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Special Event

Millennium 2000: Making Money

Aired January 3, 2000 - 5:20 a.m. ET


LEON HARRIS, CNN ANCHOR: You don't need bills if you've got plastic. Why carry cash if you've got some Flooz?


PERRI PELTZ, CNN CORRESPONDENT: How many Flooz customers are there right now? What do you call them, Floozies?

ROBERT LEVITAN, FLOOZ.COM: No. We definitely don't call them that. We call them Floozers.


HARRIS: Will there be anything you can put in a real piggy bank? It's all about money and your future.

Well, for all the economic advances over the past millennium, a lot of things remain the same.

COLLEEN MCEDWARDS, CNN ANCHOR: Big credit bills, inflation and just plain greed, all ancient inventions, and all unlikely to change.

HARRIS: That's right. And Charles Hodson looks at 5,000 years of coins, bank notes and some less obvious kinds of currency.


CHARLES HODSON, CNN CORRESPONDENT (voice-over): God to some, roots of all evil to others. Benjamin Franklin equated it with time. To most of us, it's the key to survival and even happiness.

UNIDENTIFIED MALE: The gross amount before taxes, $78.8 million and some change.

HODSON: But money is no more than a means of exchange, as old as civilization itself. It's taken the form of everything from furs to tobacco to cattle. And even seashells.

BARRY CLAYDEN, COINCRAFT: These are ancient Samarian civilization. They are hollowed-out conch shells into this round shape, and it's believed that they were most likely used as a medium of exchange.

HODSON: Barry Clayden's Samarian shells are more than 5,000 years old. He trades in old currencies, including the world's first coins.

CLAYDEN: These were issued by the ancient Persian civilization, Lydia (ph). They are known as segloids (ph). They're silver coins. They date from about 500 B.C., approximately.

HODSON: China's Han dynasty was minting coins around the same time and beat the West to the next step. The Chinese were the first to use their invention, paper, for money in the seventh century A.D.

JOE CRIBB, BRITISH MUSEUM: They'd already used credit notes for large-scale transactions over a distance, and so they were used to the idea of paper representing money.

HODSON: But the Chinese were to suffer the disease that plagues all currencies, and in its most acute form.

CRIBB: They experienced paper money inflation and hyperinflation fairly soon after they started to use it. The notes here from the 14th century was issued a thousands coin note, and within 20 years of its issue, it was circulating as worth one coin, even though it's still denominated as a thousand coins.

HODSON: In 1440 the German Johannes Gutenberg developed printing, replacing Chinese woodcut technology with movable metal plates. Printing transformed Western knowledge and money.

(on camera): Gold may glitter, but it's heavy and risky to carry about. So as economies expanded and became more complex, they needed a means of exchange that was convenient and trustworthy. That meant loosening the link between gold and everyday money.

(voice-over): In 1661, the Bank of Sweden issued this bank note, the first chartered bank in the West to do so. And in 1694, the newly-founded Bank of England issued its first printed bank note, and has issued paper money ever since. Its bills, originally receipts for gold, were sometimes ridiculed but became the basis of Britain's wealth.

The Central Bank's good name transforms near worthless pieces of paper into currency.

JOHN KEYWORTH, BANK OF ENGLAND MUSEUM: And the reason they have the value is simply that people have confidence in the institution that issues them. That's the important thing.

HODSON: Meanwhile, today's leading currency was born in Bohemia in 1519, the jochimstaler, shortened to taler, then dollar. In various forms, it became widely accepted, above all in Britain's American colonies. The newly independent United States minted its own silver dollars from 1792. And when the U.S. economy became the world's largest a century later, the pound sterling's days of global dominance were numbered.

PROF. RICHARD PORTES, LONDON BUSINESS SCHOOL: Inevitably, inexorably, sterling was displaced by the dollar because of the dominance of New York as a major international financial center. HODSON: In the 20th century, leading currencies abandoned any connection or convertibility to gold -- the British pound and French franc in the 1930s and the dollar in 1973. Money meanwhile mutated again from metal and paper to plastic.

(BEGIN VIDEO CLIP, Advertisement)

UNIDENTIFIED MALE: In the Diner's Club, the more things change, the more they remain the same.


HODSON: In 1950, Frank McNamara created the Diner's Club card after running out of money at a restaurant. His wife had to drive two hours from home to bail him out.

