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Old 02-26-2012, 09:29 PM
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Why is defacing currency illegal?

There seems to be a bunch of controversy surrounding whether defacing currency is illegal (internet consensus: It depends), but I'd like to know why it's illegal.

Apparently there's a phrase in the US laws (and similar ones here in Canada and elsewhere) that reads something like
Quote:
Whoever mutilates, cuts, defaces, disfigures, or perforates, or unites or cements together, or does any other thing to any [...bill, etc] with intent to render such bill unfit to be reissued, shall be fined [...] imprisoned [...]
I can't figure out:
  • It's my property, so why I do with it as I like?
  • why does the government care anyway? If I inherit Scrooge McDuck sized moolah and melt down dimes to remake the Bluenose Schooner with 100$ bills for sails, I just gave the gov't free money, no?
  • Is the "intent" important? Maybe I dropped them in the campfire. Maybe I "intend" to make pretty wallpaper, or chads for a wedding, or something else.
Old 02-26-2012, 09:46 PM
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One of the very few ways that governments have to manage economies is to control the amount of money in circulation. It requires a pretty deft hand to keep inflation under control while allowing for growth. If there was a mass movement to destroy currency to make some kind of political point, it could do real damage to the economy.

And in the end, the government would be on the hook to reprint the currency that was destroyed- which is not a particularly cheap task. It costs something like ten cents to print a bill. If everyone in the US decided to burn a dollar bill, that's thirty million dollars in printing costs alone just to replace the bills.
Old 02-26-2012, 10:15 PM
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Quote:
Originally Posted by Nanoda View Post
[LIST][*]It's my property, so why I do with it as I like?
Currency is not your property. It represents value that belongs to you, but a bill is not your property in the same way that a toaster is.

Quote:
[*]why does the government care anyway? If I inherit Scrooge McDuck sized moolah and melt down dimes to remake the Bluenose Schooner with 100$ bills for sails, I just gave the gov't free money, no?
In order for fiscal policy to work, the government has to be able to control the circulation of currency in the market. If people are randomly destroying it, then it causes problems.
Old 02-26-2012, 10:38 PM
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These days, the most important thing is "intent."

If you alter with intent to defraud, then you're in trouble.

Most other reasons, they let you pass.
Old 02-27-2012, 12:48 AM
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Quote:
Originally Posted by even sven View Post
One of the very few ways that governments have to manage economies is to control the amount of money in circulation. It requires a pretty deft hand to keep inflation under control while allowing for growth. If there was a mass movement to destroy currency to make some kind of political point, it could do real damage to the economy.
Most money is of the electronic variety. And if the government spends a nickel to create a dollar bill and a millionaire burns it, then Ca-ching! That's a gain for the government.

What would happen if the law was repealed? Presumably businesses would be excited to place all manner of advertisements on the currency. Mischief makers might pull stunts, which is ok provided it doesn't "...renders bills unfit to be re-issued," which is what is illegal. If you deface a dollar and put it back into circulation, that's a problem, as it increases the Bureau of the Mint's printing costs.

ETA: Obligatory reference to Where's George? http://wheresgeorge.com/faq.php

Last edited by Measure for Measure; 02-27-2012 at 12:50 AM.
Old 02-27-2012, 12:51 AM
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Quote:
Originally Posted by even sven View Post
One of the very few ways that governments have to manage economies is to control the amount of money in circulation. It requires a pretty deft hand to keep inflation under control while allowing for growth. If there was a mass movement to destroy currency to make some kind of political point, it could do real damage to the economy.
I don't think that logic holds up. Instead of destroying it, you could just put it in a safety deposit box or bury it in a mason jar in your yard. You'd get the same result of reducing the money in circulation.

And anyway, rather than being distressed at currency being destroyed, governments would be quite happy to print replacements. If it costs 10c to print a bill, they can make a 900-90000% profit on every bill printed. They can take those newly minted dollars and go buy stuff with them, and not have to worry about causing runaway inflation because some political movement has helpfully balanced out the money supply. Way more efficient and politically agreeable than raising taxes.
Old 02-27-2012, 08:51 AM
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The treasury makes no profit aka "seniorage" when someone turns in a defaced note. They have to print another to replace it. So yes, it's in their interest to declare intentionally defacing money a crime.

