When It’s Legal to Launder Our Money

Health experts have said that the coronavirus could live for a limited time period on our cash. Concerned, the Fed has quarantined currency shipments from Asia for 7 to 10 days.

This is not the first time that dollars have been quarantined.

Contaminated Currency

Our story starts in 1779. First,  smallpox spread from visiting soldiers to the residents of Salem, North Carolina. Then, the nearby town of New Bern became “infested.” Because the colony’s official printer lived and worked there, his new issue of dollars was a concern. The decision, similar to today’s Fed, was to prevent $74,700 from being circulated. Instead, a new printer located 90 miles to the Southwest in Wilmington produced clean money:

The uncirculated New Bern currency included a one-fourth of a dollar bill:

Since then, monetary authorities have worried about disease and cash. Whether looking at the 1849 cholera outbreak or smallpox 20 years later, authorities cited “soiled” bank notes. During the 1901-1903 smallpox epidemic, it again resurfaced.

Our Bottom Line: Money

Money is much more than rectangular pieces of fabric. It can be any commodity that has the following three characteristics:

• a medium of exchange (It is widely accepted.)
• a unit of value (We have to know how much it’s worth.)
• a store of value (It should retain its value.)

Returning to where we began, we see the Federal Reserve is repeating the currency concerns we have had for centuries. Some economists have even suggested that it could accelerate a transition to  forms of digital cash that satisfy the three characteristics of money. All, though, would agree that it has become legal to “launder” our currency.

My sources and more: The Washington Post is a good starting point for learning about the history of dirty money. From there, this paper had the story of the 1779 smallpox outbreak in North Carolina. Meanwhile, WSJ told about the current cash quarantine.