RICHARD MOSELEY, HEAD OF CARD SERVICES, HSBC: I think it was definitely a revolution, the ability to go into a shop and just buy something without having to organize credit beforehand is worth a huge amount.

HODSON: Now the Internet is transforming the economy, and e- commerce is spawning e-money, like the Mondex electronic cash card with its embedded memory chip.

MICHAEL KEEGAN, CEO, MONDEX: With this single card, I can visit the train station, insert the card and use Mondex value to pay for some tickets. I don't think we're going to live in the cashless society. What we might end up living in is the less cash society.

HODSON: For now, the automated teller machine remains king. We just aren't yet ready to abandon the jingle of small change or the rustle of bank notes. Two-thirds of transactions in major economies are still made in cash.

Charles Hodson, CNN Financial News, London.


HARRIS: Well, some money is a lot like people; the more it changes, the more it stays the same, right?

MCEDWARDS: Well, maybe not quite. The euro isn't the only recently introduced means of exchange. CNN's Perri Peltz now with a look at a currency with a catchy name, the Flooz.





UNIDENTIFIED FEMALE: You mean like the illness?

(BEGIN VIDEO CLIP, Advertisement)

WHOOPI GOLDBERG, ACTOR: Hey! Who you buying that for?


GOLDBERG: Your mother who carried you for nine months in her womb, now you're going to make her carry this? Uh-uh. Give her Flooz.



LEVITAN: Flooz is actually a slang term for cash around the Mediterranean. So, in France, in Greece, in Morocco, people use the word "Flooz" as money. We've got some momentum. This is where we want to go.

PELTZ (voice-over): Back in 1998, Robert Levitan was coming off a huge success.

LEVITAN: Let's go get 'em and have another big week.

PELTZ: Having built the number one women's site on the web, iVillage. But Levitan wanted to do something different. So when his friend, Spencer Waxman, approached him about forming an e-commerce company, Levitan agreed. But he wanted pure e-commerce -- e-commerce with a capital "E."

LEVITAN: I don't want to own any product. I don't want to pick, pack and ship anything. The next wave is coming up with electronic services and products that really solve problems for people. So we talked about ideas and we both agreed, gift-giving. It should be easier in a network society to give and receive a gift, and that the recipient should have a choice.

PELTZ: This is how it works. You log onto You buy some Flooz, say, $75 worth. You send it by e-mail to your friend. Your friend now has a Flooz account and can spend that $75 at one of more than 50 online stores. That friend can be chocolates at Godiva, a CD at Tower Records and toys at Red Rocket. takes a 15 to 20 percent cut out of every one of those transactions.

(on camera): How many Flooz customers are there right now? What do you call them, Floozies?

LEVITAN: No. We definitely don't call them that. We call them Floozers. There are no Floozies.

PELTZ: An important distinction.

LEVITAN: Absolutely. None at all.

PELTZ (on camera): How many Floozers are there? LEVITAN: We currently have opened over 125,000 accounts as of today.

PELTZ: One of those accounts belongs to Seth Price. Price is an Internet consultant with a frenetic work schedule. He says giving gifts is not his strong suit. When it comes to remembering a friend's birthday or a wedding present, Seth's record is, well, kind of spotty.

SETH PRICE, FLOOZ.COM CUSTOMER: I'm not a real big fan of shopping. Stores and salespeople seem to get in the way, and I always seem to forget to send gifts. I sort of take full advantage of Emily Post's one year to send wedding gifts.

PELTZ: So far, Seth Price has sent Flooz to about a dozen people. He says his gifts average between $25 and $100. Last month he even managed to send a wedding gift using Flooz to friends in Australia.

So, if people are spending Flooz money all over the world, is Flooz a gift certificate or something bigger? A pure form of e- currency? Others have tried to come up with online cash. So far, no one has succeeded. DigiCash filed for Chapter 11 in 1998, and Cybercash has tried for nearly five years to convince consumers to use e-cash.

American Express is trying with its blue card. Consumers can now swipe their card at their desktops. Smart cards have had some popularity in Europe but have not taken off in the United States.

(on camera): Why do you think that so many of the e-currency efforts have failed? DigiCash, Cybercash, a lot of them.

