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Ralph Nader > In the Public Interest > A Cashless Society

Washington–Stuart Speiser is a New York aviation lawyer who wants to abolish paper money. He believes that a cashless society would dramatically reduce much crime and corruption or at least make it easily detectable by law enforcement agencies. Coins and tokens would remain in circulation. A payment card system, keyed to bank accounts, would replace paper money and terminals would replace cash registers.

Naturally, such a proposal immediately raises many questions and objections. But it is important to discuss this idea to see whether its advantages outweigh its disadvantages. To start with, here are Speiser’s arguments:

1. The principal legitimate use of the $71 billion of currency in use today is for retail sales transactions. Even in retail sales, checks, charge accounts and credit cards have been making heavy inroads against cash. For the convenience of using paper money for retail purchases, the nation is paying a tremendous price for a cash based epidemic of street and political crimes and corruption, says Speiser.

2. The incentive or lubricant for simple and complex crimes is paper money. “In practically every instance of robbery, burglary and street mugging,” Spieser says, “the object of the crime is to obtain physical possession of paper currency from the victim, or to obtain other property from the victim which the criminal can then turn into paper money by some form of ‘fencing.'” He argues that police corruption could not be so rampant without cash bribes or conversion of “hot goods” into cash. Nor, he claims, could the Watergate criminality tax fraud or the thousands of lesser politicalpayoffs and scandals have occurred if the “transactions” had to be recorded through the payment card.

3. The logic of a cashless society is already apparent to many people who work at the retail business level. Bus drivers prefer to accept tokens or exact change as a way to prevent holdups. In cities where this system has been adopted, such robberies have declined dramatically. Many gasoline stations refuse to accept cash after dark (if they are still open that is).

4. What about invasion of privacy? Speiser claims that privacy will be enhanced because the need for it will be so universal with the adoption of payment cards that the cashless system would not go into effect without a tough privacy law. Presently, there are no federal laws which prohibit or make a criminal offense the divulgence of bank information. Nor is there such a law in the banking center of New York State. Indeed, absent such laws, many banks and savings and loans are very loose in giving out information about depositors to credit bureaus, employers or private detectives.

5. The technology, Speiser adds, is already available. Electronic money systems and their retail terminals would be much cheaper than the sums now spent on printing money, cash registers, or detecting and prosecuting crimes, not to mention the massive material and psychological cost of crime to individuals and society.

This month, for example, the Treasury Department will begin paying government benefit checks to 3.5 million handicapped or aged recipients by direct electronic deposits into their designated banks if they so wish. Treasury officials see the voluntary system spreading over the next three years to 25 million Social Security recipients and millions of other citizens receiving veterans benefits and civil service retirements. These officials believe that the inconvenience, expense and time required to cash checks will make many people choose electronic payment over mailed checks.

The payment card proposal will not do much about high level corporate or governmental crimes or such problems as unsafely produced automobiles, drugs or nuclear power plants. There will be far fewer bank robberies of cashless banks but banks will continue their consumer abuses which Cong. Wright Patman, chairman of the House Banking Committee, has exposed for so many years.

In addition, the ingenuity of lawbreakers trying to get around the payment card constraints has to be taken into account. But if the idea is not a wholesale panecea, it does merit debate and it does stimulate thinking about more basic strategies to solve basic social ills. For one of the major costs of street and political crimes is their enormous capacity to draw human energies, attentions and priorities away from other problems and conditions of our society, particularly the distribution and use of power and wealth.

Speiser would like to see a federal commission to study the feasibility of the payment card system. He finds that banks are more interested in abolishing checks and pushing credit cards. Readers who want a more detailed presentation of the payment card proposal can write for a copy to Speiser at 200 Park Avenue, New York, New York 10017. Send him your objections and criticisms as well.