Reply #16: The US has always had a $2 bill, but it was NEVER popular

[happyslug]

Various reasons for its unpopularity was given, bad luck was one, that $2 was what the price people were paid to vote for certain candi ates etc. The most logical rationale is that in the Gold Coin System, the US used three gold coins till the adoption of the "Double Eagle" $20 gold piece, when it became one of four gold coins. The Four Gold pieces were the "Double Eagle" a $20 gold piece, the Eagle, a $20 gold coin, the Half Eagle, a $5 Gold Coin and the Quarter Eagle, or $2.50 gold piece (The US has also issued a $1 gold coin, but do to its small size was unpopular).

The $2 Dollar bill was close, but NOT equal to the $2.50 Quarter Eagle. Worse, during the Civil War, the $2 Dollar Bill's value dropped in relationship to Quarter Eagles so that Two Two Dollar Bills almost equaled a Quarter eagle (Face value $2,50 in gold).

Unlike the $5 Dollar, $10 Dollar and $20 Dollar Gold pieces, it was hard to exchange $2.00 Dollars bills for Gold, even when Dollar Bills regained value with Gold by 1879. How do you convert a $2.00 Dollar bill into a Coin, when the smallest gold Coin was $2.50? Remember this is also the days of a Dollar a Day wage, thus that $2.00 dollar bill was hard to convert to a gold coin.

This was made worse by the drop in the value of Silver in proportion to Gold that occurred from the 1860s onward. In the 1850s a Silver Dollar had just a bit less then $1.00 in silver in the coin. By the 1890s the Silver Content remained the same, but its value had dropped to just about 55 Cents in a Dollar Coin (This was the main reason for the "Free Silver" coinage movement in the late 1800s, the US needed inflation to undo the deflation caused by the desire to return to the Gold Standard, printing of Silver Dollars would have lead to that inflation, by 1900 the opening of new Gold Mines in South Africa and Australia had had the effect of introducing the needed inflation, so the Free Silver Movement died).

Anyway, in my opinion, the fact that the older gold coin was $2.50 in value while the newer Two Dollar bill was worth 50 cents less caused all types of problems. In a mostly agricultural society, when payments are generally made after the crop is in (This applied to the farmer when he was paid for his crop AND his workers who were paid for their work for the whole year at the same time, the difference would have been significant (the 1920 Census is the First US Census where the Majority of American lived in Urban Areas, thus in the late 1800s, most Americans lived in Rural America NOT Urban America).

That difference, would have made the $2 dollar bill unpopular, especially in rural America (and by that term I include Rural Canada). The recent move to the $2 dollar coin in Canada reflects the massive inflation both countries have faced over the last 50 years. As a whole inflation is good, it is better then deflation, but one cost of inflation is money slowly becomes less valuable. Thus what you could buy with a 50 cent piece 50 years ago you need a $2 coin today (I remember taking the bus in the late 1960s, it was 25 cents plus a 10 cents transfer, today it is $2.50 for the same trips and a $1 dollar transfer). Thus a $2 dollar coin, like a $1 dollar coin would be popular even in the US, if the US did what Canada and the rest of the World did when a coin replaced a bill, take the bill out of circulation. The US has refused to take the $1 bill out of Circulation so the $1 US Coin remains under used. The same with any $2 coin, it would remain unused as long as the $1 dollar and $2 dollars bills are printed and used.