How Benjamin Franklin Helped Foil Early American Money Counterfeiters

Scientists identified specific pigments, minerals and fibers used in the bills 

By Jo Craven McGinty of The WSJ. Excerpts:

"Franklin, who was a printer, among his other roles, was known for marking his early paper money with images of intricately veined leaves that were nearly impossible for counterfeiters to copy, using a variety of fonts, some available only to him, and intentionally lacing the text with misspellings.

But scientists say Franklin took things a step further to stave off fraudsters. Other distinguishing characteristics of Franklin’s money—the new research revealed through advanced atomic-level imaging methods—were more subtle. He used a unique black ink. His paper glimmered. Blue threads decorated the surface, and finer fibers were woven throughout."

"Franklin and his associates held lucrative government contracts to print the paper currencies of the Pennsylvania, New Jersey and Delaware colonies. Later, after Franklin retired, his associates carried on with the novel techniques leading up to the Revolutionary War, when the Continental Congress ordered the first national currency to finance the American Revolution. Their bills bore their names—“B. Franklin” or “Hall and Sellers,” for example, identifying Franklin, his former business partner David Hall, and Hall’s subsequent partner, William Sellers."

"Researchers discovered that the black ink used by Franklin and his associates was made of graphite. The blue threads in their bills were dyed with indigo, a plant-based pigment. Their paper was strengthened with muscovite, a variety of mica."

"“He has small muscovite inside the paper early on,” Manukyan said. “Then we see it appear on the surface and glimmer. No others had this among those we analyzed. Indigo-colored threads were unique to Benjamin Franklin’s money. The black pigment is a more vivid black than the others.”"

"While it is difficult to know to what extent counterfeiting occurred, it is evident that it was a concern. 

Some bills bore the warning “To counterfeit is Death,” a reminder that making funny money was a capital offense. And Franklin, John Adams and others expressed concern that the British government was circulating fake bills to undermine the colonial economy and rebellion. 

Amid those concerns, the Continental Congress recalled more than 41 million Continental dollars, swapping new bills for two lots of compromised notes."

"Today, modern currency incorporates safeguards that are reminiscent of the techniques Franklin pioneered.

The hundred-dollar bill, which bears Franklin’s portrait, is protected by a 3-D blue security ribbon that is woven into the note. A pink security thread is concealed in the fiber. Color-shifting numerals change from copper to green. A hologram of the Liberty Bell and a faint watermark tattoo the paper."

Some colleges cost $95,000 per year, and they’re only getting more expensive. Here’s why (But the net price of college has been decreasing due to financial aid) Also, a no-frills college

By Nicole Goodkind of Yahoo. Excerpts:

"The average tuition at US private colleges grew by about 4% last year to just under $40,000 per year, according to data collected by US News & World Report. For a public in-state school, that cost was $10,500, that’s an annual increase of 0.8% for in-state students and about 1% for out-of-state.

But at highly rated or selective schools, the price tag increases substantially. Harvard University charges $57,246 in tuition and fees, per year, for undergraduate students. When you add in housing, food, books and other cost of living expenses, Harvard says you should expect to pay about $95,438 each year." [Keep in mind that you have to pay for housing and food even if you are not in college]

"It wasn’t always this way. After adjusting for currency inflation, college tuition has increased 747.8% since 1963, the Education Data Initiative found.

And between 1980 and 2020, the average price of tuition, fees, room and board for an undergraduate degree increased by 169%, according to a report from the Georgetown University Center on Education and the Workforce.

That far outpaces wage increases.

Over the same 40-year period, earnings for workers ages 22 to 27 only increased by 19%, the report found."

"So why is the price of college rising so rapidly?

"It costs a lot to employ professors, said Catharine Hill, an economist with the education nonprofit organization Ithaka S&R and the former president of Vassar College.

“Higher education is primarily produced by skilled workers — faculty and administrators,” she said. “Their price in the economy has gone up.”

Real wages for US skilled workers have outpaced inflation by a couple of percentage points for long periods of time, but other industries have been able to offset those labor costs through productivity advances that reduce their reliance on skilled labor — things like AI and robotics.

But there aren’t many robots teaching college classes. You still need professors with expensive degrees to do that.

“We pretty much produce higher education the way we used to, which is a faculty member in front of a class of anywhere from 20 to 40 students,” said Hill. “That means that there haven’t been efficiency gains to reduce that cost.”" [this reminds me of "Baumol's cost disease"-more on that below]

"a top-ranked university can charge whatever it wants and will still find wealthy families willing and able to pay each year.

“Flagship schools are competing for talented students and families that can pay the sticker price,” said Hill. These families “don’t have any trouble writing that check,” and are willing to spend more in exchange for luxe services and well-maintained campuses. “They want small classes, they want nice dormitories, they want good food,” said Hill.

If a school tried to scale back on spending and cut back on those amenities, she said, “they wouldn’t end up attracting those students.”

Colleges currently spend more on administrative services and luxuries than they ever have in the past, according to a recent study by the American Council of Trustees and Alumni. That type of spending grew by 29% between 2010 and 2018, compared to a 17% increase in spending on instructional staff."

"Between 2020 and 2021, state funding for higher education declined in 37 states by an average of 6%, according to a recent NEA analysis. “This means colleges and universities must rely on students to pay the cost of college — and those students are borrowing to do it,” wrote the NEA in a report.

Many students at the nation’s top universities who qualify are receiving a healthy amount of financial aid and other subsidies, greatly reducing the price they ultimately pay for their degrees. But not everyone benefits from financial aid and other subsidies."

"Yes, sticker prices are increasing. But the net price of college — that’s the amount that students and their families are actually shelling out — has been decreasing.

