The answer is not so apparent at first but is logical when explained. In the 1930’s large banknotes were used for large transactions. We (the country) was pretty much on a cash basis then and transactions of any size were usually cash. Credit was almost nonexistent in private transactions and even banks transferred cash between them to balance books. (Reason for the $100,000 note).

Today, the Bureau of Engraving and Printing reports that the average size of a large cash transaction is only $42, otherwise we whip out the credit card or write a check (or debit card). The amount of cash in circulation is dwindling, yet much more ‘money’ is circulating due to credit, checks, debit cards, online/computer banking, electronic transfers (paypal, etc.). Not only is the government devaluing the money supply by printing more, we too are adding money out of thin air from credit cards.

And David Spragg is 100% correct in that the government has limited the denomination because of drug transactions. Also a factoid I heard is that 75% (or somewhere close) of all $100 bills have traces of cocaine on them. I believed it.