BEP'S PRODUCTION OF PAPER MONEY HAS SLOWED

The number of dollar bills rolling off the great government presses here and in Fort Worth fell to a modern low in the last fiscal year. Production of $5 bills also dropped to the lowest level in 30 years. And for the first time in that period, the Treasury Department did not print any $10 bills.

The meaning seems clear. The future is here. Cash is in decline.

You can't use it for online purchases, nor on many airplanes to buy snacks or duty-free goods. Last year, 36 percent of taxi fares in New York were paid with plastic. At Commerce, a restaurant in the West Village in Manhattan, the bar menus read, "Credit cards only. No cash please. Thank you."

There is no definitive data on all of this. Cash transactions are notoriously hard to track, in part because people use cash when they do not want to be tracked. But a simple ratio is illuminating. In 1970, at the dawn of plastic payment, the value of United States currency in domestic circulation equaled about 5 percent of the nation's economic activity. Last year, the value of currency in domestic circulation equaled about 2.5 percent of economic activity.

"This morning I bought a gallon of milk for $2.50 at a Mobil station, and I paid with my credit card," said Tony Zazula, co-owner of Commerce restaurant, who spoke with a reporter while traveling in upstate New York. "I do carry a little cash, but only for gratuities."

It is easy to look down the slope of this trend and predict the end of paper currency. Easy, but probably wrong. Most Americans prefer to use cash at least some of the time, and even those who do not, like Mr. Zazula, grudgingly concede they cannot live without it.

Indeed, cash remains so pervasive, and the pace of change so slow, that Ron Shevlin, an analyst with the Boston research firm Aite Group, recently calculated that Americans would still be using paper currency in 200 years.

"Cash works for us," Mr. Shevlin said. "The downward trend is clear, but change advocates always overestimate how quickly these things will happen."

Production of paper currency is declining much more quickly than actual currency use because the bills are lasting longer. Thanks to technological advances, the average dollar bill now circulates for 40 months, up from 18 months two decades ago, according to Federal Reserve estimates.

To read the complete article, see: As Plastic Reigns, the Treasury Slows Its Printing Presses (www.nytimes.com/2011/07/07/business/07currency.html)

Wayne Homren, Editor

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