The average student at a private four-year college paid $32,800 for tuition and room and board last year. When adjusted for inflation, the actual price paid for private college has dropped by 11% over the past five years, according to College Board data.

For public colleges, the net price averages out at just over $19,000 and has dropped 13% over the past five years."

See also This no-frills college helps students get a degree quickly, simply and affordably Jon Marcus of NPR. It is about CU Coventry in United Kingdom. Excerpts:

[it is] "a university where students can start at any of six times during the year, take just one subject at a time for the same four hours every weekday, and end up with a bachelor's degree in three years. There are no electives; just about the only choice is whether to go in the mornings or the afternoons."

"This assembly-line-style approach also vastly lowers the cost of doing business for the university. CU Coventry doesn't have to juggle faculty assignments or classroom space or offer many of the extras other institutions have added over time that don't have anything to do with education."

"The library, for instance, has only books connected to the subjects of the classes. There are no athletics, though students can participate in the broader activities of the parent Coventry University nearby, or pay extra if they decide to use the gym. And faculty don't do research; they only teach."

For Baumol's cost see also Baumol effect from Wikipedia. Excerpt:

"In economics, the Baumol effect, also known as Baumol's cost disease, is the rise of wages in jobs that have experienced little or no increase in labor productivity, in response to rising salaries in other jobs that have experienced higher productivity growth. The phenomenon was described by William J. Baumol and William G. Bowen in the 1960s^[1][2] and is an example of cross elasticity of demand.

The rise of wages in jobs without productivity gains derives from the requirement to compete for workers with jobs that have experienced productivity gains and so can naturally pay higher salaries, just as classical economics predicts. For instance, if the retail sector pays its managers low wages, they may decide to quit and get jobs in the automobile sector, where wages are higher because of higher labor productivity. Thus, retail managers' salaries increase not due to labor productivity increases in the retail sector, but due to productivity and corresponding wage increases in other industries."

 

Related posts:

How to Get a Big Break on the Cost of College: Just Ask: The pandemic has accelerated a yearslong shift in financial power toward families, away from schools (2020)

Threat of anti-trust investigation leads colleges to compete more for students (2019)

Why Are Some Private Colleges And Universities So Expensive? (2010)

Are The Forces Of Supply And Demand Slowing College Tuition Increases? (2017)

As college costs rise, sticker shock eased by student aid (2010)

Are College Costs Actually Falling? (2010)

Is It Getting Too Expensive To Go College?   (2011)

Price discrimination and profit (explains how price discrimination increases profit) (2020)

New merger guidelines from The Federal Trade Commission and Department of Justice (as they relate to the Herfindahl-Hirschman Index (HHI))

See Merger Guidelines: U.S. Department of Justice and the Federal Trade Commission. This PDF document is 50 pages long, so there is alot more to it than just the HHI.

See also The feds just laid out new guidelines for approving mergers — here they are by Lauren Feiner CNBC.

First I will show some things about the HHI and the old guidelines (which were enacted around 2010). Then I will show what the new HHI guidelines are.

Herfindahl-Hirschman Index (HHI)-a measure of market concentration obtained by squaring the market share of each firm in the industry and then summing these numbers. “The sum of the squares of the market shares." 

Example:

Firm A-40%

Firm B-30%

Firm C-20%

Firm D-10%

(notice that the %’s add up to 100)

HHI = 40² + 30² + 20² + 10²

HHI = 1600 + 900 + 400 + 100

HHI = 3000

By squaring the market share, we add extra emphasis to bigness. If a firm doubled its market share from 10% to 20%, under HHI the impact on competition has more than a doubling effect because 20 squared is 400, which is 4 times larger than 100 (or 10 squared, the firm’s previous share squared). So every 1-percentage point gain in market share hurts competition by more than 1% using HHI.

Old Justice Department Guidelines

Competitive Market: HHI < 1500

Moderately Concentrated: 1500 ≤ HHI ≤ 2500

Highly Concentrated: 2500 ≤ HHI

Mergers involving an increase in the HHI of less than 100 points are unlikely to be challenged.

Mergers resulting in unconcentrated markets are unlikely to be challenged

Mergers resulting in moderately concentrated markets that involve an increase in the HHI of more than 100 points are likely to be challenged

Mergers resulting in highly concentrated markets that involve an increase in the HHI of between 100 points and 200 points potentially raise significant competitive concerns and often warrant scrutiny. Mergers resulting in highly concentrated markets that involve an increase in the HHI of more than 200 points will be presumed to be likely to enhance market power.

Now some facts about the new guidelines.

"Markets with HHI between 1,000 and 1,800 are referred to as “concentrated markets.”" (prior to 2010 those cases were considered moderately concentrated).

"Markets with post-merger HHI greater than 1,800 are highly concentrated" (this is the level they had before 2010).

"A merger causes undue concentration and triggers a structural presumption that the merger may substantially lessen competition or tend to create a monopoly when it would result in a highly concentrated market and produce an increase in the HHI of more than 100 points."

"The more concentrated a market with an HHI above 1,000, the more likely the Agencies are to conclude that the market structure suggests susceptibility to coordination."

Also

"the Agencies consider whether the merger would occur in a market or industry sector where there is a significant tendency toward concentration. That trend may be toward horizontal concentration, or it may be a “trend toward vertical integration” that would ultimately result in the “foreclosure of independent manufacturers from markets otherwise open to them.” That trend can be established by market structure, for example as a steadily increasing HHI exceeds 1,000 and rises toward 1,800. Or it can be reflected in other market characteristics, such as the exit of significant players or other factors driving concentration."

"the Agencies examine whether the merger would increase the existing level of concentration or the pace of that trend. That may be established by a significant increase in concentration, such as a change in HHI greater than 200, or it may be established by other facts showing the merger would increase the pace of concentration."