If it's burned to the point where it can't be returned to the central bank for replacement, then they make their seniorage profit. So they don't care about that.
Old 02-27-2012, 10:56 AM
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Quote:
Originally Posted by Ponderoid View Post
The treasury makes no profit aka "seniorage" when someone turns in a defaced note. They have to print another to replace it. So yes, it's in their interest to declare intentionally defacing money a crime.

If it's burned to the point where it can't be returned to the central bank for replacement, then they make their seniorage profit. So they don't care about that.
This is the main point. Suppose some bozo went to the bank everyday, got stacks of $1 bills and spent all day "wearing them out". Running them thru the washer, crumpling them, etc. Takes them back to the back and gets new bills. Lather, rinse, repeat.

The bank returns the worn out bills to the Fed, the Fed has to spend money printing replacements, etc.

It is in the government's best interest to have coins and bills last as long as possible. People tearing them, writing on them, mangling them on purpose causes financial harm.

In general, keep in mind: What if it's not you just doing it once, what if it's a million people doing it everyday? That's the government's point of view.
Old 02-27-2012, 11:00 AM
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I don't know that this directly relates to the legal ban on defacing, but in India, merchants will not accept excessively worn bills.

When the U.S. started redesigning bills, the rule was that any old-style bills in circulation would remain valid, but in India, people who dealt in American currency immediately stopped accepting the old-style bills.

I think there is at least some measure of superstition that plays a part here.

(I recall an episode of the sitcom MASH in which there was a changeover from "blue scrip" to "red scrip" or something like that, when the old bills immediately lost their value. I wonder if there's some residual belief from that kind of thing.)
Old 02-27-2012, 01:54 PM
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They must not care too much about those penny mashing machines set up at every tourist attraction across the country.
Old 02-27-2012, 02:24 PM
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18 U.S.C. 333 : US Code - Section 333: Mutilation of national bank obligations

Quote:
Whoever mutilates, cuts, defaces, disfigures, or perforates, or unites or cements together, or does any other thing to any bank bill, draft, note, or other evidence of debt issued by any national banking association, or Federal Reserve bank, or the Federal Reserve System, with intent to render such bank bill, draft, note, or other evidence of debt unfit to be reissued, shall be fined under this title or imprisoned not more than six months, or both.
Old 02-27-2012, 03:37 PM
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Answer:
This is a somewhat anachronistic law from the early days [actually, not that long ago] of the US when banks were issuing their own notes, and these notes were then exchanged between individuals for trade purposes.

Eg., Party A goes to the BANK and deposits $10, the bank gives him a demand note [payable to any party upon presentation of said note to the BANK]. He gives the note to Party B in exchange for goods and/or services. Party B scribbles/doodles on the note, then demands payment from the BANK. The BANK has a tough time making out the denomination of the note--and may in fact pay Party B the incorrect amount. When this happens enough, the BANK calls their Senator and insist that a law be passed prohibiting the defacing of demand notes. And so a law is passed.

see: http://codes.lp.findlaw.com/uscode/18/I/17/333/notes
Old 02-28-2012, 09:31 AM
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IIRC from freshman Econ, Federal Reserve Notes represent a debt that the government has incurred. You would think that they would love people burning them. It would be similar to going to the courthouse and burning my mortgage.

But I think others have touched on it. We design a monetary system with $X of bills in circulation. We can estimate that they wear out after so much time. If you have people intentionally destroying the money, it messes up the scheme. But since money is an asset to people, you would wonder why you need a law to prevent people from doing something that would be a detriment anyways. Maybe next we need a law making it illegal to pluck your own eyeball out.

*shrugs
Old 02-28-2012, 12:50 PM
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I think counterfeiting also plays a role in the intent of the law.

People have been altering one dollar bills to look like a higher denomination.

And before optical scanners were used in vending machines, the coins were accepted or rejected by weight. Altering a nickel or a penny to dime-size is a very small scam, but it adds up.


