UNITED STATES NOTE

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A 'United States Note' is a fiat paper currency that was issued directly into circulation by the United States Department of the Treasury. The notes were also known as Legal Tender Notes because of the inscription on its face stating "This Note is a Legal Tender." They were among the first national United States currency, authorized by the Legal Tender Act of 1862 and began circulating during the American Civil War. They preceded the National Bank Notes and Gold Certificates of 1865. On a United States Note, the Treasury seal and the note's serial number are printed in red.
United States Notes were printed in the following denominations: $1, $2, $5, $10, $20, $50, $100, $500, $1000, $5000, and $10,000.
The Treasury Department issued these notes directly into circulation, and they are obligations of the United States Government. The issuance of United States Notes is subject to limitations established by Congress. In order to stimulate the economy, the Acts of July 10 1862 and March 3, 1863 (among other legislation) established a statutory limitation of $300 million on the amount of United States Notes authorized to be outstanding and in circulation. This currency was not backed by any deposit in any bank or government reserve, in contrast to the Gold Certificates at the time. They also did not bear interest, unlike the appropriately titled Interest Bearing Notes of 1861 to 1865. While $300 million was a significant figure in Civil War days, it is now a very small fraction of the total currency in circulation in the United States.
Despite the fact that in modern times the word "Greenback" is meant to refer to any United States Currency, the origin of the term rests in these Government-issued United States Notes that have since given way to bank-issued currency, or Federal Reserve Notes, in the United States.
The primary difference between the United States Note and the Federal Reserve Note is that a United States Note is created by the government directly, and thus there is no interest for the Government to pay for the creation of that dollar. A Federal Reserve Note, on the other hand, is bank currency, and the U.S. has to pay interest on the treasury bonds that it gives the Federal Reserve System in exchange for the right to produce like number of Federal Reserve Notes.
Both United States Notes and Federal Reserve Notes are parts of the national currency of the United States and both are legal tender. They circulate as money in the same way. However, the issuing authority for them comes from different statutes. United States Notes (like the later Federal Reserve Notes) were fiat currency, in that they were never redeemable explicitly for any precious metal. During the Civil War, the banking interests did not want these notes to be a legal tender to pay the national debt, so the Senate depreciated the currency by putting an exception clause in, which allowed Government creditors to be paid in gold. Thaddeus Stevens, the Chairman of the House of Representatives Committee of Ways and Means which authored the original United States Notes bill to be a legal tender for ''all'' debts, viciously denounced the Senate's amended exception clause, calling the new bill "mischevious" because it made United States Notes an intentionally depreciated currency for the masses, while the banks who loaned to the government got "sound money" in gold. However, it was necessary to allow the banks the exception clause or otherwise there would have been no way to fund the Civil War effort.
The notes were not immediately redeemable in gold. However, while the United States was on the gold standard, it was possible to redeem them for gold indirectly by exchanging them for a currency of a different obligation, for example a Gold Certificate. Whoever accepted the exchange was left with the less-trusted fiat currency. At the time United States Notes were issued, this was a serious concern, as the government sought to strike a balance between coin shortages and fiat currency. The greenback traded at a substantial discount from gold, which prompted Congress to pass the short-lived Anti-gold futures act of 1864 which was promptly repealed after it seemed to accelerate the decline of the greenback.
After the abandonment of the gold standard in 1933, all types of issued currency (silver certificates, Federal Reserve notes, and United States Notes) were redeemable only for silver. This ceased to be the case in 1963, during a time in which all U.S. currency was becoming fiat currency. At this point, the United States Notes became obsolete, and no more were issued after about 1966. In order to meet the requirement of $300 million in "circulation", a series of $100 bills was printed in 1966, and comically moved from one Federal Reserve Bank to another every few weeks. These $100 notes, depending on condition, may be of significant numismatic value.
The act was repealed in 1970, and none has been placed into circulation since January 21, 1971. As is the case with all issue of the U.S. from 1861 onward, any United States Note is legal tender at its face value and may have a premium to collectors.

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External links

External links

★ U.S. Treasury Dept. information about United States Notes

★ Six Kinds of United States Paper Currency