THE MONEY SHREDDER: BILLIONS OF DOLLARS GO THROUGH SHREDDER ANNUALLY

These $2 bills are in poor condition and will be considered for shredding.

This dollar bill is "all washed up" and will be retired from circulation.

Never mind what the song says. You CAN have a "barrel" of money. Or a bale. And it will only cost 2 cents on the dollar.

Where's the bargain? It's through the U.S. Bureau of Engraving and Printing. The only catch is the money has been shredded.

Producing crisp new bills isn't the only function of the Bureau Engraving and Printing. The agency is also charged with disposing of "old" and/or mutilated money.

In 1995, $8.9 billion in currency notes went through the shredder, representing about $113.8 billion, said Bob Moore, a spokesman of the Bureau of Engraving and Printing in Washington.

"The average lifetime of a dollar bill is about 18 months," said Moore. "All other denominations last longer, but eventually, they all end up in the shredder."

In the St. Louis Federal Reserve Bank District, which includes four facilities in seven states, more than 19 million separate notes went through shredders in four facilities.

The St. Louis District 8 includes the main facility at St. Louis, and branches at Memphis, Tenn., Little Rock, Ark., and Louisville, Ky.

More than 7 million notes were shredded at St. Louis, said Charles Henderson, an 8th District Federal Reserve spokesman at St. Louis.

Money destined for the shredder is tested first by special machines throughout the Federal Reserve system.

"These machines can inspect 80,000 notes an hour," said Henderson. "The machine automatically kicks out the `bad' bills for shredding."

The machine also detects "counterfeits," Henderson noted. Those are passed onto federal authorities.

Different Federal Bank districts have different means of disposing of shredded currency. Some is recycled, some is sold to be made into souvenirs, others are destined for landfills, said Henderson.

Some are also given to visitors who tour the U.S. Bureau of Engraving and Printing and Federal Reserve Banks.

People can also purchase paper money at the U.S. Bureau of Engraving & Printing, in small packages of $150, at a cost of just over one-cent a dollar.

Or, visitors to any of the Federal Reserve Banks -- 12 of them with 25 branches -- can pick up a small package of money at no cost.

The greenbacks, however, are not spendable.

They're shredded.

Shredding is a necessary thing, Moore said.

In some cases, the $5 bill may be ready for the shredder in 18 months, but most will last two years. The larger the denomination, the longer the life, said Moore.

The larger bills are not handled as much as the smaller bills.

Much of the shredded currency ends up on souvenir counters. At the U.S. Mint in Washington where visitors can purchase souvenir packets containing shredded money. If you're into souvenirs of significant size, you can also purchase a bale -- a 4-foot-long, 2-by-2-foot rectangle of shredded Washingtons, Jeffersons, Lincolns, Hamiltons, Jacksons, Grants or Franklins.

To buy shredded money in large volume, it's necessary to submit a letter to U.S. Engraving and Printing, explaining what it will be used for, noted Jim Marshall of the Bureau of Engraving.

Shredded currency is recycled by some companies for use in stationery. Others pack it into souvenir packets, and still others use it to stuff novelty toys and see-through pens and pencils.

At one time, shredded money was destroyed by burning. Because of the lead content in the paper, that practice has been banned by the Environmental Protection Agency.

The Federal Reserve Bank receives old and mutilated notes from banks throughout their areas.

In one Cape Girardeau, bank tellers go through bills daily, setting aside the "spoiled" currency for a destination to the St. Louis Federal Reserve Bank.

Paper money is printed in seven denominations -- $1, $2, $5, $10, $20, $50 and $100.

At one time, four larger denominations -- $500, $1,000, $5,000 and $10,000 -- were issued, but the government started withdrawing such bills from circulation in 1969.

Paper money of some sort has been around since 1690 when it was issued as "bills of credit" to citizens as receipts for loans made by the citizens to the colonial government.

During mid-1775, "Continental" currency was issued by the Continental Congress to help finance the Revolutionary War. So many of the notes were printed they became almost worthless, thus the phrase, "it's not worth a continental."

It wasn't until 1792 that an act of Congress established the first national money system, establishing mints to produce gold and silver coinage. Some bank notes were issued during the early 1800s, but it wasn't until the early 1860s that "greenbacks" were issued to help defray the costs of the Civil War.

U.S. currency today consists of coins and paper money. Under federal law, only the Department of Treasury and the Federal Reserve System may issue U.S. currency. The Treasury issued all coins and a type of paper money known as U.S. notes. The Federal Reserve issues paper currency called Federal Reserve Notes. All U.S. currency carry the nation's official motto, "In God We Trust." Coins are produced in six denominations -- penny, nickel dime, quarter, half-dollar and the dollar.

Many people have the false belief that the paper used for money is made by a secret process, but the government publishes a detailed description of the paper so private companies can compete for the contract to manufacture it. A U.S. law, however, forbids unauthorized people to make any type of paper similar to that used for money.