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United States Paper Currency Thread, Whats the difference between Legal Tender Notes and Federal Reverse Notes in Currency Forums; Whats the difference between Legal Tender Notes and Federal Reverse Notes? Sorry, I am not a big currency collector and ...
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    Administrator Jesh's Avatar
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    Whats the difference between Legal Tender Notes and Federal Reverse Notes

    Whats the difference between Legal Tender Notes and Federal Reverse Notes? Sorry, I am not a big currency collector and never really followed it. I like the designs on the currency, that is about it.

    Can someone explain the difference of these two??

  2. #2
    Junior Numismatic raider34's Avatar
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    Quote Originally Posted by Jesh View Post
    Whats the difference between Legal Tender Notes and Federal Reverse Notes? Sorry, I am not a big currency collector and never really followed it. I like the designs on the currency, that is about it.

    Can someone explain the difference of these two??
    The difference? Good old politics and laws .

    Here's from the Treasury Dept: https://ustreas.gov/education/faq/cu...l-tender.shtml

    United States Notes (characterized by a red seal and serial number) were the first national currency, authorized by the Legal Tender Act of 1862 and began circulating during the Civil War. 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. It established a statutory limitation of $300 million on the amount of United States Notes authorized to be outstanding and in circulation. While this 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.

    Both United States Notes and Federal Reserve Notes are parts of our national currency 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 were redeemable in gold until 1933, when the United States abandoned the gold standard. Since then, both currencies have served essentially the same purpose, and have had the same value. Because United States Notes serve no function that is not already adequately served by Federal Reserve Notes, their issuance was discontinued, and none have been placed in to circulation since January 21, 1971.

    The Federal Reserve Act of 1913 authorized the production and circulation of Federal Reserve notes. Although the Bureau of Engraving and Printing (BEP) prints these notes, they move into circulation through the Federal Reserve System. They are obligations of both the Federal Reserve System and the United States Government. On Federal Reserve notes, the seals and serial numbers appear in green.

    United States notes serve no function that is not already adequately served by Federal Reserve notes. As a result, the Treasury Department stopped issuing United States notes, and none have been placed into circulation since January 21, 1971.

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    Junior Numismatic raider34's Avatar
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    Here's a little more of the Fed notes: https://ustreas.gov/education/faq/cu...l-tender.shtml

    Federal Reserve notes are legal tender currency notes. The twelve Federal Reserve Banks issue them into circulation pursuant to the Federal Reserve Act of 1913. A commercial bank belonging to the Federal Reserve System can obtain Federal Reserve notes from the Federal Reserve Bank in its district whenever it wishes. It must pay for them in full, dollar for dollar, by drawing down its account with its district Federal Reserve Bank.

    Federal Reserve Banks obtain the notes from our Bureau of Engraving and Printing (BEP). It pays the BEP for the cost of producing the notes, which then become liabilities of the Federal Reserve Banks, and obligations of the United States Government.

    Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the Federal Reserve notes that the Bank receives. This collateral is chiefly gold certificates and United States securities. This provides backing for the note issue. The idea was that if the Congress dissolved the Federal Reserve System, the United States would take over the notes (liabilities). This would meet the requirements of Section 411, but the government would also take over the assets, which would be of equal value. Federal Reserve notes represent a first lien on all the assets of the Federal Reserve Banks, and on the collateral specifically held against them.

    Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything This has been the case since 1933. The notes have no value for themselves, but for what they will buy. In another sense, because they are legal tender, Federal Reserve notes are "backed" by all the goods and services in the economy.

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    Administrator Jesh's Avatar
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    Thanks Raider. Just wanted to know what that was all about in case I had to move currency images

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    New Member Chester's Avatar
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    According to my knowledge both the US Treasury and the Federal Reserve admit Federal Reserve Notes are neither 'Dollars' nor 'Lawful Money.
    Most Americans today don't realize that there's a very broad difference between 'Legal Tender' and 'Lawful Money'.
    Interestingly, the Federal Reserve began issuing the new bills with the deletions and collecting the old bills the same day JFK was buried when the publics attention was distracted
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    Last edited by Chester; 03-05-2011 at 01:36 AM.

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    Junior Numismatic krispy's Avatar
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    Some further reading at USPAPERMONEY.INFO regarding changes beginning in 1963: The FRNs stand alone

 

 

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