How it's made American Dollar

but all key policy decisions are made

behind these doors

Chairman Alan Greenspan is about to

convene a meeting of the feds Board of

Governors the men around this table

exercise more power than any other group

of bankers in the world they set the

interest rates that banks pay to borrow

money and that Americans end up paying

for houses and cars they run the systems

Americans use to pay their bills be they

cash check credit card or computer their

goal is to grow the economy without

inflation what you're trying to avoid is

big swings up in the economy which

inevitably lead to a collapse in the

economy but these days the job of the

Federal Reserve has gotten harder than

ever with the advent of new technology

particularly electronics and new

structures for banking systems all of

these things are adding enormous lees to

the complexity of conducting central

banking to see how the Fed is facing

these challenges we must come first to

New York City the world capital of


just three blocks from Wall Street sits

the Federal Reserve Bank of New York

it's the largest and most important of

the feds regional banks

it occupies an entire city block

the bank was built in 1924 and modeled

after a Renaissance Italian palace

our Federal Reserve Banks serve as a

tangible visible symbol of the financial

system that they represent and that they

serve a central bank ought to look like

a really serious solid place it's

dependable you can count on them so it

was meant to give a psychological

message and it still does the New York

Fed is the only bank allowed to conduct

business with foreign governments in the

name of the US government the amount of

that business has grown enormously but

like every other Federal Reserve Bank

the New York Fed also helps to regulate

the local banks in its area and lend

those banks money

the interest rate in which the Fed lends

money to other banks is determined on

the open market trading floor the

function of the open market desk is to

perform the nuts-and-bolts operation

that it's necessary for the Federal

Reserve to control that basic interest

rate upon which all the other interest

rates are built only one item is bought

or sold here US government securities

IOU is from the federal government as

much as one hundred eighty five billion

dollars in a single day this is the feds

primary tool for raising or lowering

interest rates the effect of it is we

add or we subtract money to the banking

system if you add money to the banking

system it has the effect of bringing the

interest rate down if you pull money out

of the banking system that has the

effect of making the interest rate go up

another unique role that the New York

Fed plays in the banking system may come

as quite a surprise five storeys below

street level is one of the deepest

basements in Manhattan with just a few

turns of the handwheel a 90-ton steel

cylinder rotates to open an air and

watertight vault inside is gold more

gold than at Fort Knox more gold than in

any other place in the world

about seventy billion dollars worth

remarkably 98% of this gold belongs to

foreign countries and not to the United



when foreign central banks want to keep

their gold in a really secure place they

keep it at the Federal Reserve Bank of

New York

each gold bar weighs 28 pounds worth

about 118 thousand dollars at today's


the workers must wear metal covers over

their shoes to protect their feet


there's not much high-tech about

transactions in gold

the bars are literally moved from a

country's compartment by hand


every time there's a transaction the

bars must be weighed using an

old-fashioned mechanical scale

the senior vault custodian confirms all

gold transactions the process may look

primitive but it can measure weights

lighter than a single grain of rice

sometimes the gold is transferred from

the Fed to another location

that's done by a private security


but too many of these outside companies

the gold is just another product to be


perhaps that's because gold no longer

has anything to do with the value of the

US dollar it is the faith in the

government of the United States that

gives the US currency its value it's not

backed by gold it's not backed by

anything except people's confidence in

the United States of America it is

electronic payments not gold that are

the feds future

these are the first pictures ever

allowed the feds network command center

its exact location is kept secret

it's the hub of the electronic payment

system called phenoix

this is the way banks and big

institutions pay each other in the blink

of an eye

millions can be transferred from one

account to another it's the fastest form

of payment the cheapest the safest and

the most important every day almost two

point one trillion dollars moves through

this room

that's almost 50% of all money in the

United States

if one of our electronic systems went

down in the middle of the day it would

bring the economy to a halt very quickly

it would be a very serious event and we

have to be very careful to maintain our

systems on up or gold basis sums of

money but a larger number of

transactions are done by Czech Americans

write more checks than any other nation

in the world every bank of the Federal

Reserve processes checks and new york is

one of the busiest

the machine can scan 1,800 checks a

minute the Fed expects that electronic

