all debts, public and private
A million pennies saved, nothing earned -CNN
This CNN story highlights something I believe is a principle of our economic system. That government issued currency is legal tender for all debts public and private. What this means is if I owe you a Diet Coke I can pay you in the $.50 it would cost to buy one. The principle is that government issued money cannot be declined as a form of payment.
This brings up a couple of legal questions. One is the one from the story. How can 10,000 of US currency be worth less the 10,000? These are legal tendered coin of the US; you should be able to buy a car with them without being charged extra for not paying in $100 bills. I know it cost more to make transactions in pennies, but what happens when dimes, quarters, or even dollars reach this point? The principle is same…in our treasury system a penny is worth 1/100th of a dollar, no more, no less. The US mint not accepting that fact is disturbing.
The second question it these signs “No bill over $20 Accepted” and “No pennies.” How can one currency be accepted and not another? The idea of all debts public and private is that I have assurance that if I have a $50 bill in my pocket I know I can us it any where US currency is accepted and by law that is at least anywhere in the US. This sign says that not only is my $50 bill not worth the same as two $20 bills and a $10, but it is in fact worthless. This idea comes to a head at vending machines. Have you ever faced a vending machine that wants $.50 for a Diet Coke and you are standing there with a billfold full of $20 bills it will not accept. This is when I think our monetary system has really lost touch.
I understand accepting 3.6 tons of pennies for a $10,000 debt is a pain, but that is a principle of out monetary system. If the penny is out of date, retire it. Lincoln is still on the $5, he will not mind. Even the IRS is rounding things to the nearest whole dollar for federal taxes. Now I am not anti penny, I just think that if it is 1/100th of a dollar then 50 of them should be able to buy a Diet Coke.
--- What the law says ---
The pertinent portion of law that applies to this question is the Coinage Act of 1965 Section 102. It can also be found in section 392 of Title 31 of the United States Code.
The law says:
"All coins and currencies of the United States, regardless of when coined or issued, shall be legal-tender for all debts, public and private, public charges, taxes, duties and dues."
What this statute means is all United States money is a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. The Diet Coke vending machine is getting this loophole though.
Comments
You know, Dan - I was bitten by this very bug less than one year ago.
Through poor Prior Planning on my part, I miscalculated the amount of money in my checking account. Result: my rent check went 'boing.' I immediately gathered up the cash necessary to pay my rent and showed up at the office of my apartment complex, cash in hand, to pay my rent.
Only to be told by my apartment manager that they did not accept cash.
Don't accept Cash? How can you not accept Cash? How is this less secure than accepting a check? So now I have to take even MORE time out of my day to go get a Postal Service Money Order (for a $0.39 fee from the Post Office)) or a bank issued Cashiers Check (for a $5.00 fee from the bank). The bank is across the street. The Post Office, not so close.
For our poor little vending machine, the solution is an ATM-like cash dispensary. The $20 bill is the most widely circulated and used form of currency in America. This is, in part, due to the fact that a Conspiracy of Epic Proportion™ has lead every major bank and ATM Manufacturer in the world to provide us with ATMs that dispense only $20 bills. What happened to the days when one could not only 10- but 5-dollar bills from the ATMs as well?
Of course, the cash dispenser on the Vending Machine would have to handle 1-, 5- and 10-dollar bills - and since there seems to be a shortage of these types of dispensers around, I guess we'll see vending machines that take debit-cards for a 50¢ purchase long before we'll see a vending machine that will take pennies or twenties.
Only in America.
Posted by: Shannon Wiley | July 18, 2004 12:18 PM
The $20 bill has the largest circulation. So, much so that we called them ‘yuppie lunch coupons.’ I once paid a $20 to get $10 and five $1 bills in order to get change for the machine that blesses us all with diet coke if we are pure of heart and have correct change.
Posted by: Dan | July 19, 2004 08:51 AM