That year, the Bank of Canada declared in an internal memo that counterfeiting levels were at “dangerous” levels. In search of a solution, Canada turned to the one country that seemed to have the problem in check better than anyone else: Australia.
HOW POLYMER MONEY WAS BORN
In 1966, David Solomon was a young chemist working on developing new kinds of paint for the Dulux company when he was invited to an emergency meeting of Australian scientists.
The country had just introduced its first dollar banknote that year, after severing ties with the British pound. The Australian Reserve Bank spent three years designing what it thought was the most secure currency possible, equipped with the best modern anti-counterfeiting technology of the day, including watermarks and raised ink printed on cotton-based “rag paper” that has since become the standard for money in places like Canada.
But within weeks, a flood of high-quality forgeries began to circulate. They were so convincing that authorities could barely distinguish them from the real ones, were it not for the fact that the counterfeiters had used the same serial number on each fake bill.
Even more problematic though, was that the forgeries had been made with paper bought at an ordinary office store. And since there was no problem mimicking the substrate, there was no telling how much fake money was out there. The hard-hit Australian $10 note soon became a pariah currency and was refused in stores across the country.
Unable to stop the flood of fake bills, the central bank convened physicists, chemists and psychologists to come up with a solution.
Mr. Solomon, the youngest scientist in the room, had a special interest in polymers – better known as plastics. He stayed quiet for most of the meeting, but to him the answer was simple: Money needed to be printed on material that couldn’t be easily replicated by forgers.
“Why don’t we use polymer?” Mr. Solomon said, using what he calls “a fancy word for plastic.”
The room fell silent, Mr. Solomon, now 81, recalls. Some people laughed. Plastic money?
Mr. Solomon was thinking like a scientist: His idea was to choose a substrate that was harder to obtain so that forgers wouldn’t be able to mimic it so easily. Control the substrate, he believed, and you can effectively control counterfeiting.
He was not the first to think of this. Throughout history, civilizations have tried and failed to control the basic material for currency. Facing a shortage of copper in the 13th century, when Chinese rulers introduced the first paper banknotes, they used wood from mulberry trees to make their money. To protect access to the paper, guards were stationed at mulberry forests. Counterfeiters and substrate thieves were punished by death.
In the 15th century, Aztecs used cocoa beans as currency. Three beans bought an avocado, 100 beans purchased a turkey. Since cocoa didn’t grow naturally in the arid Mexican mountains and had to be imported, the beans were believed to be rare enough for trading. However, counterfeiters soon figured out that eaten beans could be repurposed by filling the shells with brownish mud and mixing them with actual cocoa beans. The sudden proliferation of fake currency caused rampant inflation in the Aztec economy.
Polymer money relies on the same restriction of access to the base material. Making thin flexible plastic is hard, since it involves fusing microscopic fibres together. Create the plastic incorrectly and it will be brittle, or flimsy like a shopping bag and susceptible to tearing. A common method for an Australian bank teller to test a polymer banknote is to snap it quickly – as though pulling it apart by the edges. If it rips in two, it’s a counterfeit.
Back in 1966, though, Mr. Solomon needed a way to prove that his crazy idea could work. He began making plastic money himself. In an empty shed, he set up a crude printing shop and began churning out polymer-based notes that looked exactly like real Australian money, except for the fictitious denomination: He used $7, just in case any test-money went missing.