U.S.
BUSINESS > An
Overview of the U.S. Economy > Dollars & Cents: Fundamental
Facts About U.S. Money
Circulation
of Money
The amount of cash in circulation in the United
States increased dramatically during the 20th
century, as shown in the table below. (Figures
are from statements published by the Treasury
Department.)
Date |
Amount
of
Cash in
Circulation |
Amount
of Cash per
Capita* |
June 30, 1910 |
|
$ 3,148,700,000 |
|
$ 34.07 |
June 30, 1920 |
|
$ 5,698,214,612 |
|
$ 53.18 |
June 30, 1930 |
|
$ 4,521,987,962 |
|
$ 36.74 |
June 30, 1940 |
|
$ 7,847,501,324 |
|
$ 59.40 |
June 30, 1950 |
|
$ 27,156,290,042 |
|
$ 179.03 |
June 30, 1960 |
|
$ 32,064,619,064 |
|
$ 177.47 |
June 30, 1970 |
|
$ 54,350,971,661 |
|
$ 265.39 |
June 30, 1980 |
|
$ 127,097,192,148 |
|
$ 570.51 |
June 30, 1990 |
|
$ 266,902,367,798 |
|
$ 1,062.86 |
June 30, 2000 |
|
$ 571,121,194,344 |
|
$ 2,075.63 |
*In the United States |
How Money Circulates
The Treasury Department ships new paper money
and coins to the Federal Reserve Banks; the
Reserve Banks pay it out to commercial banks,
savings and loan associations, and other depository
institutions. Customers of these institutions
withdraw cash as they need it. Once people
spend their cash at department stores, grocery
stores, and so on, most of this money is eventually
redeposited in depository institutions. As
notes wear out or become dirty or damaged,
depository institutions redeposit them at the
Reserve Banks.
When
Money Wears Out
Money wears out from handling and is sometimes
accidentally damaged or destroyed. The average
life span of a $1 bill, for example, is about
18 months. The $10 bill has about the same
life span. For a $5 bill the average life is
15 months, and for a $20, two years. The $50
and $100 notes don't circulate as often as
the smaller denominations, so they last longer—the
$50 bill, about five years, and the $100, eight
and a half years. The average life of a coin
is 25 years.
Banks send old, worn, torn, or soiled notes
to a Federal Reserve Bank to be exchanged for
new bills. The Reserve Banks sort the money
they receive from commercial banks to determine
if it is "fit" or "unfit." Fit
(reusable) money is stored in their vaults
until it goes out again through the commercial
banking system. Reserve Banks destroy unfit
currency and return damaged and worn coins
to the Treasury.
Redeeming
Damaged Money
Paper money that has been mutilated or partially
destroyed may in some cases be redeemable at
full face value. Any badly soiled, defaced,
torn, or worn-out currency that is clearly
more than half of the original note can be
exchanged at a commercial bank, which processes
the note through a Federal Reserve Bank. More
seriously damaged notes—those with clearly
less than half of the original surface or those
requiring special examination to determine
their value—must be sent to the Department
of the Treasury for redemption.
The redemption value of mutilated coins depends
on their type, denomination, and the extent
of their mutilation. Redemption of mutilated
coins is handled by the U.S. Mint in Philadelphia.
Coins that are merely bent or worn slick through
natural wear are not considered mutilated and
are exchangeable at full face value.
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The numerical data in this section is solely for informational purposes. Please consult the original sources for updated information.
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