payments will one day replace these



in addition to processing checks every

bank of the Fed also provides a more

traditional banking function keeping

cash safe this is the Federal Reserve

Bank of Cleveland in the 1920s guards

with machine guns hid in these statues

to keep away bank robbers

even though no Fed bank has ever been

robbed security remains a concern so

when the Cleveland Fed recently spent

117 million dollars to remodel part of

the money went to upgrading the security

system but can't really tell how many

cameras are located around the banks

specifically it's sort of a security

concern but let me suffice it to say

it's in the hundreds of cameras

throughout the bank sort of watching

everything you really can't go anywhere

without being uncaring but it's the

unseen devices that really make the

protection state-of-the-art

the protection is really advanced to a

Star Wars type of technology which

includes such devices as heat vibration

sound microwave infrared and even

biometric scanners we have now certain


all this security serves one purpose to

protect the contents of armored cars

like this

delivery's arrived throughout the day

from the 480 regional banks served by

the Cleveland Fed


in 1996 the Federal Reserve agreed to

nine changes in the design of all US

currency except the one dollar bill the

most visible change was a new and larger

portrait set off-center


but turning the new designs into actual

money was an enormous undertaking it

began in this attic studio at the Bureau

of Engraving engraver will fly shop

transfers a wax outline of the new

Lincoln portrait onto a clean piece of

quarter-inch steel


next he'll begin to cut that design into

the plate by hand no cut can be deeper

than the thickness of a human hair

it's hard to even see the lines that I

engrave without a sixth power 2 10 power

glass and that's purposefully done the

my new details make the portrait harder

to copy accurately but they also make

the engravers job harder

you have to learn to control your

breathing you have to get used to

looking under magnification for long

periods of time perhaps the biggest

challenge facing the engraver is working

in Reverse

drawing and reverse is a kind of a

conundrum I mean you have to like trick

yourself all the time

it can take up to eight months to

complete a single portrait I enjoy

watching the image develop this is a

great man but at the same time he had a

really raucous sense of humor he was the

kind of a guy that you could talk to I

try to convey that

the use of portraits on the face of the

currency is actually done for a security

reason people are used to looking at

people's faces and they can notice a lot

of detail they can notice differences so

that if someone else tries to reproduce

that Ben Franklin and doesn't do quite

as good a job you'll notice that another

new security feature is much harder to

notice it's called micro printing some

engraved letters are just 1/100 of an

inch tall much too small to be

reproduced on a copier all the letters

are engraved by hand for two reasons

having a hand engraving rather than a

computer-generated image gives us what

we feel is only the best image but also

a secure image even the same engraver

couldn't reproduce that exact same

hand-cut image if they try it again it's

also for security reasons

that no one single engraver ever does

all the work

once the portrait and letters are


they're combined onto a single steel

plate called a master die

there's one master die for the front of

a bill and one for the back it's from

this master die that the printing plates

will eventually be made and that process

is astonishingly complex first a sheet

of special plastic is placed on the die

the dinah plastic are then baked

together in an oven at 250 degrees



that sets the design into the plastic



the finished plastic plate is measured

to check the depth of the design

impression if it doesn't match the

measurements of the engraved image it

will be rejected

the plastic plates that pass inspection

are then joined into a sheet of 32

next sheet is sprayed with a thin

coating of silver then it is lowered

into a vat of nickel solution that

contains pieces of pure nickel here seen

in green baskets when an electrical

current passes through the VAT and it

slowly deposits a layer of nickel onto

the silver coated plastic

the entire process takes 22 hours


the original plastic sheet will be

destroyed the nickel sheet will be the

actual plate that prints money

but the printing plates are not yet

finished they must first be scrubbed

with a special solution to remove the


and carefully ground down by a machine

to a thickness of exactly three

hundredths of an inch


next coat of chrome is added to harden

it each plate is then shaped to fit the

printing press a plate can make 32

million banknotes before wearing out so

multiple working plates are made

all these plates of course are extremely

valuable changing the design of US

currency was only one part of the

Federal Reserve's program to deter

counterfeiting the other part was

changing the paper 100 years all US

currency paper has been made in Dalton

Massachusetts at the mill owned by crane


the message to Crane has we're

interested in every conceivable new form

of and a counterfeit technology but

whatever you do don't change the feel of

the paper the feel of the paper comes in

