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So if you bust out a Morgan dollar from an NGC holder and submit it to PCGS, they have no clue what the previous grade was, or even if there was a previous grade.

But if you send in a graded note is there some common database/reference that records previously graded currency by known serial number?

I just picked up the watermelon and have no intention of re-grading it. No added value point really in hoping for an AU50 when it's already Choice EF45. It did make me think of the serial number thing though.

I don't have an answer to your question but WOW that bill is a beauty!!!! Even if it is a fiat instrument it is a great piece of artistic monetary history.

The Paper Money Forum has many threads on this very subject. Paper money has a serial number so the companies that grade could use that info but it seems in a lot of cases they do not. There are also multiple companies that do this so each company would probably only have access to information on notes they have previously graded. The criteria that they use seems to change over time and it is common for folks to crack notes out and resubmit them. A person that knows what they are doing can often make a judgment as to whether a note will grade higher than what the grade currently is.

I didn't know much about currency details; this forced me to look some things up, but questions remain. I didn't know there were markers on bills that included the plate numbers and the position within the plate, though that makes sense. So I see the front plate number, but where did the grader get the rear plate number?

There's a tiny '4' in the white field, just above the bottom right 500. Hard to see in the resolution required to post here.

Ah, I noticed the blob but didn't make it out as a 4. I can imagine it as a 4 now.