Peter Jackson column

Mar 15 2007 By Peter Jackson, The Journal

Scottish economist Adam Smith features on the new £20 notes, the first time, apparently, a Scotsman has appeared on an English note.

That, and the fact that Smith was born in Kirkcaldy, part of Gordon Brown's constituency, has made some suspect the hand of Number 11 Downing Street.

Even without a conspiracy theory, there would be resentment at the change, for we get fond of our bank notes. I, for one, still mourn the passing of the £5 note bearing the image of Charles Dickens, for it was a party piece of mine to fold it in such a way, combining the features of the heads on the both sides of the note, that one could make Her Majesty look like John McEnroe. But we have to accept that times change. In fact, we have to accept that cash is getting less and less important.

Even some years ago, when I worked as a sales assistant for an electrical goods retailer, this was becoming increasingly the case. At least once a day, a customer, having decided on a purchase, would give a knowing leer and ask, `Any discount for cash?' To which the reply was always, `No, but there might be for credit', because, of course, my employer increased its slender margins significantly if it got finance company commission. It is not just credit which is king, it is any method of payment which can avoid the necessity for cash or cheques changing hands.

From May 1, BT is levying an increased charge of £4.50 every quarter on customers who pay bills by cash or cheque and Virgin already imposes a £5 monthly charge for those who don't pay cable TV, phone and broadband bills by direct debit.

The usual justification for these charges is that they are to meet the costs of handling cash and cheques.

There may be something in this argument, but it has been pointed out that the charges are often higher than can reasonably be justified on these lines. Perhaps it is really because direct debit subscribers are far less likely to cancel subscriptions.

This is a powerful reason for the decline of cash - the operation of `the invisible hand of the market', as Smith would have described it.