Imagine you’re working at a diner in the 1930s, and you’ve just given the check to
a well-dressed frequent customer who works at the bank down the street.
You’re waiting for him to pay for his eggs, bread and coffee, which at 1930s prices comes
out to about 35 cents.
The customer keeps rustling around in his pockets, getting increasingly embarrassed,
seemingly unable to find a few coins or a $1 bill so he can pay.
Suddenly, he feels a piece of paper in his pocket and his face lights up.
He pulls out a crisp $100,000 bill and hands it over.
You don’t know whether to laugh at such an obvious scam, or be incensed at the fact
that the man expected you to find $99.999.65 in change.
Your manager comes over and shocks you by telling you that even though you can’t accept
it and the customer shouldn’t be carrying it in the first place, the $100,000 bill he
pulled out is, in fact, real.
Why did the US ever issue such astronomically large dollar bills?
And why did they stop?
Well, we gathered up our team of top financial experts and economists to discover what happened
to the $100,000 bill.
You might be surprised to know that in 1928, the government started issuing currency in
all sorts of large denominations, including $1,000, $5,000, and $10,000 bills.
Apparently the economy was running so hot in the notoriously reckless 1920s, that people
thought a $10,000 bill would somehow be useful to have circulating around.
Little did the US know that the next year, it was about to experience a small financial
setback known as “The Great Depression”.
To be fair, there were practical reasons for the introduction of such bills.
Banks and financial institutions relied on wire transfers to complete large transactions.
However, in the 20s and 30s, those transfers were so slow and unreliable that many institutions
preferred to simply hand over a $5,000 or $10,000 bill to take care of a debt or loan.
So when did the $100,000 bill come into play?
In December 1934, the US, or more specifically, the Bureau of Engraving and Printing, started
printing Series 1934 $100,000 gold certificates.
They only printed these certificates for three weeks in total, ending production in January
of 1935.
Although to us the certificates look less realistic than Monopoly money, at the time
they were valid legal tender.
However, the $100,000 bill could not be privately carried or used for personal transactions,
meaning the diner customer in our opening story would have been in big trouble with
his bank for carrying a $100k bill with him.
Only certain Federal Reserve Banks could use the certificates for official transactions.
The banks who wanted to use these bills had to prove to the US Treasurer that they had
an equivalent amount of gold bullion held in the Treasury.
In fact, the $100,000 bill can’t even be held by private citizens in the present day.
Most of the 42,000 bills printed have been destroyed by the government by now, and the
few remaining ones are accounted for and held by the Reserve.
Private ownership of a $100,000 bill is actually illegal, and the government would have a lot
of questions as to how you might have found one in the first place.
Since the few remaining copies can be found in branches of the Federal Reserve, or prestigious
institutions like the Smithsonian Museum, finding a real $100,000 bill would most likely
involve a Nicholas Cage, “National Treasure” type of situation.
Which no one should ever be involved in.
The $100,000 bills printed by the Bureau featured a portrait of Woodrow Wilson, who served as
US President from 1913 to 1921 and led the US through World War I.
The bill was printed on a blend of 75% cotton and 25% linen which - surprise! - is actually
what our money today is printed on as well.
That’s right; even though we refer to and think of our money as paper, it is in fact
printed on material closer to the T-shirt you’re wearing than actual paper.
Other large denomination notes also featured notable politicians such as William McKinley
on the $500 bill, Grover Cleveland on the $1,000 bill , founding father James Madison
on the $5,000 bill , and on the $10,000 bill….Salmon P. Chase?
For those of you wondering whether your history teacher failed you even more than you thought,
don’t worry - most people don’t recognize Salmon P. Chase at all.
However, at one time, he was quite important in US politics.
In the mid to late 1800s, Chase served as Ohio’s governor and senator, Chief Justice
of the United States, and Lincoln’s initial Secretary of the Treasury.
It was this last post that led to Chase being put on the $10,000 bill eventually.
In 1861, the US started issuing the first greenback notes that eventually led to our
modern currency.
Chase was asked to pick someone whose face would be placed on the all-important $1 bill,
and so Chase picked…(*pause*)...himself.
