Why Did U.S. Banknotes Shrink in Size?

Those who are aware of classic United States banknotes from the 1920s or earlier have certainly noticed today’s folding money isn’t as physically large in size as it once was. In fact, modern circulating United States Federal Reserve Notes are about 30% smaller than they were before 1929, when the nation’s banknotes shrank in size from a standard 7.38 by 3.13 inches to the current 6.14 by 2.61 inches. These old large-size notes were often dubbed “Horse Blankets” or “Saddle Blankets,” a wry nickname used by the public and remaining in the parlance of banknote collectors today to poke fun at the large size of these notes – seemingly big enough to envelop a four-legged land beast of the equine kind.

The Series 1923 $1 Silver Certificate was among the last of the large-size United States banknotes. Click image to enlarge.

Large-size banknotes were issued from 1861 until they were replaced by small-size notes in 1929. But why the changeover?

As with so many transitions in the government’s production of money, the switch from large-size banknotes to small-size came in an effort to save costs. Quite simply, during the 1920s the Bureau of Engraving and Printing began significantly increasing the number of notes it was printing each year, and the many tons of paper required to print these notes were of a special quality that was becoming expensive to make. Cost analyses revealed that millions of dollars could be saved by reducing the physical dimensions of banknotes.

The last of the large-size notes were issued under Series 1923 and were replaced on July 10, 1929, with the release of the reduced-size notes of current proportions. The changes were made to the nation’s various circulating bill across the board, including Silver Certificates, Gold Certificates, United States Notes, National Bank Notes, Federal Reserve Bank Notes, and Federal Reserve Notes.

The public adapted to the new notes in short order, with financial institutions prepared for the changes and educating people on the new banknotes, which quickly replaced the large-size pieces as they were withdrawn from use. Clothiers were also evolving with the reduction in banknote size, manufacturing and offering wallets, purses, and other fashion items designed to carry money in slimmer sizes to shrink with the smaller size of the nation’s sleeker bills.

Perhaps aiding in the transition from large-size to small-size bills was the unfortunate occurrence of the Great Depression, a period of prolonged economic devastation following the stock market crash of 1929 and causing millions of Americans to lose their livelihoods and homes. Countless folks with the large-size bills socked away in cookie jars, under mattresses, and in chests cashed in their savings simply to survive. And with the deposits of these older bills, the large-size money of yore disappeared from circulation.

Even many decades after they were last issued, large-size bills printed between 1861 and 1929 remain legal-tender and can be spent for their total face value today. However, it’s advisable that those who have these vintage banknotes keep them or sell them to a banknote dealer, as they’re worth much more than their face value to collectors. Even the Series 1923 $1 Legal Tender Notes, among the latest and most common of old Horse Blankets, are worth around $100 and up in circulated grades. Collectors who wish to have their old notes accurately graded and protected for years to come should submit their pieces to PCGS Banknote for encapsulation.

Sources

• Freidberg, Arthur L. and Ira S. A Guide Book of United States Paper Money. Whitman Publishing, 2016.
• Orzano, Michele. “What is a Horse Blanket Note?” Coin World. February 25, 2015. Accessed February 24, 2021.
• Ross, Kelley, L., Ph.D. “Six Kinds of United States Paper Currency.” Accessed February 24, 2021.
• “The History of U.S. Currency.” U.S. Currency Education Program. Accessed February 24, 2021.