LEVITAN: Consumers don't care about currency for the sake of currency. They didn't have an application that meant something. We have an application: It's gift-giving. There's a problem. We all have lots of gifts to give. We don't have enough time. We don't know what the recipient wants. We have a solution.

PELTZ (voice-over): Ken Cassar, an analyst with Jupiter Communications, thinks Flooz may be an indicator for where e-currency is headed.

(on camera): says they're not gift certificates. They are a gift e-currency, so to speak. What do you make of Flooz?

KEN CASSAR, JUPITER COMMUNICATIONS: I would argue that Flooz could well become another form of currency. Right now it really is being positioned as a networked gift certificate. As a gift certificate they can use at a number of different stores, and that's an intelligent way to start.

PELTZ (voice-over): And there's opportunity for to grow. According to Jupiter Communications, online currency is a growth market. Right now, 95 percent of all dollars spent on line are transacted through credit cards. By 2003, that figure is expected to drop down to 80 percent. So analysts are watching companies like Flooz very closely, and so are other companies. just signed up and will start accepting Flooz in January.

JOY MARCUS, BN.COM: I think there's going to be a lot of development in the online payment area over the next year or so, I really do. I think we're just seeing the very, very, very beginnings of this. I think that, notwithstanding anything any of our competitors are doing, we have to stay at the very, very edge of offering any type of payment that's available for consumers on our site. We just need to make it easy for people to pay. If not, they'll leave.

PELTZ: Perri Peltz, CNN New York.


HARRIS: Coming up, we'll introduce you to the create of another kind of currency, and this one doesn't go in your wallet. Charles Cohen will tell us how beans can finance Floozes or just make e- business easier for you. Don't worry. We'll explain all that coming up.

MCEDWARDS: And just before we break, we want to bring you up to date on a developing story. Four rocket-propelled grenades have been fired at the Russian embassy in Beirut, Lebanon. A guard at the embassy has been killed. His nationality is not known at this time. A Lebanese policeman outside the embassy has also been killed, and we are also told that there are reports of other injuries.

The assailants have not been identified, and there are reported -- there is reported to be a gun battle going on between Lebanese security forces and those unidentified assailants. We will keep you up to date on this story as it develops.


MCEDWARDS: Well, we've looked at one possible scenario for the future of money, but will the day ever come when cash is trash and paper is passe?

HARRIS: Well, our next guest this morning says that his invention could usher in a new kind of commerce. Charles Cohen is the founder of That's, and he joins us now live from London. Good morning. How are you? Thanks for taking the time to come in and talk to us about Beenz.


HARRIS: What exactly is Beenz? We've heard about Flooz just moments ago. What's the difference between Beenz and Flooz?

COHEN: Well, Beenz is a completely independent currency. Flooz is, as you know, as Rob Levitan said, it's a way of giving gifts over the Internet. Beenz is a way -- it's a currency in its own right. We have a central bank which is, and people get paid Beenz. They earn Beenz for use in the Internet, and they have them kept in a Beenz account, and then they can spend them just like money, and the purchasing value of the Beenz is about half a cent. But it's universal.

HARRIS: I'm sorry. I didn't mean to cut you off. So that the Flooz that we saw moments ago works more like just a gift certificate that can be used at network retailers or whatever who actually agree to honor the same sort of a document or same e-document, if you will, while Beenz is actually something that's backed up by currency or something of some value?

COHEN: Yes. As a consumer, you buy Flooz for dollars, and you buy the face value of the Flooz, but you don't -- you can't buy Beenz, just in the same way as, you know, you can't really buy dollars. You can borrow them from the bank. But with Beenz, you earn them for doing work, for filling in forms, for visiting web sites, for buying stuff, and it works exactly like money, just better.

MCEDWARDS: All right. So where can you spend them?

COHEN: You can spend them right now at any one of dozens of web sites around the world. We have about 200 or so business who are paying Beenz to consumers, and they range from, you know, really big web sites everyone knows, like MPfree (ph).com, and the Motley Fool, the financial services web site, all the way through to, you know, little mom and pop stores. And we're in the U.K., we're in Australia, we're in the United States, we're in the Far East, and we're taking on dozens of merchants every week.

