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Afterimage Review

Our Next President Should Reinstate $500 and $1,000 Bills

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Our next President and his staff should seriously consider reinstating $500 and $1,000 bills back into circulation.

The absence of higher denomination bills is becoming more and more of an inconvenience for people. Because it takes several years for our Bureau Of Engraving And Printing to design new bills that are difficult for counterfeiters to reproduce, I’m simply proposing here that our next President seriously considers reinstating $500 and $1,000 bills back into circulation.

Way, way back in yestercentury, when I was born in 1972, Richard Milhous Nixon was the President of The United States Of America and Spiro Agnew was our Vice President.  There are quite a few foreign and domestic policy decisions that they’d enacted which I consider to be among the most senseless in our country’s history, and there are only a small handful of domestic as well as foreign policy decisions that their administration enacted during their 1½ terms in office that I actually fully agree with.  

Among the few decisions which they’d enacted which I do actually agree with was the July 1969 executive order which ordered our Federal Reserve bank to remove all of the remaining $500 and $1,000 bills from circulation, thus making the $100 bill our highest denomination note in circulation.  So, why am I writing an article in which I advocate for reinstating the higher denomination bills?

The reason is actually impressively simple.  Thanks to the past 4 and a half decades of inflation and recessions, $500 today is actually worth less than $100 was back in 1969 when our banks removed the $500 and the $1,000 bills from circulation.

The Nixon Administration’s July 1969 Executive Order

The Bureau Of Engraving And Printing first began to issue $500 and $1,000 bills back in the 1860’s, and they’d continued to print them until December of 1945.  Although $500 and $1,000 bills were no longer printed after 1945, they remained in circulation until the latter years of the 1960’s.  By the latter years of the 1960’s, the higher value bills were mostly used between banks, though they were still legal tender, and they were still used to a lesser extent in peoples’ day- to- day cash transaction.  Once they were removed from circulation, many of them have now ended up in private numismatics collections throughout the world.

The reason that the Nixon administration had opted to order the removal of the $500 and the $1,000 bills from circulation in 1969 was they were trying to crack down on the activities of organized crime throughout the U.S.

Organized crime is not a domestic entity, they operate throughout the entire world, and if they no longer move large quantities of money between different countries, then they will cease to exist entirely.  Former President Nixon’s advisors had been consulting with the various law enforcement agencies, and they’d realized that it is much more difficult for criminals to move their funds into as well as out of the U.S. without being detected by Customs And Border Protection inspectors if the larger denomination bills are no longer available.

Which is in fact still quite true today.  And that’s why I’m not proposing that we introduce anything higher than a $1,000 bill into circulation.

But What About Organized Crime, Street Gangs, Criminal Gangs, Hate Groups And Terrorists?

Our Federal as well as state governments have learned a lot about organized crime and criminal gangs since the 1960’s.  Much of the successful efforts at reducing the activities of organized crime and other criminal gangs has been from Federal and state law enforcement agents working undercover, penetrating various criminal organizations, gathering evidence, and then the subsequent arrests and trials which culminate with sending crime bosses, smugglers and gangsters to prison.

There are also quite a few technologies available to law enforcement agencies today which had existed only in science fiction back in the 1960’s.  Today, our Customs And Border Protection agents have ground penetrating radar available to them, so that they can detect anyone attempting to construct tunnels beneath our border with Mexico.  The radar systems which are used in aviation are now easily able to detect low flying aircraft, thus making it much more difficult for criminals to fly “under the radar” as they attempt to smuggle arms, narcotics, counterfeit currency, counterfeit merchandise, etc. into the country.  The combination of aerial drones and satellite surveillance now make it easy for our Federal law enforcement agencies such as the FBI and Homeland Security to monitor the many thousands of small coastal islands which are located along our Atlantic coast, our Pacific coast, our Gulf Coast and in our Great Lakes, which have been favorite hideouts and drop- off locations for international smugglers dating as far back as the 19th century.

Our local city governments have also learned a lot about criminal gangs since the 1960’s.  There are thousands of sports, recreation, arts, music, academic, and outdoors/ nature programs in cities throughout the country which are oriented specifically at attempting to offer at risk youth activities that they can engage in which are part of efforts to show them that there are numerous opportunities available to them for their futures, their interests, their educations and their careers now.

These programs all emerged as parts of efforts to steer youth away from crime, to show them that there are activities which are intended to be more appealing to them as an alternative option to beginning to engage in petty crimes while they are young.  Our city, county and state governments have finally learned that the easiest way to end the activities of criminal gangs is to prevent them from forming to begin with, and showing at risk youths that there are quite a few productive activities available to them is one way to prevent gangs from forming.

There is no doubt that the combination of numerous law enforcement agencies conducting undercover operations, border surveillance technologies and youth programs in our cities are the three factors that that have contributed the most to keeping the presence of  various criminal gangs, organized crime and hate groups to the sizes that they presently are today.  Without those, we’d likely have the presence of criminal gangs and organized crime reminiscent of the 1920’s in all of our cities today.  However, we also do need to acknowledge that removing the higher value denomination bills from circulation back in 1969 did probably make the operations of smugglers more difficult.  

We do in fact still have quite a few very active organized crime families, smugglers, street gangs and various other criminal gangs operating throughout this country.  We still have hate groups, and in recent years, we now have to worry more than ever about terrorists.  And quite obviously, none of these groups are ever going to conduct any of their transactions with credit cards or with direct funds transfers.  They all will want to move cash into and out the U.S. undetected.

