SO WHAT'D ABE HAVE AGAINST E-BUCKS?
DID ABRAHAM LINCOLN SET up an obstacle for cybermoney, making companies using it outlaws? With electronic money, you send cash to vendors over the Internet or pay at a store for purchases with currency literally embedded in a smart card.
Lincoln's 1862 Stamp Payments Act banned notes that merchants issued for small amounts for customers. During the Civil War, rampant inflation led to a scarcity of U.S. coins, the result of stockpiling--the metal's actual value often was higher than the coin's face value. But the quasicurrencies threatenedto worsen inflation. Under the 1862 law, anyone circulating notes for less than $1 intended to be used as U.S. money risks fines or six months in prison. (Until 1913, both banks and the feds issued currency; then, Washington monopolized it.)
Attorney Thomas Vartanian of Fried, Frank, Harris, Shriver & Jacobson worries that some cybermoney ventures could run afoul of the old law. Although Washington has given no opinion on the issue yet, he advises E-money pioneers to clear new products with the Justice Dept. This business, now doing an estimated $50 million yearly, could grow to $1 billion by 2000, says research outfit Jupiter Communications.
EDITED BY LARRY LIGHT
Updated June 14, 1997 by bwwebmaster
Copyright 1996, Bloomberg L.P.