The Legal Tender Cases were two 1871 United States Supreme Court cases that affirmed the constitutionality of paper money . The two cases were Knox v. Lee and Parker v. Davis .
72-912: The U.S. federal government had issued paper money known as United States Notes during the American Civil War , pursuant to the terms of the Legal Tender Act of 1862. In the 1869 case of Hepburn v. Griswold , the Court had held that the Legal Tender Act violated the Due Process Clause of the Fifth Amendment to the United States Constitution . In his majority opinion, Chief Justice Salmon P. Chase did not hold that Congress lacked
144-467: A 5–3 majority of the Court that the Act was an unconstitutional violation of the Due Process Clause of the Fifth Amendment : It is quite clear, that whatever may be the operation of such an act, due process of law makes no part of it. Does it deprive any person of property? A very large proportion of the property of civilized men exists in the form of contracts. These contracts almost invariably stipulate for
216-637: A form of fiat currency . During the early 1860s the so-called second obligation on the reverse of the notes stated: This Note is a Legal Tender for all debts public and private except Duties on Imports and Interest on the Public Debt; and is receivable in payment of all loans made to the United States. By the 1930s, this obligation would eventually be shortened to: This note is a legal tender at its face value for all debts public and private They were originally issued directly into circulation by
288-536: A large part of government tax revenue and by making these payable in gold, the government would generate the coin necessary to make the interest payments on the bonds. Lastly, by making the bonds available for purchase at par in United States Notes, the value of the latter would be confirmed as well. The limitations of the legal tender status were quite controversial. Thaddeus Stevens , the Chairman of
360-653: A legal tender, but were made redeemable under regulations to be prescribed by the Secretary of the Treasury. In February, 1863, the issue of three hundred millions of dollars in notes of the National banking associations was authorized. These notes were made receivable to the same extent as United States notes, and provision was made to secure their redemption, but they were not made a legal tender. In Hepburn v. Griswold (1870), Chief Justice Salmon P. Chase held for
432-700: A new cause in the Free Silver movement . Opposition to the resumption of specie convertibility of the Greenbacks during 1879 was accordingly muted. Juilliard v. Greenman Juilliard v. Greenman , 110 U.S. 421 (1884), was a Supreme Court of the United States case in which issuance of greenbacks as legal tender in peacetime was challenged. The Legal Tender Acts of 1862 and 1863 were upheld. Augustus D. Juilliard sold and delivered 100 bales of cotton to Thomas S. Greenman for $ 5,122.90. Greenman tendered $ 5,100 in United States legal tender notes and
504-422: A recall of those notes already in circulation. This provision means that United States Notes are to be canceled and destroyed but not reissued. This will eventually result in a decrease in the amount of these notes outstanding. As of December 2012 , the U.S. Treasury calculates that $ 239 million in United States Notes are in circulation and, in accordance with debt ceiling legislation , excludes this amount from
576-437: A revised limit of $ 300,000,000 , and required the government to redeem them for gold, on demand, after January 1, 1879. As a result, the currency strengthened and by April 1876, the notes were on par with silver coins which then began to re-emerge into circulation. On May 31, 1878, the contraction in the circulation was halted at $ 346,681,016 —a level which would be maintained for almost 100 years afterwards. While $ 346,681,016
648-516: Is inconsistent with the spirit of the Constitution; and that it is prohibited by the Constitution. Ironically, Chief Justice Chase had played a role in formulating the Legal Tender Act of 1862, in his previous position as Secretary of the Treasury . On the same day that Hepburn was decided, President Ulysses Grant nominated two new justices to the Court, Joseph Bradley and William Strong , although Grant later denied that he had known about
720-568: Is involved in that of borrowing." The power to emit paper money (e.g. bank notes ) has been justified by invoking the Necessary and Proper Clause in combination with the other enumerated powers which include the power to borrow money. The power to "issue bills of credit" is explicitly mentioned in the Constitution as a prohibition on the States, and could therefore be interpreted as a power so momentous that it would have to be conferred explicitly on
792-654: Is that a United States Note represented a "bill of credit" and, since it was issued by the government itself and does not involve either lending or borrowing, was inserted by the Treasury directly into circulation free of interest. 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
