation eliminating paper money and making payment cards the sole means of payment other than coins. Mere existence of an alternative form of banking through payment cards would do little or nothing to eliminate crime and corruption since crooks could continue to use cash.
Congress has specific power under Article 1, Section 8 of the Constitution to coin and regulate money. Statutes such as 31 U.S.C. * 451 et seq give Congress power to determine what is legal tender and to recall old series of currency. It is well within the powers of Congress to make the payment card system a reality.
Public Law 93-495, enacted October 28. 1974 establishes a new National Commission on Electronic Fund Transfers to study the use of these transfer systems. Sponsors of this legislation including Senators Proxmire, Johnston, and Williams have assured me of their interest in having the commission consider the use of payment cards to combat crime.
Lawyers should foster the study and development of this system which has the potential of eliminating the financial incentives for crime and corruption at a single stroke of federal legislation. It is my hope that the American Bar Association will lead the way.

Some Questions and Answers About Payment Cards

Q.We are all familiar with massive computer foul ups, which continue to occur despite many years of operation. Won’t these bugs In the computer systems paralyze our economy?

A.No. Computer manufacturers claim that their systems can be made fall safe Ilk, our nuclear weapons and space programs. A federal commission can determine whether this can be done. The payment card sys tern, therefore, should not be rejected out of hand by those who fear computer foul ups.

Q. Doesn’t this Idea place restrictions on the freedom to spend one’s money as one wishes?

A. No. This freedom is actually enhanced, because each person has the ability to spend all his money at any given moment. Under the present cash system he can spend only the cash he has with him and whatever credit he can muster. Under the payment card system he can spend whatever is in his bank account no matter how far from home he is—and all his monetary wealth Is In his bank account at all times.

Q. Won’t this lead to overextension of credit and abuse of credit cards?

A. No. The payment card system has nothing to do with credit or credit cards. It relates solely to the cash that Is now carried on the person or kept in bank accounts.

Q. What about people on welfare, the illiterate, the jobless, and the people who don’t have bank accounts?

A. They would be required to open bank accounts or federally operated payment card accounts, which would be available without charge. Already, because of massive abuses, the Treasury Department has begun paying government benefit checks by direct electronic deposits. For those who do not desire to have bank accounts, It would be possible to operate the payment card system through post offices or other federal facilities.

Q. What about the card that Is mislaid and not missed for a few days, the father’s card that is borrowed and used by his child, the card that is not taken along on a trip, and the card that Is used by a crooked or inefficient salesclerk to debit $2,000 for a $20 purchase?

A. All of these are specific operating problems that can be solved by research and planning. There can be identification built into the cards, and it can be required in sales over certain amounts. If necessary, there can be a federally established insurance scheme that will take care of the small percentage of cases in which financial damage might otherwise occur, All these problems are far more manageable than our present problems of crime, corruption, and terrorism. There are errors by salesclerks, credit card companies, and banks today, many of which are difficult or impossible to trace. Under the payment card system, errors can be traced easily. There is always a receiving bank account at the end of a payment card transaction, and a permanent record of the receipt of income.

Q. While crime, corruption, and terrorism are massive problems and rapidly growing, the payment card system seems to be a very radical and somewhat utopian solution. Surely there exist institutions, structures, and less radical ideas to solve these problems?

A. Can you name one!


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