HARRIS: Let me ask you about this. You bring up this concept now of bringing in -- doing business in a number of different countries. How are you getting around I guess the different laws that may exist in each country about use of currency in each country? Doesn't this run afoul of what governments are trying to do with their own currencies.

COHEN: Well, we haven't run into problems with any governments yet. But what we've done is we've avoided Beenz having some of the features of a government-minted currency. So, for example, consumers cannot transfer Beenz privately between themselves. That prevents it from being like cash. And we also have relationships with other companies like Mondex you featured in your film before where we're going to allow you to actually take Beenz as if it were a loyalty point as well.

So, we're really not too concerned about the regulatory issues.

MCEDWARDS: How popular do you expect it to be, and what makes you think that then it's anything more than a sort of a fad, something that has longevity?

COHEN: Well, I, you know -- we -- we want Beenz to be the web's currency. And in less than six months, we've taken on half a million consumer accounts, and we're growing that by tens of thousands a day.

We're getting acceptance of Beenz as a concept in currencies all -- in countries all over the world, and by businesses in all kinds of fields. So, you know, as far as we're concerned, it's successful so far. We've got a long way to go. We're trying very hard. We've got some fantastic investment behind us. And, you know, we're going to be -- we're going to be everywhere. Beenz is going to be everywhere.

HARRIS: Let me ask you this, Charles. How are taxes computed? Do you pay taxes to each particular respective government in Beenz if you've paid in the local currency or what?

COHEN: Well, the businesses who pay Beenz have a tax situation when they buy them from us, because we sell the Beenz to these business at one cent apiece, and in some jurisdictions, we have to charge a sales tax on that. In some jurisdictions, we don't. But when a consumer spends beans, they're spending money, in a sense, and they're then liable through that purchase to local tax regulations. And the merchant -- the merchant is concerned about that.

But it's no different to, you know, when you go and buy a book from Amazon, you know, you have to pay tax if you're in a certain jurisdiction, and they work it out just based on the exchange.

HARRIS: OK. Well, I guess we should ask you this. Maybe we should have asked you this one first. Why in the world did you decide to call them Beenz?

COHEN: Well, it's something you get when you've been somewhere.

HARRIS: Now you sound like Colleen with a Canadian accent. The Beenz. OK.

MCEDWARDS: Beenz as opposed to bins.

HARRIS: OK. That works, I guess. All right. Charles Cohen, thanks a lot. We appreciate it. And good luck. We'll follow up and see how this goes.

COHEN: Thank you. Thank you very much.

MCEDWARDS: All right. There's more to come here, though. Coming up from a redhead with a head for business to a head of state who lost his estate, we'll meet the author of "Money Secrets for the Rich and Famous." Stay with us.


MCEDWARDS: Well, have you ever wondered how the truly rich got that way or stayed that way or managed to lose everything?

HARRIS: Well, here's a hint for you. It takes a bit more than acting ability, athletic prowess or rich parents. We're joined now by Michael Reynard. His book, "Money Secrets of the Rich and Famous," looks at how the rich got richer, and in some case they did not. We thank you much for coming in and talking to us this morning. Happy New Year to you.

Now as I understand it, you went down -- you came down this path by starting out by collecting old checks or old documents, is that correct?

MICHAEL REYNARD, AUTHOR: Yes. Leon and Colleen, I started collecting old checks many, many years ago, and as a result, I became very much aware of some of the stories behind these fascinating checks.

HARRIS: All right. Well, let's start with some of the names that we've seen that popped up in your book. How about Ty Cobb?

REYNARD: Yes. Not too many people realize this, but Ty Cobb, in addition to becoming the first baseball player elected to the Baseball Hall of Fame, also became the first millionaire in professional sports. And he did this primarily through his investments in the stock market.

HARRIS: Yeah, because baseball salaries weren't that big back then, that's for sure.

REYNARD: That's right.

HARRIS: So how did he do it?

REYNARD: Back in 1918, Ty Cobb was one of the first investors in a small company back then called Coca-Cola. His initial investment of $10,800 would now be worth over $1.6 billion.

HARRIS: Incredible.

MCEDWARDS: Buy and hold, right? What about Babe Ruth?

REYNARD: Babe Ruth was fascinating also in the sense that Babe Ruth really never learned how to manage money. And for that reason, he hired a business manager by the name of Christy Walsh (ph). And Christy Walsh put the Babe on solid financial ground. He arranged for Babe to appear in vaudeville, in movies. He co-wrote books with the Babe. And as a result, the Babe made more money outside of baseball than he did in baseball itself.