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#1732765110040864-507: Is that, under the original meaning of the Constitution, the issuance of paper money as legal tender would be unconstitutional, sending our economy into disarray." Regarding paper money, Nathaniel Gorham explained at the Constitutional Convention that he "was for striking out" an explicit power of Congress to issue paper money, but Gorham was also against "inserting any prohibition". That is what ultimately happened at
936-400: The American Civil War . The paper money depreciated in terms of gold and became the subject of controversy, particularly because debts contracted earlier could be paid in this cheaper currency. Chief Justice Chase described the sequence of events: Now, then, let it be considered what has actually been done in the provision of a National currency. In July and August, 1861, and February, 1862,
1008-458: The U.S. Treasury to pay expenses incurred by the Union during the American Civil War . During the next century, the legislation governing these notes was modified many times and numerous versions were issued by the Treasury. United States Notes that were issued in the large-size format, before 1929, differ dramatically in appearance when compared to modern American currency, but those issued in
1080-565: The U.S. Treasury Seal and the serial numbers are printed in red (contrasting with Federal Reserve Notes, where they appear in green). By the time the treasury adopted the small-size format in 1928, the Federal Reserve System had existed for fifteen years and there had been a decline in the need for United States Notes; the notes were mainly issued in $ 2 and $ 5 denominations in the Series years of 1928, 1953, and 1963. There
1152-418: The gold recall of 1933. Both have been used in circulation as money in the same way. However, the issuing authority for them came from different statutes. United States Notes are, depending on their issue, redeemable directly for precious metal – as after the specie resumption of 1879 which authorized federal officials to do so if requested. The difference between a United States Note and a Federal Reserve Note
1224-427: The statutory debt limit of the United States. The $ 239 million excludes $ 25 million in United States Notes issued prior to July 1, 1929, determined pursuant to Act of June 30, 1961, 31 U.S.C. 5119, to have been destroyed or irretrievably lost. The United States Notes were introduced as fiat money rather than the precious metal medium of exchange that the United States had traditionally used. Their introduction
1296-589: The "reserve" to counteract seasonal demands for currency, and eventually expanded the circulation of the Greenbacks to $ 382,000,000 in response to the Panic of 1873 . In June 1874, Congress established a maximum for Greenback circulation of $ 382,000,000 , and in January 1875, approved the Specie Payment Resumption Act , which authorized a reduction of the circulation of Greenbacks towards
1368-473: The Constitution specifically gives Congress power to "borrow money" and also power to "coin money and regulate the value" of both U.S. and foreign coins, and regulate interstate commerce, but does not explicitly and unambiguously grant Congress the power to print paper money or make it legal tender. The federal government first issued paper money in 1861 to fund the Civil War. Before that, all U.S. paper money
1440-546: The Convention: language explicitly giving the federal government power to issue legal tender paper money was removed on a vote of 9–2, but an option allowing the issuance together with a prohibition against making it legal tender was not acted upon. Article I, Section 8 of the Constitution gives Congress power to "borrow money on the credit of the United States", and therefore Gorham envisioned that "The power [e.g. to emit promissory paper], as far as it will be necessary or safe,
1512-430: The Court, and President Grant appointed two new Republicans , Strong and Bradley , who joined the three sitting Republicans, Swayne , Miller , and Davis , to reverse Hepburn, 5–4, in the 1871 cases Knox v. Lee and Parker v. Davis . In 1884, the Court, controlled 8–1 by Republicans, granted the federal government very broad power to issue Legal Tender paper through the case Juilliard v. Greenman , with only
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#17327651100401584-783: 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. Like all U.S. currency, United States Notes were produced in a large sized format until 1929, at which time the notes' sizes were reduced to the small-size format of the present day. Per the Treasury Department Appropriation Bill of 1929, notes issued before October 1928 were 7 + 7 ⁄ 16 × 3 + 9 ⁄ 64 inches and later issues were to be 6 + 5 ⁄ 16 × 2 + 11 ⁄ 16 inches, which allowed
1656-505: The House of Representatives Committee of Ways and Means, which had authored an earlier version of the Legal Tender Act that would have made United States Notes a legal tender for all debts, denounced the exceptions, calling the new bill "mischievous" 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. This controversy would continue until