part from the raw materials that go into

it they're actually waste products bits

of cotton flax and denim

it turns out that denim ever since its

invention by Levi Strauss has been the

cloth material that has the highest

quality cotton some aspects of

papermaking haven't changed in centuries

bales of cotton rags are loaded into the

top of a huge boiler

after the hatch has been locked down a

cleaning agent would be added in the

cooking the start

the boiler is 14 feet wide and suspended

eight feet above the ground

it's made of cast iron and holds three

and a half tonnes of rags the

temperature inside will rise to two

hundred eighty degrees Fahrenheit

after two and a half hours the rags have

been stripped of their natural oils what

emerges is bra cellulose

but even this is not strong enough to

make good paper

the fibers must be made to ink a lot

more tightly to do that

the rags begin a violent journey then

mixed with harsh chemicals beaten into a

pulp and spread out over a fine mesh

screen much of the liquid drains through

but even when the pulp is squeezed into

a heavy roll it's still too soggy to

hold together

the wrong paper still contains

impurities to remove them the whole

process will be repeated

this time the VAT contains bleach to

drain out all color

from here the pulp is piped into a

special press that squeezes out the

water under more than half a ton of

pressure then cuts the paper into sheets


at this point the paper is similar to

other fine papers but security features

will now be added that will make it like

no other paper in the world the most

unusual feature is this security strip

which took scientists to crane more than

seven years to develop it starts as a

roll of plastic two and a quarter miles

long the roll is cut into strips from

1/16 of an inch wide

embedded in each stripper letters here

magnified 75 times that spell out a

bills denomination each letter is cut

out of multiple layers of a special foil

the security strip will be inserted into

the paper by a secret process the strips

have a unique property they're not

visible under reflected light so they

can't be photocopied only when light

shines through the bill can once see the

security strip it's very easy for the

public to identify that and see whether

or not it's in there it's very hard for

counterfeit or to replicate that if

there is not a thin strip embedded in

the paper of your bill then you should

be suspect of it for added security the

strips are dyed colors that glow under

ultraviolet light greens for 20s

another new security feature is actually

centuries old it's a shadow image known

as a watermark

making the watermark begins with a wax


Tom Gardner engraved the portrait of ben

franklin for the watermark in the new

$100 bill


after the models are finished it's

covered in copper then pressed into a

fine mesh screen but creating watermarks

from these images takes many more steps


we can get a sense of that process in

the testing lab the wire mesh with the

image is clamped into a special


the pulp is similar to that year after

currency paper


as the liquid drains out the fibrous

settle onto the surface of the screen

fibers collect most deeply in the dense

of the portrait

the Pope has then lifted onto a piece of

blotting paper

the portrait sticks up highest the pulp

is quickly dried under a weighted cover

what will emerge is a faint worker

that's actually part of the paper itself

it's a series of steps that have been

practiced by paper makers for many many

years we have simply refined it it's a

process that crane holds as one of our

prized two secrets in fact the actual

process of inserting currency watermarks

is so secret that it's done behind

guarded curtains

watermarks are inserted every six inches

onto the currency paper

this sheet with Andrew Jackson

watermarks will make 20s but the paper

is not yet ready for printing it must

first get a chemical coat so that the

ink will stick to it the paper then

travels through a series of 25 dryers at

300 degrees Fahrenheit

next comes of rigorous inspection

we have to confirm and verify that all

of the things that are in the paper

whether it's a watermark a security

thread are all present in the very

specific location where they belong

in the paper 14 different cameras and

now scan the paper the laser burns a

tiny hole wherever there's a defect one

defect in the unwinding of the security

thread destroys the paper potentially

all the way across the full width of the

paper machine each finished roll weighs

four tons and is more than fifty eight

thousand feet long enough for 3,200,000

banknotes but the inspection isn't over

yet if the papers too damp it may rot so

they weigh sample pieces if any of the

samples contains more than six percent

moisture by weight the entire roll will

be turned back into pulp

the papers temperature must also be

within a specified range the paper

strength will be tested on this one

hundred twenty five-year-old machines

which push and pull a two inch paper

sample if a sample tears before it's

folded eight thousand times the entire

roll will be rejected

every role that passes inspection is cut

down into smaller roles then fed into a

high-speed cutting machine



each shape can make 32 banknotes even at

this point an inspector can reject an

entire roll

the finished sheets are stacked into

blocks of 20,000

