Did you realize that the $100 bill is the largest denomination of paper currency today?
This guest post comes from Michael, a contributing editor of the Dough Roller, a personal finance and investing blog, and Credit Card Offers IQ, a credit card review site. I am sure that you, like me, will enjoy reading the history of paper currency in the United States. Thanks, Michael, for your research.
Depending on how old you are, you’ve probably seen a lot of changes to the way paper currency has been printed. It wasn’t long ago that the government was backing US currency with gold bullion and depositing a $100,000 bill into your savings account was possible. Since the first print of paper currency in 1690, the United States has seen hundreds of changes to the way money is printed, handled and destroyed. I think a history lesson is in order!
In 1690, the Massachusetts Bay Colony issued the first paper currency in the colonies of the United States. In 1775, just before the Revolutionary War, the Continental Congress printed a new currency, backed by the anticipation of tax revenues. As you would expect the notes were easy to forge and when no tax revenues came, the bills became worthless. Just after the Revolutionary War, the Bank of North America, located in Philadelphia, was nominated as the “Nations First Bank.” Four years later in 1781, the concept of the dollar was born and the coin to represent this decision would be struck several years later.
Philadelphia Mint
The monetary system was officially in business with the creation of the Philadelphia Mint and in 1836, there were over 30,000 varieties of paper currency. 1,600 banks were printing bills with different colors, shapes and sizes, causing chaos among merchants. This continued for over forty years, until the Bureau of Engraving and Printing was established in 1877. Thirty years later, all currency was printed by the United States government and not by individual banks, dealing a solid blow to the counterfeiting business.
Federal Reserve Act
Undoubtedly, the most important decision was to create the Federal Reserve act of 1913, which authorized the Federal Reserve System to regulate the flow of money. This meant the regulation of paper currency in order to control and stabilize the economy. Without this act, currency could be over and under printed, causing massive amounts of fluctuation within our economy.
Currency Design
Now with that out of the way, let’s talk actual currency design. In 1929 the size of paper currency was reduced by 25% (to the size you see today) to save money on, well, printing money. At the time, there were six different types of US currency in circulation and when the Great Depression hit, that number was quickly reduced to three. Two decades following the Great Depression, the United States was left with one type of currency, which is what you see in circulation today.
In God We Trust
“In God We Trust” was added to all currency in 1957, and it wasn’t until 1990 that the last significant change to currency was made, the addition of security threads and holograms. Any change to currency now is done specifically to thwart counterfeiting and bills over $100 are no longer printed for this specific reason.
Today
Today, six denominations of US currency are printed ($1, $5, $10, $20, $50 and $100) and it’s the $1 bill that remains unique when compared to the rest. That $1 bill has certainly seen a lot of changes in its lifetime and it’s certainly going to see many more. Currently, the dollar is holding strong against the Euro and with continued security updates to US currency, expect it to strengthen even more during the coming years.
photo credit: daniel.julia
{ 9 comments… read them below or add one }
Michael,
I was surprised to read that “In God We Trust” was not added to currency until 1957. I would have thought much earlier. This fact just tells me how much our nation has changed in the past 50 years, because there is no way our legislators today would approve the “In God We Trust” initiative on the currency. I wonder what the history was behind this…who sponsored the bill…why…was there any opposition…?
Thanks for a good read!
Interesting guest post. I thought I knew quite a bit about American currency and its history, but I learned quite a bit in this article.
@JoePlemon: If I recall correctly, the ‘In God We Trust’ comment was added during the Eisenhower Administration (and the start of the Cold War) to contrast the US and its citizens’ belief in a higher power with the ‘Godless Communism’ of the USSR. I don’t know who sponsored it or whether there was any opposition (I would guess not, as it was intended as more of a screw you to the communists than the declaration of Christian faith, per se.) Around the same time (and for the same reasons), the phrase ‘Under God’ was added to the Pledge of Allegiance. As for our leaders not approving such an initiative today… I’ve heard of more than one atheist attempting to sue to have the phrase removed from the currency, and never having much success. Perhaps the government (or at least the courts) is friendlier to religion than we tend to think.
Interesting summary. Maybe you should write article about the future of paper currency. Credit cards, pay pal, personal accounts and shopping tokens offered in every second shop – we don’t hold cash in our hands as often as we used to. Add the monetary madness of recent years (unfortunately still ongoing) and who knows what will remain of good old greenbacks (or loonies in my case) in next decades.
@Roger,
Your theory about “In God We Trust” being used to make a statement against communism during the Cold War makes sense. I was born in 1946, so I am old enough to remember, but I don’t. However, I do vaguely remember the “under God” being inserted into the Pledge of Allegiance.
If the motives back then were more about making a statement against communism than making a positive declaration about God, then my assertion that such an act couldn’t happen today is even more valid. Communism or opposition thereof is not a big issue today and taking initiative to make a positive declaration about God doesn’t seem to be on the legislative or administrative radar.
You are right that our government and courts have refuted the attempts of atheists to remove such references to God. But refuting atheists is not the same as taking a positive initiative.
Thanks for the thoughtful commentary. I am going to have to do some research to learn more of the “In God We Trust” history.
@Ellie,
Great suggestion. Our world is moving toward a cashless society. Larry Burkett, in his book “Your Finances in a Changing Society”, predicts a time when we will operate without cash. Interestingly, Burkett wrote his book 35 years ago…in 1975.
Seeing “in God we trust in our currency is a good thing. People are opposing it right now because our nation has been taken away from god and they didn’t even recognized Him as the God who blessed this country. just saying
I agree to you Kathrine, many americans today seems to forget that God is the one who blessed this country.
Today, six denominations of US currency are printed ($1, $5, $10, $20, $50 and $100)
So who is printing the $2 bill?
@Duane,
Evidently the $2 bill is printed sporadically, most recently, according to my research, in 2006.