~VOW
Old 02-28-2012, 03:43 PM
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If defacing currency were not illegal, dollar bills would become an instant billboard for everyone with a policial ax to grind--Death to Bankers, Ron Paul for President, Stop Abortion Now. We don't want that. We don't want that so much it hurts.
Old 02-28-2012, 04:08 PM
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Quote:
Originally Posted by Freddy the Pig View Post
If defacing currency were not illegal, dollar bills would become an instant billboard for everyone with a policial ax to grind--Death to Bankers, Ron Paul for President, Stop Abortion Now. We don't want that. We don't want that so much it hurts.
But it's apparently legal to turn dollar bills into instant billboards, so long as you don't turn them into instant billboards with the intent to make them unfit to be used.
Old 02-28-2012, 04:53 PM
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Originally Posted by Freddy the Pig View Post
If defacing currency were not illegal, dollar bills would become an instant billboard for everyone with a policial ax to grind--Death to Bankers, Ron Paul for President, Stop Abortion Now. We don't want that. We don't want that so much it hurts.
When JFK ran for President, there was quite a group who felt threatened by his Catholicism. They took all the quarters they could get their hands on, and used red nail polish to paint a red cap on George Washington, to represent the control they felt the Pope would have over the United States Government.

I remember seeing all those quarters when I was a kid, but it wasn't until decades later I found out what the intention was.


~VOW
Old 02-28-2012, 05:02 PM
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Originally Posted by Lord Feldon View Post
But it's apparently legal to turn dollar bills into instant billboards, so long as you don't turn them into instant billboards with the intent to make them unfit to be used.
The person doing so must take the chance that a court won't consider sloganized currency "unfit to be reissued".
Old 02-28-2012, 05:19 PM
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So you are telling me I could cement a stack of 100's together and face not more than six months in jail and or a fine?

Last edited by fifty-six; 02-28-2012 at 05:20 PM.
Old 02-29-2012, 01:08 PM
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Originally Posted by jtgain View Post
. But since money is an asset to people, you would wonder why you need a law to prevent people from doing something that would be a detriment anyways. Maybe next we need a law making it illegal to pluck your own eyeball out.

*shrugs

There's no law in France forbiding to deface or destroy bank notes, and quite surprinsigly, typically people don't deface or destroy their banknotes, nor use them for advertisment, despite the lack of punishment. I'm yet to see an euro note with merely something scribbled on it, for instance (I've seen once a 500 Francs [roughly $ 100] note being burnt live on TV by a celebrity to make a point, though)

So, I guess this law indeed serves no real purpose, at least nowadays.

Last edited by clairobscur; 02-29-2012 at 01:11 PM.
Old 02-29-2012, 01:38 PM
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I've gotten bills that had been written on with an ink pen, Even a few crudely drawn mustaches on the Presidents picture. I kept the one with horns on Washington for awhile because it made me laugh.

I've wondered what the threshold is before they can't be used?

The average Dollar bill wears out after 18 months anyway.
http://trackdollarbills.com/blog/tag/dollar-bill/

Last edited by aceplace57; 02-29-2012 at 01:39 PM.
Old 02-29-2012, 04:48 PM
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Originally Posted by iamthewalrus(:3= View Post
... They can take those newly minted dollars and go buy stuff with them, and not have to worry about causing runaway inflation because some political movement has helpfully balanced out the money supply...
Unless I am mistaken, the government does not "spend" the money it prints.
Old 03-01-2012, 10:46 AM
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Quote:
Originally Posted by ftg View Post
This is the main point. Suppose some bozo went to the bank everyday, got stacks of $1 bills and spent all day "wearing them out". Running them thru the washer, crumpling them, etc. Takes them back to the back and gets new bills. Lather, rinse, repeat.

The bank returns the worn out bills to the Fed, the Fed has to spend money printing replacements, etc.
But in the OP, the money isn't randomly returned and arbitrarily deemed in need of replacement, but removed from circulation altogether. If I write an IOU and it gets all tattered, I have to spend time writing a new one. If it never comes back... fantastic!

