William McKinley could be making a comeback.
The 25th president could resurface in a big way if one economist gets his way: He's arguing that the $500 bill, which featured President McKinley but was formally discontinued in 1969, should be printed and put back into circulation once again.
The idea of bringing back the $500 bill may seem puzzling. The world seems to be going in the opposite direction, with trends pointing to economies not only discontinuing large-denomination bills but getting rid of cash entirely.
Zagorsky acknowledges it's faster and more convenient to pay for things with a phone or credit card compared to using cash. And he admits that large bills "make it easier for crime and corruption to flourish." Nonetheless, he says that in light of the continued likelihood of cyber attacks, natural disasters, and wars causing chaos with the world's cashless networks, the positives of big bills outweigh the negatives.
"A cashless society means a country’s economy is vulnerable to anything that causes a long-term disruption in power, communications or security," Zagorsky writes. Hurricanes, wildfires, and large-scale security breaches are among the recent examples of societies being exposed to the risks of going cash-free. "When the power goes out, telephone lines shut down or account information is stolen, it is impossible to use ATMs, credit or debit cards or mobile payments – no matter how rich you are."
The solution Zagorsky proposes is to bring back large notes such as the $500 bill as a safeguard against these issues. "National defense is not only about boots, guns and bullets," he writes. "It is about keeping the economy running at all times. Cash can ensure the economy won’t collapse in an emergency, since people with cash are still able to buy and sell."
And the existence of big bills like the $500 would obviously make it easier for larger transactions to be completed when disaster inevitably strikes.
Even so, it seems very unlikely that the new $500 bills will appear, given how forces keep shifting toward less and less cash in use.
Using coins and paper notes for transactions is highly inefficient, proponents of a cashless society say. Cash is expensive to produce, it can be lost or stolen without recourse, and the existence of large-denomination bills makes it easy for criminals to remain under the radar while conducting illicit activities. Cash is even known to spread disease as it passes from hand to hand.
For all of these reasons, countries like the Netherlands and Sweden are among the first moving to become nearly cash-free. The €500 note, which was nicknamed the "Bin Laden" because it was frequently used as the underground currency of choice in bribes, money laundering, and even the funding of terrorism, will stop being issued next year.
In the U.S., luminaries like former Treasury Secretary Larry Summers have argued that we should get rid of the $100 bill because it's the "preferred payment mechanism of those pursuing illicit activities." Harvard economist Kenneth Rogoff's 2016 book The Curse of Cash also makes the case that the $100 bill should be phased out, and that eventually $50 notes and perhaps even $20s should disappear one day too.
Mind you, there are still old $500 bills featuring William McKinley's face out there, and they are still valid legal tender. If you happen to come by one, though, don't try to spend it like normal cash. It's been more than half a century since the last $500 bills were printed, and at this point they are collector's items. A couple of years ago, Motley Fool estimated that the average $500 bill was worth 40% over its face value, with some rare bills fetching $1,500 and even upwards of $10,000 at auction.