Abolishing Cash: Fantasy or Nightmare?

I am in the middle of doing some home renovations, and it became necessary for me to move around some boxes and files from one room to another. As it happened, I came across a crumpled piece of paper, upon which was glued a newspaper article. It turned out to be an opinion article I wrote in early 1991, shortly after I joined the Libertarian Party and after my first campaign for public office.

Reading the article (which, eerily, appeared in the Charlottesville Daily Progress, years before I ever imagined living in Mr. Jefferson's town), I was struck by how relevant it is given current concerns about the USA PATRIOT Act, the Treasury Department's proposed "Know-Your-Customer" regulations, the government's heavy-handed anti-money-laundering activities, and a wide range of proposals to require uniform identification documents for all Americans.

I had completely forgotten writing this article, which had been prompted by an op-ed piece in the New York Times that was so offensive and frightening that it cried out for an immediate response. Although I do not mention the original piece by title in the article, thanks to Google, I was able to track it down as "Abolish Cash," by Harvey F. Wachsman, published on December 29, 1990. (Does that seem like a century ago rather than a decade and a half?)

I found an excerpt from Wachsman's article on a rather odd web site (but that's easier than paying to use the New York Times archives for such an ephemeral purpose). Here is a key passage:

If all the people who do business in cash were forced to report their incomes accurately — if the underground economy were forced to the surface — the Government could collect an additional $100 billion a year for the national treasury — without raising taxes. States and cities, many in serious financial trouble, would also benefit from collecting previously unpaid income and sales taxes.

How do we create a system to keep cash businesses honest? Eliminate cash. This may sound revolutionary, but the exchange of cash for electronic currency is already used in nearly all legitimate international business transactions...

Here's how it would work. The Government would change the color of the currency and require all old money to be exchanged at the Treasury.

Then, all the new currency would be returned by its owners to the bank of their choice...

We would offer a period of tax amnesty to encourage compliance, but as a practical matter compliance would be assured because after a certain date all currency would be worthless.

In place of the paper money, we would receive new cards — let's call them Americards — each biomechanically impregnated with the owner's hand and retina prints to insure virtually foolproof identification...

Fugitives would be easier to track down, legal judgments easier to enforce, illegal aliens simpler to spot, debtors unable to avoid their responsibilities by skipping town...

Some people might be concerned about possible abuses of civil liberties. But there would be a record of anyone who entered another's account — officials would be granted access only after electronic verification of their hand and retina prints. Civil and criminal penalties for theft of information would be devastatingly severe...

Then, in a paragraph that makes me smile because it both underscores its own intended meaning and simultaneously undermines it by showing how technology has advanced so unpredictably in the subsequent years, Wachsman writes:

Americard may seem like a drastic approach but its advent is inevitable. In the days of the telegraph and the pony express, who could have imagined that one day there would be a phone on every street corner in Manhattan?

(For my younger readers, I should explain that, years ago, most people were unable to carry their telephones with them. For their convenience, there were "pay phones" in public places that accepted coins in return for a few minutes of conversation. These have largely disappeared but they can be seen in museum exhibits and Superman movies.)

Here is my response to Harvey F. Wachsman, published in the Charlottesville Daily Progress on January 20, 1991:

Liberty imperiled by surveillance
By Richard E. Sincere Jr.

Great seer that he was, Benjamin Franklin must have had Harvey F. Wachsman in mind when he wrote: “They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.”

Wachsman, a neurosurgeon and lawyer, suggested in a recent New York Times article that the U.S. government forbid cash transactions of any kind for, among other reasons, catching tax cheats, stymieing muggers and making life more difficult for drug dealers. To do this, he proposes a central computer system that will track all transactions, from buying a hot dog to trading blue-chip stock.

In place of paper money, he writes, “we would receive new cards – let’s call them Americards – each biomechanically impregnated with the owner’s hand and retina prints to insure virtually foolproof identification.”

This is an intrusive assault on liberty and privacy that creates far more opportunities for state interference in the personal lives of citizens than any of the most draconian measures endured in pre-Gorbachev society. The potential for abuse, despite Wachsman’s lame assurances to “some people ... concerned about ... civil liberties” is limitless.

Wachsman tries to claim that there would be civil and criminal penalties for unauthorized use of information from “Americard” transactions. Such penalties already exist for those who delve into our personal lives today, but did that stop the harassment of Martin Luther King by J. Edgar Hoover? Did it stop the illegal use of Internal Revenue Service files by the Johnson and Nixon administrations in efforts to deal with political enemies? Does it stop the National Enquirer and other salacious tabloids from releasing intimate details about celebrities’ private lives?

Establishing a central computer bank with detailed information about the purchasing habits of every American simply would make easier the jobs of spies, gossip-mongers, and political tricksters.

Imagine: People will shy away from making embarrassing but essential purchases – such as hemorrhoid medicine or condoms – knowing that an accessible record of the transaction will be kept. Republicans who want to contribute to a Democrat’s campaign will demur for fear their colleagues will find out. Closeted homosexuals will be shut up even further, afraid to subscribe to a gay magazine or make a donation to an AIDS charity.

Wachsman brushes aside such objections to his fantasy by saying: “I’d like to ask every parent whose child walks to school through a gauntlet of drug dealers, everyone whose home has been robbed, whether they think their rights are jeopardized by a system that could solve all these problems?”

The gut reaction of many people will, alas, be that it does not harm them or deprive them of fundamental rights. Emotions run high on issues like this, clouding our judgment. Reasonable reflection on Wachsman’s proposal to abolish cash reveals that it is, in a word, chilling. It is undeserving of serious consideration.

Unfortunately, Wachsman’s views are symptomatic of so many in today’s society who fail to heed Ayn Rand’s observation in her novel, The Fountainhead, that “civilization is the progress toward a society of privacy. The savage’s whole existence is public, ruled by the laws of his tribe. Civilization is the process of setting man free from men.” Wachsman wants to step backward from civilization toward computerized savagery. His proposal, like those of many others who want to solve the deficit or solve the drug problem, sacrifices liberty for safety and subordinates personal freedom to tribal control.

Richard Sincere was recently the Libertarian candidate for the Virginia House of Delegates in Arlington’s 49th District. He is also an issues analyst and writer.