Which is why I’m proposing only that we re-introduce $500 and $1,000 bills into circulation, and no higher value denominations.  Those two denominations will not be likely to make the operations of smugglers or criminal gangs any easier.

We still have to declare any currency above $10,000 when we’re traveling into as well as out of the U.S.  Domestic U.S. Postal money orders will still not be available in excess of $1,000, or $700 for foreign currencies, and the purchase of money orders exceeding those values will still need to be reported.  The scanners and the sniffer dogs that Homeland Security and Customs And Border Protection uses at our airports, train stations, bus stations and at our borders will still be able to easily detect suspiciously large quantities of currency when someone attempts to bring larger quantities of currency into or out of the U.S.

As far back as the late 1950’s, when bank issued credit cards were first introduced in the United States, people were predicting that cash would eventually be nearly phased out.  In the late 1990’s, when shopping online for almost everything that we purchase became commonplace, economists were again predicting that cash would become almost obsolete at some point.  And it is quite possible that at some date in the future, there will only be a small handful of transactions which are conducted with cash.  However, despite more than half a century of predictions that cash transactions might soon become a distant memory, billions of dollars of cash are used in sales throughout the U.S. every single day.

So, I rather than print numerous charts which show the comparative of value of gasoline, clothes, books, groceries, electronics, automobiles, utility bills, etc. from 1969, compared to 2016, I’d like to ask the readers of The Pavlovic Today who are old enough to remember the latter years of the 1960’s to try to remember what $100 purchased for you back then.  And now try to think of what $100 purchases for you today in the spring of 2016.  And for our younger readers, ask this question to your parents, grandparents, aunts, uncles, family friends, etc.  The simple fact is that when the Nixon administration ordered the removal of the $500 and the $1,000 bills from circulation, the purchasing power of those bills was many multiples of what they would be worth today.

Therefore, while the reasoning behind the Nixon administration’s 1969 decision to remove the higher value denomination bills from circulation actually does still make sense today, the circumstances have changed.  Inflation has rendered the American dollar worth a mere fraction of what it was back in the latter half of the 1960’s, and so it actually does make sense to reintroduce the $500 and the $1,000 bills back into circulation.  I don’t believe that this will result in an increase in smuggling or in the activities of organized crime, hate groups, other criminal gangs or terrorist cells.

Countries Which Have Removed High Denomination Bills From Circulation In Recent Years

For those of you who are curious to compare, the only country that I know of which has withdrawn their higher denomination bills from circulation in relatively recent years is Canada, whose government opted to withdraw their $1,000 bills from circulation back in 2000.  

The Canadian government’s decision to withdraw their $1,000 bill from circulation was due to similar concerns about smugglers and criminal activities.  Because it is not known how much illegal narcotics, arms, counterfeit merchandise, counterfeit currency is smuggled into or out of Canada, and it is impossible to find accurate precise numbers as to how much money people spend on illegal gambling and prostitution, it is not known whether or not the Canadian government’s decision to remove the $1,000 bills from circulation has resulted in weakening the activities of organized crime in Canada.  Incidents of serious violent crimes seem to have neither increased nor decreased significantly since the Canadian government opted to remove the $1,000 bills from circulation back in 2000.

In the Eurozone countries, the €500 note will be in circulation until 2018, though they European Central bank has recently stopped printing them.  Again, this is due to concerns about illegal activities, though it remains to be seen whether this will actually reduce the smuggling of anything into or out of the Eurozone countries.

Countries Which Are Presently Keeping Their High Denomination Bills In Circulation

The Swiss National bank issues a 1,000 Swiss Franc note, which is used throughout Switzerland and Lichtenstein.  The national banks in Brunei and Singapore also issue very high value notes.  In 2002, the bank of Thailand issued a 500,000 Bhat note, which as far as I know is the highest value note which is actually legal tender anywhere in the world, though that note was issued specifically to commemorate the 50the wedding anniversary of King Bhumibol Adulyadej and Queen Sirikit; although that bill is technically legal tender within Thailand, it was not actually intended to be commonly used in daily cash purchases.

All of those aforementioned countries do indeed have crime occurring within them, though I’ve yet to meet any economists or political analysts who believe that there is any link between the issuing of high denomination notes in those countries and making life any easier for career criminals or for organized crime and other criminal gangs.

Into The 2020’s And Beyond

As I mentioned earlier, there have been numerous recessions since the $500 and the $1000 bills were removed from circulation back in 1969, and due to decades of inflation, the purchasing power of the U.S. Dollar has been steadily decreasing since the early 1970’s.  While we may see some short term fluctuations in the value of the American dollar, most credible economists throughout the world do agree that the long term trend throughout the upcoming decades of the first half of the 21st century will be that the purchasing power of the U.S. Dollar will likely continue to decrease.  

Because it takes years for the Bureau Of Engraving And Printing to design new notes which can withstand ordinary use and are difficult to counterfeit, now really is the time for our next President and his or her staff to seriously consider ordering the reintroduction of $500 and $1,000 bills into circulation.

Although higher value denominations would be a notably obvious target for both domestic as well as foreign forgers, recent advances in the technologies of watermarks and laser holograms now make newly designed bills impressively difficult to counterfeit.

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About the author

Scott Benowitz

Scott Benowitz

Scott Benowitz is a staff writer for Afterimage Review. He holds an MSc in Comparative Politics from The London School of Economics & Political Science and a B.A. in International Studies from Reed College in Portland, Oregon. Scott lives in Rye, N.Y. photo credit: Liza Margulies