The Economics of the $2

The 1976 Pitch

The Treasury sold the 1976 reissue as arithmetic. The New York Times reported on April 11, 1976 that the note could replace about half the $1 bills in circulation and save $4 million to $7 million a year in printing. The Richmond Fed's fuller estimate was "about $27 million (in 1976 dollars) in printing, handling, storage, and shipping costs between 1976 and 1981," built on a printing cost of 1.525 cents per note and the fact that ones made up 55 to 60 percent of all pieces of currency. Secretary Simon said he believed the note "will be enthusiastically and widely accepted by the American people."

Sources: CoinWeek, citing the New York Times of April 11, 1976 · Richmond Fed, "The $2 Bill Returns" · Simon quote as reproduced at Attic Capital

Why the Public Did Not Play Along

Three reasons, each with a witness.

• Retailers never adopted it. The Bureau of Engraving and Printing's Lydia Washington: "The key for the successful circulation of the $2 note is for retailers to use them just like any other denomination in their daily operations." They did not, and a cashier who gets one usually swaps it out of the drawer.
• The cash register has no slot. "There's never even been a cash register slot for $2 bills," as one $2 advocate put it to Pacific Standard. Money magazine's account of 1976 blamed the same thing: cashiers "disliked them because cash trays lacked designated spaces."
• Everyone keeps them. John Bennardo, who made the documentary: "The reason they're rare is because everyone puts them in the drawer and doesn't use them." The Federal Reserve's process makes this self-reinforcing: print orders are driven by "destruction rates of unfit notes," and a note nobody handles never wears out, so the Fed rarely orders more.

The numbers show the drawers filling. The value of $2 notes in circulation rose every single year from $1.5 billion in 2005 to $3.6 billion in 2025, while the Fed says the note "does not widely circulate." Growth without circulation is a stockpile.

Sources: Pacific Standard, "The Mystery of $2 Bills," May 15, 2015 · Money · Federal Reserve, 2025 print order (how orders are set) · Federal Reserve, Value of Currency in Circulation · Federal Reserve lifespan FAQ

What the GAO and the Fed Have Said

The $2 shows up in Washington mostly as a footnote to the fight over the $1 coin. The Government Accountability Office spent two decades arguing that replacing the paper dollar with a coin would save money, and its 2011 report modeled the two directly: "If the $1 coin replaced the $1 note, the use of the $2 note could increase because people and businesses might limit how many coins they kept in their pockets and cash trays." It noted that "In Canada, demand for the $2 bill did increase when the $1 note was replaced with the $1 coin. However, Canada already had a readily circulating $2 note at the time, whereas the United States does not." In a scenario where a quarter of $1-note demand moved to twos, the projected 30-year benefit fell only slightly, to about $5 billion.

Then the math flipped. Because the Federal Reserve stopped destroying "misfaced" notes and the $1's life more than doubled, GAO found in 2019 that a coin switch would lose the government $611 million to $2.6 billion, "the first time GAO has found that replacing the $1 note with a $1 coin would result in a net loss." Fed staff had reached the same conclusion in 2013, adding that Canada's $2 note was replaced by only 1.25 coins per note, a sign that people simply moved to electronic payment. Nobody in these reports proposes touching the $2; it is the denomination everyone forgets to model.

Sources: GAO-11-281, March 2011 (PDF) · GAO-19-300, March 2019 (PDF) · Federal Reserve Board staff working paper, December 2013 (PDF)

What Congress Has Tried

No bill has ever proposed killing the $2. Two tried to make it interesting. Representative Jim Kolbe's Legal Tender Modernization Act of 2001 (H.R. 2528) would have required "a new design" for $2 notes "during each year of the 5-year period" starting in 2003, each "emblematic of the history of the United States," chosen with the Commission of Fine Arts, with the rule that "no portrait of a living person may be included." He tried again in 2006 with the COIN Act (H.R. 5818), which would have put five years of changing designs on the back of the $2 beginning in 2007 while phasing out the $1 note in favor of the coin. Neither passed. The bills that did target the $1 note, in 2011 and 2017, never mention the $2 at all.

Sources: H.R. 2528, 107th Congress (govinfo) · H.R. 5818, 109th Congress (govinfo) · H.R. 2977, 112th Congress · S. 759, 115th Congress