1728-585: The Riegle act, the treasury considered releasing its large remaining stockpile of unissued $ 100 United States Notes into general circulation, but with the recently redesigned series 1996 $ 100 Federal Reserve Note, it was decided confusion would likely arise with the sudden appearance of two very different $ 100 notes in circulation. The Treasury announced in 1996 that the remaining stock of $ 100 United States Notes had been destroyed. Both United States Notes and Federal Reserve Notes have been legal tender since
1800-462: The Secretary's argument. With an eventual return to gold convertibility in mind, the Funding Act of April 12, 1866 was passed, authorizing McCulloch to retire $ 10 million of the Greenbacks within six months and up to $ 4 million per month thereafter. This he proceeded to do until only $ 356,000,000 were outstanding during February 1868. By this time, the wartime economic prosperity was ended,
1872-489: The Treasury Department to produce 12 notes per 16 + 1 ⁄ 4 × 13 + 1 ⁄ 4 inch sheet of paper that previously would yield 8 notes at the old size. The original large-sized Civil War issues were dated 1862 and 1863, and issued in denominations of $ 1 , $ 2 , $ 5 , $ 10 , $ 20 , $ 50 , $ 100 , $ 500 and $ 1,000 . The United States Notes were dramatically redesigned for the Series of 1869,
1944-538: The Treasury converted the outstanding balance into new $ 100 United States Notes, the majority of which sat unissued in bank vaults. Series 1966 and Series 1966A $ 100 United States Notes were printed from 1966 to 1969, with distribution into public circulation officially ending January 21, 1971. In September 1994, the Riegle Improvement Act released the Treasury from its long-standing obligation to keep United States Notes in circulation. Just prior to
2016-582: The U.S. Treasury to issue $ 150 million in notes as legal tender. This caused tremendous controversy in Congress, as hitherto the Constitution had been interpreted as not granting the government the power to issue a paper currency. "The bill before us is a war measure, a measure of necessity , and not of choice," Spaulding argued before the House, adding, "These are extraordinary times, and extraordinary measures must be resorted to in order to save our Government, and preserve our nationality." Spaulding justified
2088-773: The Union's expenses increasing, and the government was having trouble funding the escalating war. U.S. Demand Notes—which were used, among other things, to pay Union soldiers—were unredeemable, and the value of the notes began to deteriorate. Congressman and Buffalo banker Elbridge G. Spaulding prepared a bill, based on the Free Banking Law of New York, that eventually became the National Banking Act of 1863 . Recognizing, however, that his proposal would take many months to pass Congress, during early February Spaulding introduced another bill to permit
2160-405: The United States," a distinction was clearly made between debt and coin. He also cited many quotes by the founders against paper money, including the following by James Madison : "The pretext for paper currency, and particularly for making the bills a tender either for public or private debts, was cut off." Finally, Justice Field wrote "For nearly three-quarters of a century after the adoption of
2232-578: The United States. Having been current for 109 years, they were issued for longer than any other form of U.S. paper money other than the currently issued Federal Reserve Note . They were known popularly as " greenbacks ", a name inherited from the earlier greenbacks , the Demand Notes , that they replaced in 1862. Often termed Legal Tender Notes, they were named United States Notes by the First Legal Tender Act, which authorized them as
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2304-522: The action as a " necessary means of carrying into execution the powers granted in the Constitution 'to raise and support armies', and 'to provide and maintain a navy ' ". Despite strong opposition, President Abraham Lincoln signed the First Legal Tender Act , enacted February 25, 1862, into law, authorizing the issuance of United States Notes as a legal tender —the paper currency soon to be known as "greenbacks". Initially,
2376-432: The appearance of fiat currency had per Gresham's law driven even silver coinage out of circulation. As a result of this inflation , the greenback began to trade at a substantial discount from gold, which prompted Congress to pass the short-lived Anti-Gold Futures Act of 1864 , which was soon repealed after it seemed to accelerate the decrease of greenback value. The largest amount of greenbacks outstanding at any one time
2448-475: The convenience of the government, was authorized, subject to certain restrictions as to fifty millions. These notes were made receivable for the bonds of the National loans, for all debts due to or from the United States, except duties on imports and interest on the public debt, and were also declared a legal tender. In March, 1863, the issue of notes for parts of a dollar was authorized to an amount not exceeding fifty millions of dollars. These notes were not declared
