Defacing currency is a crime – Sunday Times

By Kavan Ratnatunga
I was recently surprised to see chains made of current Sri Lankan coins exhibited at the Dalada Maligawa Museum in Kandy and also at the Kiri Vehera Museum in Kataragama. I wonder if those who had them made as gifts or the curators of these Museums are aware that they are in direct violation of the Monetary Act of Sri Lanka and guilty of a prosecutable offence, with a fine recently proposed of upto Rs. 100,000.

The recently issued 2004 Annual Report of the Central Bank of Sri Lanka states "The Currency Department conducted an oratory contest in Sinhala medium amongst schoolchildren in the age group of 15 - 19 years in order to create an awareness on the proper use of currency without defacement or mutilation."

Statutory law
Shouldn't these museums set a better example to the visiting schoolchildren and public and not act outside the existing monetary law of the country?
Monetary Law (Act 58 of 1940 certified on 28th August 1950) section 58 states:

Any person who without the authority of the Monetary Board
(a) cuts, perforates, or in any other way whatsoever mutilates any currency note;
(b) prints, stamps, or draws anything upon any currency note, or affixes any seal or stamp to or upon any currency note;
(c) attaches or affixes to or upon any currency note anything in the nature or form of an advertisement; or
(d) reproduces in any form whatsoever, or makes a facsimile of, any currency note, shall be guilty of an offence.

Section 58A of the same law states:
(1) Any person who, without the authority of the Monetary Board, melts, breaks up, perforates, mutilates or uses otherwise than as legal tender, any coin which is legal tender in Sri Lanka shall be guilty of an offence.

(2) Any person who knowingly uses, possesses or deals with any metal or article which he knows or has reasonable cause to believe, is derived from any coin which has been dealt with in contravention of subsection (1), shall be guilty of an offence.

Mutilating currency
As long ago as 1825 when the British colonial powers tried to introduce British currency in Ceylon, it was not very successful since the British silver coins were worth more than their face value to the silver craftsmen who kept melting them.

The practice did not stop even after it was made illegal to mutilate coins, an almost impossible felony to control. The British stopped sending silver coins to Ceylon, creating a shortage in change, which was met by the Indian silver rupee becoming the de-facto unit of currency and by many coffee factories issuing their own copper tokens, from 1840 to 1870.

This law introduced many years ago is still part of the Monetary Act and is more justified today than a few decades ago. Just the aluminium in the 1, 2, 5 and 10 cent Lankan coins which have practically gone out of circulation is worth more than the face value of the coins. Since 1996, the 25 cent, 50 cent and one rupee Lankan coins are made with nickel covered steel to reduce the cost of minting them.

The brass five-rupee coin which had 30 cents (1984) of brass when introduced, now has about three rupees (2005) of brass in it. On average you need one thousand rupees in 2005 to make the same purchases as you could with one hundred rupees in 1983. It now costs the Central Bank of Sri Lanka more than the face value to mint the coins the size and composition of some of which were defined over 22 years ago. i.e. the same period the value of the rupee has gone down by a factor of ten.

So if coins are mutilated and taken out of circulation, the Central Bank has to issue more coins into circulation at a significant loss. Currency notes although they cost less than the face value to print need to be replaced every few years as they get dirty and any mutilation just shortens the useful lifetime a note can remain in circulation. There are many more examples to show how far this rule is ignored in Lanka.

On many of the older circulated currency notes one regularly finds multiple post marks. This practice seems to have stopped around the 1960s probably because the Central Bank informed the postal authorities that they were guilty of an offence which was traceable. Looking at many of the currency notes one gets from circulation today one notices that it is a common practice of cashiers to write a total in a bundle directly on the currency note rather than on a wrapper of the bundle. I hope they understand they are guilty of an offence. Some even write their name and address on the currency notes.

I have found a few notes with political slogans. A 10-rupee currency note from the early 1980s I have collected states in Sinhala, "North for Amir", "South for Reagan" and "For us Kanaththaa" and reflects the political frustration of that era.

Indian silver rupees and old Ceylon silver coins are often used to decorate jewellery boxes and make silver belts and chains. As long as these artifacts were made after 1942 when these coins ceased to be legal tender, it is not an offence.

These laws are more relaxed in the USA. U.S. Title 18, Chapter 17, Section 331 prohibits among other things, fraudulent alteration and mutilation of coins. This statute does not, however, prohibit the mutilation of coins if done without fraudulent intent if the mutilated coins are not used fraudulently.

Nineteenth century companies in USA used to counter-stamp coins as a way of cheap advertisements, equivalent to today's spam e-mail. Americans rarely reuse a penny they get in change. It hardly has any monetary value and there are proposals to discontinue its use. It is maintained by the politics of Jobs at the US Mint which needs to make a few billion one cent coins every year to replace the wastage.

Smashing one cent coins has been a big thing in America for a long time. An elongated coin is made by a coin being forced between two steel rollers. An engraving is on one or both of the rollers and as the coin passes through the rollers it is squeezed or elongated under tremendous pressure from the original round shape to one of an oval and the engraved design impressed into the coin at the same time. Such machines are frequently found near tourist attractions in USA to provide a cheap souvenir.

Many coin dealers impress a business card on it hoping that the collector will keep it. They have become popular in Great Britain since the 1981 changes in the old law from which the Lankan law was originally derived.

The 50 US State Quarter coins series being issued from 1999 to 2008 has created a collector market being exploited by US entrepreneurs. From simply gold plating these coins or from a more elaborate automated colourizing of them with enamel, paint dealers produce items that can be sold to collectors at coin shows and on eBay for more than ten times the face value of the coin.

Another gimmick is to re-strike a real US quarter with a different design. A popular parody "Head Quarter" on Bill Clinton a few years ago has led to a series of them being re-struck with different designs. The coin shown issued as if for "Texas" shows George Bush trying to lasso Osama Bin Laden.

A US website called encourages readers to write the URL on the note, register the serial number of any one dollar bill from circulation with location and track this tagged note after you spend it if others who get it in the future bother to record where they got it on that website.

(The author maintains an educational website on two thousand years of Lankan coins at and is a life member of the Sri Lanka Numismatic Society)