News

U.S. hasn't printed $3 bills since 1800s

Posted September 20, 2011 2:45 pm

Hope Babowice

You wanted to know

Amber Socaciu's third-graders at Lake Villa's Thompson Elementary School asked, “Why aren't there $3 bills?”

The saying about a penny saved does not mention the $3 bill, and for good reason. These bills have never been printed by the U.S. Bureau of Engraving, which first printed money in 1862.

Before then, $3 bills were printed in the U.S. by local banks, railroads and anyone who could present themselves as being able to back the face value.

Professional numismatist Dan Lewis of the North Carolina-based blackmountiancoins.com, said the U.S. government had not addressed backing and printing its own currency until the mid-1880s, preferring to use gold and silver for purchases.

Banks and other issuers created $3 notes and notes of many other denominations, including fractions like 25-cent and 50-cent notes. Bank notes would entitle the bearer to the face value, plus interest as indicated on the note.

The limited availability of notes opened the market to accepting foreign money as well.

“Mexican coins were legal tender,” Lewis said.

Bank-printed notes could bring the bearer face value in the town where it was issued, as residents knew if the bank had the means to back the bill's value. Once the note was used in another town or state, there was a likelihood the note could drop in value.

“There were people who made a living buying notes at a huge discount and then taking them to the place where they were issued to get the full value,” Lewis said.

The Civil War created a high demand for using paper money in place of gold or silver to pay the huge costs associated with the war, so the government established the U.S. Bureau of Engraving to print needed “Demand Notes” and “Legal Tender,” as they were called. Both the North and the South printed money.

“The value went up and down depending on the fortunes of war,” Lewis said.

When the war was over, Confederate bills became worthless paper.

Today, the U.S. Bureau of Printing and Engraving prints billions of dollars in various denominations each year and delivers them to the Federal Reserve, which, in turn, distributes them to banks across the U.S. and worldwide. Coins are produced by the U.S. Mint.

At one point, the bureau printed high denomination notes, including $1,000, $5,000 and $10,000 bills.

The advent of wire and electronic transfers drove those top marked notes the way of the $3 bill, but would be redeemed at face value if the bearer wanted to use it.

You might wonder why we still use $2 bills. The bureau stopped printing them for about 10 years but brought them back to ease the wear and tear on $1 bills.

Some people won't give you a red cent for a $2 bill that sometimes is incorrectly considered to be a fake. Credibility remains with the $1 bill, which accounts for nearly half the bills printed by the Bureau of Engraving.

Lewis suggests consulting the www.pcgs.com message board for answers to questions about coin and note collecting.