The self-important Chase, who would undoubtedly be trying to get on a FOX reality show if
he had been born in our times, thought showing his face to everyone in the US via the money
they used would help elevate him to the presidency one day.
Clearly, this dream never materialized.
However, the Treasury decided to pay a small honor to the man who helped start modern banknotes
by putting Chase’s face on the $10,000 bill in 1928, thereby ensuring that literally dozens
of people would see it.
However, Chase did go on to achieve some kind of greater fame, with his name eventually
being used by the modern banking behemoth known as Chase Bank.
Anyone who has spent hours listening to horrible covers of Shania Twain songs while on hold
with a teller explaining to them why there are four additional fees on their credit card
now, certainly knows Chase’s name.
In this way, he leaves behind a legacy as well-liked as he probably was in real life.
So why did the US stop printing all these high-value bills in 1946?
Well, the bills were really only useful for bank transfers and real estate deals at that
time.
With prices being much lower in the 40s and 50s than we are used to, and wire transfers
becoming faster and more reliable, it didn’t seem like a great idea to keep printing such
absurdly high value bills.
Not to mention the process for printing large denomination bills was pretty expensive.
The production runs for large bills were relatively small; after all, a lot more $1 bills are
printed than $1,000 ones.
This means the US had to keep engraving new plates, used to produce the bills, for relatively
small production runs.
It was more logical and cost efficient to run a large order of $1, $5, or $10 bills
instead.
Even if large denomination bills are not being printed anymore, could you still somehow find
a $1,000 or $5,000 bill circulating now?
Well, most likely no.
In 1969, the Federal Reserve recalled all large denomination bills from the $1,000 bill
and up.
The reason behind the Fed’s decision was that the President at the time thought such
large denominations would make counterfeiting easier for criminals.
Additionally, large denomination bills such as the $5,000 and $10,000 bill would make
undetectable, illegal transactions, such as money laundering by the mafia, all too easy
as well.
In case you’re wondering, the crime-fearing President who gave the order to recall these
large bills was Richard Nixon.
Even though these large bills have been recalled, people do occasionally come across them in
old family vaults or boxes.
If you find any, you can take them to the bank and get the equivalent amount in cash,
in reasonably smaller bills.
The large denomination bills will then be sent straight into the Federal Reserve, not
recirculated.
A wiser course of action would be to sell the old bills to collectors, as most old large
denomination bills are worth much more than their actual printed value.
A standard, gently used $1,000 bill is worth around $1,600 on average.
However, if you find a rarer example that’s valuable to collectors, a select few bills
have been known to fetch over a million dollars.
The current record for price paid for a $1,000 bill is $3.3 million.
Which seems...counterintuitive, but after all, rich people need to spend their pools
full of money on something.
In any case, if you were looking for motivation to finally dust off and go through grandma’s
old things, use the hope that you could find a $5,000 bill as incentive.
Obviously, there are minimal chances of this happening unless grandma was secretly balling
and quirky enough to stash her fortune in a box instead of leaving you a decent inheritance.
So is there ever a chance we will return to printing $100,000 bills?
Most financial experts say it’s highly unlikely.
After all, most people today prefer to use their credit cards for large transactions
instead of cash anyway.
That’s partly why the largest bill issued by the US today is $100.
The conditions under which the government would even consider printing such large bills
again would have to be near-apocalyptic.
Either a severe case of hyperinflation spiraling out of control, or the simultaneous crash
of all digital systems of money transfers.
And if either of those near-apocalyptic events happened, we’d probably have to go back
to trading fruit and hunting meat anyway, so a $100,000 bill would still be useless.
That’s not the financial experts’ opinion; just our team’s prediction here at The Infographics
Show, which is why we’ve been stockpiling apples and hunting knives for years now.
In other words, a return to $100,000 bills isn’t absolutely impossible, especially
during this - so far - quite eventful 21st century.
It’s just highly unlikely and nothing we would want to see happen.
Ever.
Now that you’ve learned the fascinating history of money in the US, go discover another
incredible story or check out this other video instead!