Should we demand $500 and $1,000 bills from our local banks?

Check out this email I got from the Bureau of Engraving and Printing about the new $100 bill, and denominations larger than $100:

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Mr. Tom:

The Board of Governors of the Federal Reserve System will decide when to release the redesigned $100 bill.

The BEP prints currency based on requests from the Federal Reserve. The Federal Reserve’s request are based on the customer demand of commercial banks that are members of the Federal Reserve System. Currency denominations above the $100 bill were discontinued for lack of customer demand. You may wish to contact the Federal Reserve (www.federalreserve.gov) for more information.

We trust that you understand our position in this matter.

Thank you,

BEP
Moneyfactory.gov


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What I don't understand is, if $500, $1,000, $5,000 and $10, 000 bills were discontinued due to lack of use, why haven't the $2 bill and half dollar coin also been discontinued for the same reason (although the half is almost discintinued, as it is only minted for collectors).

So anyway, if the key to getting a denomination higher than the $100 bill issued again is to demand them from our local bank branches, should we start asking for them, and telling the bank managers to send letters to the Treasury to start cranking out new $500 and $1,000 bills?

Obviously, there would way more demand for a $500 bill and even a $1,000 bill then a $2 bill. Agree?

I say we all start asking our local banks and maybe even ask our local credit unions, if you don't use banks, to relay the message back to their bank that supplies them with their coins and currency, that you would be interested in having $500 and $1,000 bills available for use.

(Sorry, I know we've been through this topic a lot since I've joined these boards, but this is a new piece to add to the puzzle about the Federal Reserve Banks having the authority over the denominations of currency we get, and I have read this for years, and have wrote to them on the issue a few times.)

 

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Gubm'nt claptrap. Period.

 

Bring them back

 

People, in general, would make more money if bills higher than 100 USD wouldn't exist as legal tender.
I'll give you three examples:
1) If carrying bills worth 100 USD each, people would probably desire to separate the bills into various places of their bodies; therefore, it would be "less simple" for a robber to steal one 1,000 USD bill than to steal a couple bills worth 100 dollars each.
2) If I'm the owner of a vehicle that transports bills, I may request a lighter and smaller vehicle now that I would probably consider having more higher denomination bills instead of more 100 dollar bills. At consequence, I may waste less gasoline...which equals to less money for service stations, for example.
3) If sending bills abroad, it would be cheaper and more efficient for me to send more money for less cost; however, the individuals who provide me the service would probably get less money.

The "affected" individuals would change numerous things in order to maintain part of their "profits".

 

With the widespread use of debit/credit cards by the vast majority of the population, I see no reason to carry, or possess large denomination currency. Furthermore, the only groups of individuals that I can think of that would like the return of high denomination currency, are currency collectors, and anyone wanting to make an untraceable purchase, (drug dealers, illegal arms dealers, etc) for a huge amount of money.

 

The larger denomination bills were made in an era before electronic banking, before cashiers cheques etc. Certainly before credit cards, debit cards so forth etc. Really in an era where I usually never have more than $40 in my wallet at any given time large bills are useless.

The older bills do have cool factor though. I have owned several over the years.

 

there may be no practical use for a modern $500 bill but.... I want one

 

Large denomination bills were withdrawn from active circulation in 1969 for one reason only - to make it more difficult to transport large amounts of cash. The government today is just as interested in maintaining that difficulty.

A million dollars in $100s is 10,000 notes, and weighs twenty-two pounds. A million dollars in $10,000s is 100 notes, and weighs less than four ounces.

 

I am going to agree with the majority here. Why even think of having banknotes larger than $100.00. If the reason lies simply because other Countries do, then that is no reason at all. If predictions of hyperinflation do come a common part of our currency culture in the next few years, then you may get your wish. Who would want to carry large amounts of banknotes around if a loaf of bread cost's $20.00

The hyperinflated currencies of the world have very high denominations (except for Europe). I even think you will see the larger notes phased out of the Euro Countries as well in the future.
I for one do not want to see this in the USA. I am fine with $100s and below.

 

As a child, my dad let me hold 10 $1000 bills! I haven't seen anything above $100 in business transactions in 30 years.

 

This is a persistent urban legend, but it's quite far from the truth. High denominations were withdrawn simply because they were in low demand. The last printings of $500 and $1000 notes had taken place around 1945, and the usage of these denominations then dropped off so sharply that it wasn't until 1969 that enough of them had worn out that another printing was needed. At that point, the Treasury and Fed jointly decided that the costs of updating the $500 and $1000 designs for the 32-subject printing process were too high to be justified, for such a small printing. So the high-denomination notes were discontinued instead. The press release announcing the decision presented it as a cost-saving measure.

