News

No Money, Mo’ Problems

By NISHANTH BHARGAVA, freshman

IN OCTOBER OF 1907, the United States of America faced one of the greatest economic crises of its relatively young life: a horrific stock market crash that came to be known as the Knickerbocker Crisis. Over the course of just three weeks, the New York Stock Exchange plummeted almost 50 percent from its peak in 1906. Although the crisis was resolved relatively quickly, many politicians, including President Theodore Roosevelt, were concerned that such a crisis could occur once again. In 1908, Senator Nelson Aldrich created a commission to investigate the crisis. This investigation led to the creation of the Federal Reserve System, a government organization responsible for maintaining central control of the U.S. monetary system. Today, a new financial menace is on the rise, one that could once again undermine the government’s goal of maintaining the stability of the U.S. economy: cashless businesses. In many cities across America, businesses are refusing to accept cash as payment for goods and services. While this may not seem like a big deal at first glance, these businesses threaten to plunge our financial system into anarchy. In addition to driving up prices for consumers, cashless businesses make it more difficult for small businesses to compete with large, established companies and undermine the authority of the federal government.

The most immediate side effects of a cashless economy are felt by consumers themselves. The advent of a cashless marketplace may, at first glance, seem like a boon to the average person. Unburdened by unwieldy bills and coins, a post-cash society seems to be a technocratic utopia. But this freedom comes at a price and in this case, that price comes in the form of burdensome bank fees. Credit card use does not come free; with every swipe, a few extra dollars are added onto your purchase in inquiry fees or surcharges. Businesses, unwilling to slash their profit margins, pass these fees on to the consumer. Although a dollar or two added onto each purchase might not seem like much, these fees build up over time and end up costing a total of hundreds of dollars in extra payments.

However, the people hit hardest by cashless businesses aren’t the ones participating in the system, but rather those who are unable to. In many cases, those facing financial difficulties may struggle to open and maintain bank accounts due to the regular fees required in order to do so. For example, major banks like Chase and Bank of America charge upwards of $10 per month to keep an account open. In addition, should a person have a credit score that their bank deems unsatisfactory, they can be prevented from owning a credit card at all, severely limiting their transactional opportunities in a post-cash economy. Banks have also recently come under fire for discriminatory practices and attitudes toward clients. As Kenneth Harney wrote in The Washington Post in 2017, the overall rate of denials of mortgage applications from African Americans was 18.4 percent, from Hispanics was 13.5 percent, and from Asians was 10.6 percent; for applications from nonHispanic whites, it was only 8.8 percent. The racist attitudes pervading the banking sector send an ominous message for what damage banks may cause if given unchecked control of the economy. It is not out of the question that an individual, despite managing his or her financial situation in the best possible way, may be denied the right to participate in the transactional economy simply because of the color of their skin. By unjustly preventing certain Americans from owning bank accounts, banks also prevent them from participating in the growing sphere of cashless businesses, thus facilitating discrimination.

The damage done to individuals by cashless business is clear, but what may be less obvious is the harm done to businesses themselves. In fact, the greatest casualties of a cashless world may be small businesses. Proponents of cashless businesses tout their lower operating costs as evidence of why they should be implemented, but this argument ignores the fact that running a cashless business requires a larger initial investment. A small business looking to compete in a post-cash world must invest in credit card scanners and other equipment needed to process payments. They are also forced to cough up much more in transaction fees, each business becoming a profitable thrall to a larger bank. It is already exceedingly difficult for small businesses to compete with larger corporations, which are able to provide low-cost goods and services because of their volume. In a world where the cost and risk of creating a small business rise, the simplest solution for most would be to look for another job and abandon the American Dream of commerce altogether.

Not only do businesses themselves and small institutions face large risks from a cashless economy, but the institution that faces the biggest threat from cashless businesses is none other than the Federal Reserve itself. The central bank of the United States has been chugging along since 1913 and has weathered each threat that has come its way. But the private banking sector is another beast entirely—one with the money, resources, and influence to fight a battle with the federal government and win. A future in which American legal tender is refused as payment by a business on American soil is a dark and dreary vision. Should the U.S. government not be able to enforce the legality of their currency on their own land, America, already pulling a balancing act between republicanism and oligarchy, may begin its final descent into becoming a corporate state.

American corporations can do more harm than good to the American government as a whole; it is impossible to ignore the tendrils of corporate influence creeping toward us as time goes by. The goal of the banking sector is no longer to overthrow the government; it is to render it obsolete. Once it does so, it can take over as the sole financial power in the United States. And who would this change benefit? Not the common man, but rather the corporations and banks that seek to own America. The American public must diametrically oppose the advent of cashless businesses, which threatens both government power and individual liberty.

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