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MONEY WILL REALLY GO A LONG WAY IF BILL-RECYCLING IDEA TAKES OFF

Talk about a "green" movement. For decades, the Federal Reserve has disposed of its old, worn-out currency by shredding it and burying the multibillion-dollar confetti in landfills.

But as the number of available landfills declines and concern over the environment grows, Federal Reserve banks across the country are trying to find companies that can recycle the 7,000 tons of tired money - enough to fill 1,750 dump trucks - that are shredded each year.That amounts to 715 million bills, with a face value of nearly $10 billion, roughly 3 percent of the value of the currency in circulation.

So far, the Federal Reserve's efforts have involved the use of old bills in roofing tiles, particle board, fuel pellets, stationery, packing material and artwork.

The Federal Reserve Bank of Los Angeles, for example, is negotiating with Terra Roofing Products of Fontana, Calif., to use shredded bills in its fireproof roofing shingles. The shingles, which are made of concrete and wastepaper, do not burn like wooden ones and have become popular in California as a safeguard against firestorms.

Aaron Cohen, Terra's chief executive, said the roofing company had conducted extensive studies indicating that adding a small amount of shredded money increases the strength of the shingle.

"It's the long fiber," Cohen said. "The Federal Reserve's money has long fibers that tend to add strength to the product."

At the 37 regional banks and branches of the Federal Reserve, old bills - along with worn food coupons - are shredded, then placed in a high-pressure processor that forms the residue into "bricks" that weigh 2.2 pounds apiece. Each brick contains 1,000 bank notes.

What percentage of his shingle is made of shredded money Cohen would not disclose, citing competitive reasons, but he said the company hoped to make use eventually of the 185 tons of bills that the Federal Reserve Bank of Los Angeles shreds each year.

Brent Duxbury, assistant vice president of the bank, said it currently pays a contractor about $60,000 annually to dispose of the old money and would welcome the savings generated by giving the money to a company like Terra Roofing.

"With the landfills starting to fill up, we aren't too sure that we can continue to dispose of this stuff locally," Duxbury said. "That would mean higher fees to have it carted elsewhere."

The Los Angeles Fed is also holding discussions with Gridcore Systems, based in Carlsbad, Calif., to use shredded bills in fiberboard panels that are used to make stage sets and trade-show displays.

"We still need to do some more research and development, though," said Robert Noble, Gridcore's chief executive, who added that preliminary results indicated that the shredded bills could be used to make extra-strong fiberboards because the money fibers were so resilient and adhered well to other fibrous materials. One problem, he said, is that "we don't quite know what gives the currency its strength, and the government won't tell us, for obvious reasons."

The largest shredder of old money is the Federal Reserve Bank of New York, which disposes of 950 tons of currency each year at a cost of $140,000. Every day, the bank shreds about 3 million notes with a face value of $49 million.

Bart Sotnick, a spokesman for the bank, said it had worked with several companies trying to find ways to recycle the dollars, but no feasible products resulted.

"Given the volume of shredded money we produce, there are no takers out there," said Joseph T. Botta, a vice president at the Federal Reserve Bank of New York. "We've gone to the building industry and looked for someone who can come up with uses that are acceptable to the United States Treasury, but as of yet we haven't found one."

Horse breeders attempted to use the cast-off currency as bedding but abandoned it when the chemicals in the old money caused skin rashes on the horses, Sotnick said.