HARRIS: We should add that Babe Ruth is the one in the center of this photo, and the manager he was speaking of is the one on the right.

How about Lucille Ball? We saw her name in the book as well.

REYNARD: Yes, Lucy was a very interesting lady from a financial standpoint. The ostensibly zany and naive housewife of "I Love Lucy" was in reality a very shrewd and smart investor. Lucy invested in a number of different things, including oil wells in Montana in conjunction with Marvin Davis. She owned a gas station in Flagstaff, Arizona. She co-owned real estate in Arizona with Frank Sinatra. And by the time of her death, she was considered one of the wealthiest women in Hollywood, with an estate worth over $22 million.

HARRIS: Not bad.

MCEDWARDS: And another one we wanted to ask you about is John Paul Getty. Tell us about that.

REYNARD: Yes, John Paul Getty was also quite interesting in the sense that he was your classic contrarian. After the stock market crash of 1929, while others were scrambling to sell their stocks and stockpile their savings, J. Paul Getty was out there on Wall Street buying stocks, particularly oil company stocks, which were selling at all-time lows. And soon after that, his estate mushroomed to the millions of dollars.

HARRIS: Yes. And he did quite well for himself.

Let's take a look now at some of those that did not do quite well for themselves, and lead on that list we've got Marilyn Monroe. What happened there?

REYNARD: Yes, Marilyn never made very much money during her fabulous career. But one interesting point about Marilyn was the fact that she bequeathed the largest portion of her estate to her acting coach, Lee Strasberg.

When Lee Strasberg passed away, he bequeathed the Marilyn Monroe estate to his second wife, Anna Strasberg. So what that means is that all this tremendous revenue that's generated to the Marilyn Monroe estate is now going into the bank accounts of a woman that Marilyn never knew or never met.

MCEDWARDS: Judy Garland also had her troubles, didn't she?

REYNARD: She certainly did. Judy Garland generated for herself over $8 million during her great career. But her financial base was decimated by multiple divorces, by child custody battles and also by drug abuse. And by the time she died, she left an estate with a $4 million debt.

HARRIS: Well, let's take a look, before we take a break real quickly here, let's take a look at one particular couple that might be a combination of both of the examples that we've seen this morning. How about John F. Kennedy and Jackie Kennedy?

REYNARD: Yes, John F. Kennedy never exhibited a desire to accumulate great wealth, primarily because of the fact that he was very well set by his father. His father, Joseph Kennedy, set up million-dollar trusts for his children.

Jackie Kennedy, on the other hand, during her marriage with Aristotle Onassis, was given a spending allowance of about $30,000 every single month. And she customarily exceeded that spending allowance.

HARRIS: So, Michael, why are some people good at it and some people aren't?

MCEDWARDS: Well, one of the lessons we learn from "Money Secrets of the Rich and Famous" is that having a long-term financial strategy is very, very important. It seems to be a key factor in terms of accumulating great wealth. For Ty Cobb, he continually made regular investments in the stock market, whether it was a bull or bear market, and as a result he became one of the largest shareholders in a company called Coca-Cola.

George Washington, the first president of the United States, accumulated land consistently for his entire lifetime. And at one point in time, he was one of the largest single landowners in America, owning over 60,000 acres in seven states.

But having a long-term financial strategy seems to be a very important factor for accumulating great wealth.

HARRIS: That's just exactly the same kind of advice we hear today. Well, on the way out then, if you can briefly, were there any common threads among those who were failures, if you will, or those who didn't do well?

REYNARD: Well, a classic investment of a failing investment strategy was exhibited by Ulysses S. Grant, when he put all of his eggs in one basket. Ulysses Grant invested all of his funds and his son's Wall Street brokerage firm. And when that brokerage firm went belly-up, Ulysses Grant was left penniless.

MCEDWARDS: Michael Reynard, thank you very much for coming in and talking to us.

What a fantastic book. It's "Money Secrets of the Rich and Famous." Good luck with that.

REYNARD: Thanks very much for having me on your show, Colleen and Leon.

MCEDWARDS: Thank you for coming.

HARRIS: Happy New Year to you.


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