by the time we're done with it we have

invested a great deal of know-how in

converting these materials of almost

zero value into the most prized and

arguably the most valuable paper in the

world in fact the paper is so valuable

that every shipment leaves the mill

under armed guard

the paper arrives here at the Bureau of

Engraving and printing in Washington

today they're getting ready to print new

five-dollar bills

each printing plate gets a final



the plates are bolted on to the printing

cylinders four at a time enough to make

128 notes per revolution the bureau

produces on average about 38 million

notes a day that's pieces of paper for a

full face value of approximately 400

million dollars a day

to print that much money requires three

tons of special ink a day the exact

formulas are kept secret but black ink

is used for the front of the bills and

green for the back


once the plates are inked the paper can

be added


the fronts and backs of all currency are

printed separately


the Front's are always printed after the

backs so that the portrait will stand

out clearly it's critical that the paper

be lined up properly the press operator

removes any sheets that have slipped out

of position finally they're ready to

start making money

at full speed the presses will churn out

over 260,000 bills an hour

the United States currency is printed by

the Italia print method so we actually

embossed the paper forcing the paper

into the engraved lines

so you had that raised feel to the print

before printing is complete the bills

must pass an exhaustive inspection

the inspectors first make sure the

sheets don't stick to each other


electronic sensors will scan every note

they check the placement of the security

thread and the watermark a sheet is

rejected if the space between the edge

and the printing is greater than

one-tenth of an inch other sensors check

the density of the ink

and the sheets are flipped twice to

check both sides


but even machines can make mistakes so a

technician inspects samples to catch any

errors that might have slipped through

now the sheets will move on to the final

and critical stage of becoming money

each note will be given a serial number

composed of letters and digits the

serial number is a banknotes birth

certificate the number is printed in

green in two places on the front of

every note the letters indicate the bank

of the Federal Reserve that asked for

the money in addition to the serial

number the press also prints the seal of

the Federal Reserve System in that of

the US Treasury

the points on the Treasury seals serve a

security function they're very difficult

to photocopy

for the final inspection sample sheets

that check by two operators


the sheets that pass this inspection are

now ready to make the final cut


one hundred at a time they're sliced

into sets of two notes lending to

individual banknotes

hundreds of hours of the labor have

turned scraps of fabric and a few drops

of ink into the world's most valuable


the finished banknotes are bundled into

stacks of 100 then down into blocks of a


each block is shrink-wrapped and bar



the Federal Reserve will use the barcode

to keep track of the amount of money

that's printed

Manufacturing US dollars is one of the

most profitable businesses in the world

every new banknote from a one dollar

bill to a $100 bill costs just the same

four cents we manufacture a product that

it's always easy to explain people what

you do when asked what you do you say

you make money and people know exactly

what you're talking about

no matter where I am in the world people

know our product and use our product and

they'd like to have more of it

all new banknotes are sent to Fed banks

such as the Federal Reserve of New

York's check and cash processing center

in New Jersey

the Fed monitors every shipment from

arrival to departure it's our

responsibility to keep track of every

single piece of cash that comes in the

door so the inventory of money that's in

their possession of the Federal Reserve

is of critical importance most of these

new bills will replace worn out notes

the remainder is new money ordered by

the New York Fed it's entirely at the

demand of the public whatever currency

the public demands and wishes to buy

from the Fed we supply to it and that

expands and contracts the New York Fed

has the special job of supplying

currency not only to its regional banks

but to all foreign banks as well

almost two million new banknotes arrived

here in 1999 each of these large crates

can hold up to 300,000 notes worth as

much as 30 million dollars to increase

efficiency to Fed began using guided

robots in 1992 each robot's path is

programmed down to inches to reduce

wasted movement

this robot is entering the most

important room in the building

it's the largest cash vault in the world

it's three stories tall and almost the

length of a football field

of the exact dimensions our kids see

that's because at any one time this from

70 to 90 billion dollars stored here

around the clock for automated cranes

retrieve and deposit crates of cash some

of the crates hold used bills of this

whole community printed ones

remarkably much of this money will end

up outside the United States


in fact two-thirds of all US currency

360 billion dollars is now held in

foreign countries this fact along with

the spread of digital copiers has

created an enormous problem the fact