Quote:
Originally Posted by phxjcc View Post
Answer:
This is a somewhat anachronistic law from the early days [actually, not that long ago] of the US when banks were issuing their own notes, and these notes were then exchanged between individuals for trade purposes.
That explanation actually makes some sense. As "BANK" in your example, I'd be annoyed if my demand notes got messed with. OTOH, I'd be elated if they never ever came back again. If I were such a bank, I'd soak my bills in copper sulphate or something, and spread the rumour that they burn green.
Old 03-01-2012, 08:38 PM
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Originally Posted by VOW View Post
When JFK ran for President, there was quite a group who felt threatened by his Catholicism. They took all the quarters they could get their hands on, and used red nail polish to paint a red cap on George Washington, to represent the control they felt the Pope would have over the United States Government.

I remember seeing all those quarters when I was a kid, but it wasn't until decades later I found out what the intention was.


~VOW
Urban legend at best.

If you can give a cite for this, I'd be surprised.

What you saw were "jukebox" quarters.

The owner of the bar/restaurant painted some red nail polish on some quarters and used them for "seed" money for the jukebox when things were slow. He could pick them out when the box was enptied.
Old 03-01-2012, 11:33 PM
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Well, at the time I saw these red quarters, jukeboxes played for a nickel.


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Old 03-02-2012, 12:20 AM
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Quote:
Originally Posted by Hampshire View Post
They must not care too much about those penny mashing machines set up at every tourist attraction across the country.
...or restaurants where people write their name, name of favorite sports team etc. on dollar bills and staple them on the wall.
Old 03-02-2012, 12:31 AM
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Originally Posted by VOW View Post
Well, at the time I saw these red quarters, jukeboxes played for a nickel.


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Or five plays for a quarter.

Just when was it you saw those quarters?

I'm in the coin business and I see these all the time. Always on silverquarters from before 1965.

Last edited by samclem; 03-02-2012 at 12:40 AM.
Old 03-02-2012, 01:47 AM
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Originally Posted by samclem View Post
Urban legend at best.

If you can give a cite for this, I'd be surprised.

What you saw were "jukebox" quarters.

The owner of the bar/restaurant painted some red nail polish on some quarters and used them for "seed" money for the jukebox when things were slow. He could pick them out when the box was enptied.
Arcades used to do this, too. I was a regular at several arcades, and I'd sometimes get "bonus" quarters, that is, I'd give the cashier $5 and get 25 quarters, instead of 20. The extra five quarters were painted red, and the paint WAS always red.

It was much more common to get bonus tokens when an arcade used tokens rather than quarters. Usually the deal was that if you bought over a certain amount of tokens at once, you'd get more tokens than if you bought them a dollar at a time. The more you bought, the better the deal.
Old 03-02-2012, 02:26 AM
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Originally Posted by samclem View Post
Urban legend at best.

If you can give a cite for this, I'd be surprised.

What you saw were "jukebox" quarters.

The owner of the bar/restaurant painted some red nail polish on some quarters and used them for "seed" money for the jukebox when things were slow. He could pick them out when the box was enptied.
What would be the point of this? If he needs to put an equivalent amount of money back in the till at the end of the day, wouldn't it be easier to just write down how much he put in? (Making up the difference with any old quarters he happened to grab, rather than having to fish through the box for the red ones.)

Last edited by Koxinga; 03-02-2012 at 02:27 AM.
Old 03-02-2012, 03:33 AM
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Originally Posted by samclem View Post
Or five plays for a quarter.

Just when was it you saw those quarters?

I'm in the coin business and I see these all the time. Always on silverquarters from before 1965.
Early Sixties, before 1963.

So when I read about the so-called Urban Legend that these quarters were to protest Kennedy being Catholic and about to run a Presidential campaign, it made sense. Kennedy's Catholocism worried the conspiracy-seeking people more than his war injury inspired patriotism in others.

(There's ALWAYS a conspiracy, don't you know?)


~VOW
Old 03-02-2012, 12:03 PM
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Originally Posted by Koxinga View Post
What would be the point of this? If he needs to put an equivalent amount of money back in the till at the end of the day, wouldn't it be easier to just write down how much he put in? (Making up the difference with any old quarters he happened to grab, rather than having to fish through the box for the red ones.)
The quarters were given to the employees to use in the jukebox when it was not playing. Painting them red made sure they ended up in the jukebox and not just pocketed by the workers.
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