2520-522: The crop harvest was poor, and a financial panic in Great Britain caused a recession and a sharp decrease of prices in the United States. The contraction of the money supply was blamed for the deflationary effects, and caused debtors to agitate successfully for a halt to the notes' retirement. During the early 1870s, Treasury Secretaries George S. Boutwell and William Adams Richardson maintained that, though Congress had mandated $ 356,000,000 as
2592-609: The currency. At the end of the American Civil War , some economists, such as Henry Charles Carey , argued for building on the precedent of non-interest-based fiat money and making the greenback system permanent. However, Secretary of the Treasury McCulloch argued that the Legal Tender Acts had been war measures, and that the United States should soon reverse them and return to the gold standard . The House of Representatives voted overwhelmingly to endorse
2664-711: The decision in Hepburn when the nominations were made. Justices Bradley and Strong subsequently voted to reverse the Hepburn decision, in Knox v. Lee and Parker v. Davis , by votes of 5–4. The constitutionality of the Act was more broadly upheld thirteen years later in Juilliard v. Greenman . Article I, Section 10 of the Constitution explicitly forbids the states from issuing "bills of credit" (promissory notes) or making anything but gold and silver coin legal "tender". There are no corresponding explicit prohibitions limiting
2736-629: The emission was limited to $ 150,000,000 total face value between the new Legal Tender Notes and the existing Demand Notes. The Act also intended for the new notes to be used to replace the Demand Notes as soon as practical. The Demand Notes had been issued in denominations of $ 5 , $ 10 , and $ 20 , and these were replaced by United States Notes nearly identical in appearance on the obverse. In addition, notes of entirely new design were introduced in denominations of $ 50 , $ 100 , $ 500 and $ 1,000 . The Demand Notes' printed promise of payment "On Demand"
2808-684: The federal government rather than inferred from the Necessary and Proper Clause, although it is not entirely clear whether or not the framers intended such an interpretation, nor did the Supreme Court adopt such an interpretation in the Legal Tender Cases or subsequently. James Madison 's notes, from the Constitutional Convention in 1787, include a footnote where he says that the Constitution would not allow
2880-573: The federal government to use paper as currency or legal tender, though there is no indication whether or not the contents of his footnote were uttered aloud at the Convention. Thereafter, during the ratification debates, the Federalist Papers No. 44 (assumed to be authored by Madison) said that prohibiting states from emitting "bills of credit must give pleasure to every citizen, in proportion to his love of justice and his knowledge of
2952-645: The first year of the American Civil War , the expenses incurred by the Union Government much exceeded its limited revenues from taxation, and borrowing was the main vehicle for financing the war. The Act of July 17, 1861 authorized United States Secretary of the Treasury Salmon P. Chase to raise money via the issuance of $ 50,000,000 in Treasury Notes payable on demand. These Demand Notes were paid to creditors directly and used to meet
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3024-468: The general public, there was then little to distinguish United States Notes from Federal Reserve Notes. As a result, the public circulation of United States Notes, in the form of $ 2 and $ 5 bills was discontinued in August 1966, and replaced with $ 5 Federal Reserve Notes and, eventually, $ 2 Federal Reserve Notes as well. United States Notes became rare in hand-to-hand commerce and also beginning in 1966,
3096-515: The government to make their notes legal tender would interfere with third-party contractual obligations, as third parties would be compelled by law to accept notes instead of coin . He argued that a private corporate bond could not require an amusement park to accept the bond in exchange for entry. To find that the term to borrow money as written in the Constitution , according to him, would allow interference in third-party contracts and improve
3168-415: The government to pay interest on its bonds. The Act did provide that the notes be receivable by the government for short term deposits at 5% interest, and for the purchase of 6% interest 20-year bonds at par. The rationale for these terms was that the Union government would preserve its credit-worthiness by supporting the value of its bonds by paying their interest in gold. Early in the war, customs duties were
3240-399: The greenbacks as part of the circulating medium. While the United States Notes had been used as a form of debt issuance during the Civil War, afterwards they were used as a way of moderately influencing the money supply by the federal government—such as through the actions of Boutwell and Richardson. During the Panic of 1907 , President Theodore Roosevelt attempted to increase liquidity in