that the dollar is traveling in two

areas of the world that were not open to

us 20 years ago combined with the fact

that people travel much more so than

ever before really makes the dollar a

ripe target for transnational

counterfeit activity had the Secret

Service the extent of the problem is

clear this suitcase was confiscated in

New York Airport and these fakes are by

no means the best

here in counterfeit division we see

everything ranging from this highly

deceptive hundred-dollar note that's

produced in Colombia all the way down to

this inkjet produced counterfeit $100

note that was probably produced in

someone's basement for garage details

about these counterfeit notes are

entered into a database at the Secret


the computer will identify other fakes

that have similar features

document analysts Scott Bradley then

goes to the file vault that holds

samples of other counterfeits he's

looking for the bills that the computer

identified as possible matches with a

new note

he uses high magnification to hunt for

tiny defects in the printing

when I find a defect that I'm gonna try

and match that defect on my new note to

a defect of a note that I pulled from

the ball this time Scott believes he's

found a match the printed lines on the

edge of both these bills have the same

tiny hitch

for the counterfeiter the toughest part

of making a good counterfeit note is

simulating the paper and the toughest

feature to simulate is the watermark

this is a note that we're seeing under

normal lighting conditions a counterfeit

note you can sort of see that there's a

watermark image there when I changed the

light source to a transmitted light a

light that's coming through the node

from underneath then we're able to see

the simulated counterfeit watermark

image that's on this note when I changed

to an ultraviolet light source this

particular note changes so that I can

still see the watermark and on a genuine

note a true watermark wouldn't behave

this way under ultraviolet light it's

not just the watermark but the paper

itself that's different under

ultraviolet light when the light changes

to ultraviolet only the fake paper which

contains chemical whiteners remains


forensic scientists also use other

methods to extract valuable clues from

fake money first the notes are bathed in

a special chemical the chemical will

react with any amino acids on the paper


amino acids are residue left by



when the bills are heated an amazing

transformation takes place


these could be the fingerprints of the

counterfeiter sometimes scientists must

use more high-tech names to get

fingerprints this fake note has been

treated with a special chemical now it's

examined through orange glasses when the

laser light is turned on the

fingerprints glow

The Secret Service can compare these

fingerprints to those in a special

database that holds the fingerprints of

all US citizens convicted of a


if there's a match they may have found

the counterfeiter in 1999 The Secret

Service was able to arrest almost 4,000

counterfeiters I think the number one

reason counterfeiters get caught is

greed they can't wait to try to pass the

product that they've produced each time

a counterfeiter passes a note he is

helping us because that creates new

evidence either through the actual

counterfeit notes or through witnesses

that help us identify him

but the most dangerous counterfeiters

remain at large

they're the ones who produced the

so-called super note a fake $100 bill

that looks amazingly authentic the

Secret Service believes that the super

note is printed on the same type of

intaglio presses as genuine US currency

these Swiss maid presses are so

expensive that the Secret Service

suspects a foreign government may be

involved so the hunt for the

counterfeiters goes on I think we always

have to remember that the criminal mind

is sufficiently creative that we always

have to keep a jump ahead of them and

that means constantly changing the

changes the currency will occur much

more rapidly than they have in the past

we project the currency designs will

have to be changed or at least augmented

with new security features every 7 to 10

to 12 years or so but there's one thing

about US currency that won't change and

that's the role of the Federal Reserve

as its Guardian most Americans don't

understand how their central bank

functions but a Federal Reserve

Headquarters they're trying to change

that one of the reasons so many of us

support this program is its impact on

the students participate these students

are finalists in an annual competition

called the Fed challenge and have fun

but remember central bankers never smile

like the real Board of Governors these

would be central bankers argue the fine

points of monetary

the winner be the team that best

understands the tremendous changes

sweeping through the economy what we at

the Fed have to try to do is to say

what's really happening in the economy

that makes it do so fabulously well and

what's the best thing we can do to

contribute to that that's our biggest

challenge these students have developed

an understanding of the real purpose of

the world's mightiest bank the Federal

Reserve cannot create growth and

prosperity the American people do that

our job is to try to make sure that

conditions are in place and enable them

to do their thing and all of our

decisions are made based on that