A History of Printed Money

Printed money was a perfect substitute for specie held secure in a single location. To facilitate security and counting, banking needs soon required high-denomination banknotes. Sound, trustworthy banks and some reserve banks and governments began to print and circulate banknotes with face values representing enormous sums of money in the 19th century. The United States produced banknotes of $1,000, $5,000, and $10,000. The Bank of England had £1,000 notes. France used Fr5,000 and so on.

Some of these banknotes represented years of wages to the average worker. But the notes were not issued just to puff-up national vanity, they served real purposes. In a world where credit cards, large multi-branch banks, and electronic banking had not yet been invented, if someone bought a house, they had to pay in cash. Only the upper classes had chequing accounts. If in America for example, they might have paid with a $5,000. If, however, they paid with a cheque, their bank might hold the cheque until it had accumulated several on another bank. At some point, probably every few days, the bank would have sent those cheques over to the bank they were written upon, and that bank would have returned to the first bank a banknote of $10,000.

The very highest denomination banknotes rarely circulated with the public. They were used primarily for intra-bank transactions. In the 1930s, in the United States, notes with a face value of $100,000 were printed exclusively for use between the nation’s 12 Federal Reserve Banks. Similarly, the Bank of England printed nine £1 million pound notes for intra-international central-bank use covering transactions involved with administration of the post-World War II Marshall Economic Recovery Plan. (These banknotes have since been demonetized. Seven were destroyed. Two, serial numbers 7 and 8, are now in collector hands.)