Have you ever bought your grandma a birthday card from a Hallmark Store? Have you ever got a Big Mac from McDonald's? In order to get these things you need to have money. Money falls into two basic categories, paper money and coins. Lots of people use paper money in different countries all around the globe.

China was the first country to discover the great advantage of paper money. Before that, the Chinese used leather money made from one foot square pieces of white deerskin with colorful borders. Then, about 2,000 years ago, paper money was invented in China.  It became popular throughout the world when a trader, Marco Polo, went to China.  He was amazed that they were using paper money. Paper money didn't become popular in Europe for another 400 years. The first paper money was banknotes. Banknotes are pieces of paper that are valued and guaranteed by the bank.    

In the United States, the first paper money was printed in 1861 and the notes were called greenbacks.  The bank notes were not always the same. Some banks would produce one type of dollar bills and another bank would produce a different type.  Then in 1913 the U.S. government stopped letting banks make their own notes.  The government bought all the existing notes and started a new system which was the start of the system used in the US today.  

In the United States, bills are printed at the Bureau of Engraving and Printing in Washington, D.C. (That's also the place where they make postage stamps.)  First they take a big sheet of a special type of paper. The paper in U.S. banknotes is made of a 75% cotton and 25% linen mixture.  Then the treasury prints the bills. Next the bills are cut into rectangles. Then special things are done to the bill to protect it.  Did you know that some countries are beginning to use plastic in the production of banknotes?  They use it because it is strong and not easily counterfeited. 

A lot of things are done to the bills so they can't be copied before they are let out into the public. For example, the bills have a portrait on them that a lot of people will remember. The printers also use color changing ink. The ink changes from green to black. This type of ink is hard to make so counterfeiters can be detected. There is also a method called micro printing. This method is printing on the bill in extremely small print. To the naked eye the print looks like a very thin line. An example is the print around the portrait that says, "The United States of America." The people making the money also use the fine line engraving technique. This method makes lines so small and so clear that even the best photo copiers and scanners cannot copy these lines. Of course, there are more types of techniques that protect the money from counterfeiters.

Paper money is now an important part of the currency. Now digital cash is starting to take over. Maybe in the future we will only use digital cash and no bills or coins.

Citations

Electronic Media

Carol S. Greenwald, " Federal Reserve System " World Book Online Reference Center, Carol S. Greenwald, " Federal Reserve System " World Book Online Reference Center, 
<http://www.worldbookonline.com/ar?/na/ar/co/ar193575.htm>  (December 22, 2003).

Nova. "The Secrets of Making Money." 2002, <http://www.pbs.org/wgbh/nova/moolah/history.html> (January, 2004).

Books

Godfrey, Neal S. Kids' Money Book. New York, New York: Simon & Schuster Books for Young Readers, 1998.

 Images

Images of ATM machine and stack of bills  from "Microsoft Office Online" <http://office.microsoft.com/clipart/default.aspx?cag=1> (January,2004).

Glossary

Counterfeiters: people that make or copy bills illegally.  Return

|Basic World Economy | Types of Economies | Money Around the World |Free Enterprise| Supply and Demand| Depression and Recession| Coins and Minting| Paper Money| Protecting Money | Making, Saving, and Spending Money| Banking and Checking Accounts| Federal Reserve and Taxes| Counterfeiting| The Stock Market and New York Stock Exchange|