Some years later, in the early '80s, Congress considered but rejected legislation that would've discontinued the $100 FRN, in order to combat the drug trade. That debate is probably what started people thinking that the $500+ were discontinued for similar reasons.

As for the $2, many did expect that it'd be discontinued when the supply of 1976 $2's ran out in the mid-'90s. But the Fed decided to go ahead and order another printing, and we got Series 1995 $2's.... Toward an explanation, notice that the demand for $2's was never anywhere near as low as the demand for $500's (the 575 million 1976 $2's lasted about 20 years, while the less-than-2-million 1934 $500's lasted about 35 years). Also, the 1995 and 1976 $2's were printed in the same designs on essentially the same equipment, while an update from 1934 to 1969 $500's would've required modification of the designs to change from 12-subject wet-intaglio presses to 32-subject dry-intaglio presses (as well as to add "In God We Trust" to the notes). So the cost-benefit tradeoff for the $2's looked very different than that for the $500's did....

 

Yes, I've seen this argument before, but there were large numbers of high-denomination notes in the banking network in 1969, more than enough to meet demand. If a bank had to keep $1 million in cash reserves at a specific location, it was much easier to meet the requirement with thousands rather than twenties. Simple physics made high-denomination notes useful, and plentiful relative to demand until actively recalled.

It's noteworthy to recall that the US government stopped issuing bearer bonds at the same time, because they were issued in denominations up to the millions, and made it possible to earn interest while laundering proceeds from criminal enterprises.

 

They should bring back the higher bills!

 

I'd like for them to bring them back, but then the premium I paid for my 1934 series notes would vanish.

 

We should demand that banks quit charging outrageous fees.

 

Yeah, i always thought it was to make it harder for drug smugglers etc to move their money around.

 

I won't even take $100 bills from the bank because it seems most places won't accept them because they don't want to keep massive amounts of change on hand. Twenties are easier. I'll lobby for the return of fractional currency though.
Guy

 

Here's the text of the 1969 press release, as reprinted in the O'Donnell book....

TREASURY DEPARTMENT
WASHINGTON, D.C.
July 14, 1969
FOR IMMEDIATE RELEASE

(THIS IS A SIMULTANEOUS RELEASE BY TREASURY AND FEDERAL RESERVE SYSTEM)

LARGE DENOMINATIONS OF CURRENCY TO BE DISCONTINUED

The Treasury Department and the Federal Reserve System announced today that the issuance of currency in denominations of $500, $1,000, $5,000, and $10,000 will be discontinued immediately. Use of these large denominations has declined sharply over the last two decades and the need for them appears insufficient to warrant the added cost of production and custody of new supplies.

The large denomination notes were first authorized primarily for interbank transactions by an amendment to the Federal Reserve Act in 1918. With demand for them shrinking, printings of new notes of these denominations were discontinued in 1946, and the supply that was on hand at that time has now diminished to the point where continued issuance of such notes would require additional printings. Surveys have indicated that transactions for which the large denomination notes have been used could be met by other means, such as checks or $100 notes.

Under the decision announced today all existing supplies of large denomination bills at the Federal Reserve Banks will be turned over to the Treasury for destruction as will circulating notes that find their way back to the Federal Reserve Banks in the normal course of business.

The Federal Reserve will continue to issue notes in denominations of $1, $5, $10, $20, $50, and $100. Currency comprises only about 25 percent of the nation's money supply, the vast bulk of which is made up of demand deposits (checking accounts).

O'Donnell also gives this data on the number of high-denomination notes outstanding:

12/31/1945:
$500: 903,404
$1000: 797,852
$5000: 1,405
$10000: 2,327

12/31/1968:
$500: 488,295
$1000: 291,894
$5000: 634
$10000: 383 (and 100 of those were at Binion's Horseshoe!)

So the use of these notes fell by more than half in those twenty years, and fell by larger percentages for the higher denominations. In 1945, some $10,000 notes were apparently still being used as reserves--that would explain why there were more $10,000's outstanding than $5000's. But by 1968, the $10,000 was the least common denomination, suggesting that nearly nobody was still using these notes to store a large amount of cash in a small space.

 

About being able to make purchases with $100 notes if you wanted to use cash when they discontinued high denominations: Yes, that was true BACK then, when $100 bought what $1,000 bills would buy today. That is not the case anymore today. Today, the $100 bill has become the $10 bill and the $1,000 bill has become the $100 bill. (Well, maybe inflation didn't cause the $100 to be like a $10 bill, but it certainly pushed the $1,000 bill to be like the new $100 bill)