Magazine | April 25, 2016, Issue

Letters

Why Banks Hate Bucks

In his piece “The Abolition of Cash” (April 11), Andrew Stuttaford left out the “drag” on the economy imposed by the “cut” that the banks and processing houses take on each transaction we make with a credit card. This cut has to be passed on by the merchant to recover the discount cost, which raises prices across the board for all goods and services. With cash there is no cut for the banks to take; in fact, cash actually causes them to incur increased costs because they have to physically handle it while getting no fee for doing so. While credit cards are convenient, using them is not “free,” as people think it is, even if one pays the balance off each month and gets “no annual fee” cards. Overall, the banking system is more profitable the less cash there is in circulation.

L. Schworer

Via e-mail

Andrew Stuttaford responds: Our editors, a tough crew, allowed me only limited space: I couldn’t include everything! But you make a good point. The increases that vendors make to prices to reflect credit-card transaction fees are, as you say, “across the board.” Customers pay these higher prices whether they use credit cards or not, something that may add a “regressive” effect to the equation (poor people tend to use cash more as a proportion of their spending). At the same time, the profits that banks make from their credit-card businesses can (to oversimplify) be used to subsidize “free” banking services, boost lending into the economy, or return more money to their shareholders by way of dividend. Calculating the net effect on the economy with any precision is not straightforward. More generally, you are also right to suggest that cash-based business is less profitable for banks than its electronic equivalent, whether through credit card or otherwise. Cash handling and storage is expensive, and it’s difficult to attach a fee to it. In Sweden, the banking market is dominated by a few large players: It’s no coincidence that they have played a major part in that country’s retreat from cash.

Doing Justice to the Justice

Your symposium on Antonin Scalia (March 14) offered me deeper insights into this unique and noble man. I found myself laughing, crying, mourning, and reflecting. If our politicians had just a portion of Justice Scalia’s mind and character, our country would be much better led and served. Your magazine provided me with some perspectives that I did not find elsewhere, reminding me again why I look forward to each edition. Thank you.

R. J. Young

Inverness, Ill.

Members of the National Review editorial and operational teams are included under the umbrella “NR Staff.”

In This Issue

Articles

Features

Books, Arts & Manners

Sections

The Long View

Choose Your Adventure!

The Republican Party Edition™ BEGIN HERE Republican-party front-runner Donald J. Trump pads into the “thinking room” in his elegant, palatial Palm Beach estate, Mar-a-Lago. As he sits on his gilded and intricately ...
Politics & Policy

Poetry

WHO IS THE STRANGER WHO OVERTAKES ME Who is the stranger who overtakes me On a dark street and taps me on the shoulder? I turn and there is nobody there but me, And ...
Politics & Policy

Letters

Why Banks Hate Bucks In his piece “The Abolition of Cash” (April 11), Andrew Stuttaford left out the “drag” on the economy imposed by the “cut” that the banks and processing ...
Politics & Policy

The Week

‐ Lindsey Graham has proven he’s willing to do just about anything to stop serving in the Senate alongside Ted Cruz. ‐ Could Paul Ryan emerge from the Republican convention with ...

Most Popular

White House

The Impeachment Clock

Adam Schiff’s impeachment inquiry is incoherent. Given the impossibility of a senatorial conviction, the only strategy is to taint the president with the brand of impeachment and weaken him in the 2020 election. Yet Schiff seems to have no sense that the worm has already turned. Far from tormenting Trump and ... Read More
White House

The Impeachment Clock

Adam Schiff’s impeachment inquiry is incoherent. Given the impossibility of a senatorial conviction, the only strategy is to taint the president with the brand of impeachment and weaken him in the 2020 election. Yet Schiff seems to have no sense that the worm has already turned. Far from tormenting Trump and ... Read More
Elections

Warren’s Wealth Tax Is Unethical

Senator Warren would impose a 2 percent annual tax on wealth above $50 million, and a 6 percent annual tax on wealth above $1 billion. These numbers may seem small, but remember that they would be applied every year. With wealth taxes, small numbers have large effects. Applied to an asset yielding a steady ... Read More
Elections

Warren’s Wealth Tax Is Unethical

Senator Warren would impose a 2 percent annual tax on wealth above $50 million, and a 6 percent annual tax on wealth above $1 billion. These numbers may seem small, but remember that they would be applied every year. With wealth taxes, small numbers have large effects. Applied to an asset yielding a steady ... Read More