Photo from The National Museum of American History — Public Domain
I’ve only had $100 bills at a couple of points in my life. Each time I have had them, I was very nervous — I just didn’t like carrying that much cash around. However, I didn’t realize that once upon a time, there was a $100,000 bill.
According to Rob Wile at Business Insider, the initial intent of printing the $100,000 bill was to help the economy. In 1933, the United States was still devastated by the Great Depression. The whole country was in the middle of a period of deflation, and in 1933, President Franklin Roosevelt ordered Americans to surrender their gold to the government by May 1.
It was an attempt to get more people to buy items with cash. During the Great Depression, gold hoarding and bartering were lowering the money being put into the government. Many Americans surrendered their gold, but another measure was needed — President Franklin Roosevelt agreed to bail out banks.
The initiative would devastate currency control, so another measure was needed. FDR had the Treasury take over the Federal Reserve’s gold. The federal government taking over the gold was very strategic — it could enforce plans of the government to devalue the dollar and reinvigorate the economy. Adam Hayes at Investopedia notes that countries devalue their currency because they want to boost exports and shrink trade deficits, which Roosevelt wanted for the U.S. during the Great Depression.
In January 1934, Congress passed the Gold Reserve Act of 1934. The act required all monetary gold to be transferred ownership to the Treasury. In return, per ounce of gold, people and institutions would receive a currency at a rate of $35 per ounce of gold for foreign exchange. Sections 5 and 6 of the Gold Reserve Act prohibited the Treasury and banks from redeeming dollars for gold, which people could do before. Now, the government could only convert gold to dollars, and it wasn’t necessarily an option for citizens either.
Governor Eugene Black, who was the Federal Reserve governor from September 1930 until May 1933, lamented the loss of independence for the Federal Reserve. In a rebuttal to Roosevelt’s policy, he said that the Reserve had its power of formulating an independent credit policy taken, and it could no longer regulate the flow of money into and out of the country. Since the Federal Reserve no longer had any gold, it had no control over gold movements.
“With the passage of this act, therefore, the central banking system of this country formally surrendered one of the chief privileges and duties which it had exercised prior to suspension of gold payments. … The Administration has assumed responsibility for defining our monetary policies,” Black wrote.
The Treasury was then allowed to print bills to pay for the Federal Reserve’s gold, and one of them was the $100,000 bill. The $100,000 was a gold certificate, which means it was a bill backed by gold. On the front was a picture of President Woodrow Wilson.
According to Ethan Trex at Mental Floss, the federal government only made the $100,000 bill during a three-week stretch between December 1934 and January 1935. They weren’t meant for casual use, but rather official transactions between the Federal Reserve and Treasury. The Treasury only gave the bills to federal banks with enough gold to back them up.
The initiative worked. Ending the gold standard and the use of gold as currency in America stabilized the banking system, made American goods more competitive, and reflated the economy. By the end of World War II, the dollar would become the world’s largest reserve currency.
The $10,000 was actually the highest denomination US bill to circulate, featuring Salmon Chase's face. Eventually, the Federal Reserve regained control over monetary policy in the Fed-Treasury Accord of 1951. In 1969, the Treasury announced they would discontinue all currencies above the $100 bill, including the $500, $1,000, $5,000, and $10,000, because of a lack of use.
Only 42,000 $100,000 bills were ever printed. They would only be used for large money transfers between banks. After wire transfers became a thing, the $100,000 bill stopped being transferred. Collectors could not legally hold it, but today, some Federal Reserve banks and museums still have some bills and display them for educational purposes.
I couldn’t imagine seeing the $100,000 bill while working in a bank, or if it was ever in circulation. It looks like Monopoly money and doesn’t even look real, and as a gold certificate doesn’t even look like other dollars. But it stands apart in terms of utility and appearance to every other form of American paper currency, and that’s what makes the $100,000 bill fascinating.
Originally published on Medium on January 19, 2021