3312-481: The intentions of those framers who may have believed that paper money should be prohibited: "Scholarship suggests that the Framers intended to prohibit paper money. Any judge who thought today he would go back to the original intent really ought to be accompanied by a guardian rather than be sitting on a bench." According to law professor Michael Stokes Paulson, "Among the most common canards in critiques of originalism
3384-496: The issuance of legal tender paper money, at the time called "bills of credit". In Hepburn , Chief Justice Chase noted, "No one questions the general constitutionality, and not very many, perhaps, the general expediency of the legislation by which a note currency has been authorized in recent years. The doubt is as to the power to declare a particular class of these notes to be a legal tender in payment of pre-existing debts." Originalists like Robert Bork have objected to enforcing
3456-405: The issue of sixty millions of dollars in United States notes, payable on demand, was authorized. They were made receivable in payments, but were not declared a legal tender until March, 1862, when the amount in circulation had been greatly reduced by receipt and cancellation. In 1862 and 1863 the issue of four hundred and fifty millions in United States notes, payable not on demand, but, in effect, at
3528-556: The latter having been created specifically to address the desire for hard money in California . During the 1870s and 1880s, the Greenback Party existed for the primary purpose of advocating an increased circulation of United States Notes as a way of creating inflation according to the quantity theory of money . However, as the 1870s unfolded, the market price of silver decreased with respect to gold, and inflationists found
3600-417: The lone remaining Democrat, Field, dissenting. The states in the far west stayed loyal to the Union, but also had hard money sympathies. During the specie suspension from 1862 to 1878, western states used the gold dollar as a unit of account whenever possible and accepted greenbacks at a discount wherever they could. The preferred forms of paper money were gold certificates and National Gold Bank Notes ,
3672-716: The markets by authorizing the Treasury to issue more Greenbacks, but the Aldrich–Vreeland Act provided for the needed flexibility by the National Bank Note supply instead. Eventually, the perceived need for an elastic currency was addressed with the Federal Reserve Notes authorized by the Federal Reserve Act of 1913 , and attempts to alter the circulating quantity of United States Notes ended. Soon after private ownership of gold
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#17327651100403744-508: The minimum Greenback circulation, the old Civil War statutes still authorized a maximum of $ 400,000,000 —and thus they had at their discretion a "reserve" of $ 44,000,000 . While the Senate Finance Committee under John Sherman disagreed, being of the opinion that the $ 356,000,000 was a maximum as well as a minimum, no legislation was passed to assert the committee's opinion. Starting in 1872, Boutwell and Richardson used
3816-486: The payment of money. And we have already seen that contracts in the United States, prior to the act under consideration, for the payment of money, were contracts to pay the sums specified in gold and silver coin. We are obliged to conclude that an act making mere promises to pay dollars a legal tender in payment of debts previously contracted, is not a means appropriate, plainly adapted, really calculated to carry into effect any express power vested in Congress; that such an act
3888-430: The payroll of soldiers in the field. While issued within the legal framework of Treasury Note Debt, the Demand Notes were intended to circulate as currency and were of the same size as banknotes and closely resembled them in appearance. During December 1861, economic conditions deteriorated and a suspension of specie payment caused the government to cease redeeming the Demand Notes as coins. The beginning of 1862 found
3960-480: The power "of making the notes of the United States a legal tender in payment of private debts" was interpreted as "included in the power to borrow money and to provide a national currency". Justice Field dissented, challenging the court's interpretation of the terms to "borrow" and to "coin" money. He explained that the term to borrow money was well settled in other instruments, such as municipal and corporate bonds and private contracts . He contended that allowing
4032-497: The power of the federal government, nor are there any explicit authorizations. The Tenth Amendment refers to reserved powers that only the states can exercise, as well as powers not delegated that continue to reside in the people. " Concurrent powers " also exist, which may be exercised by either the states or the federal government, such as the power to repel invasions, and arguably including power to make legal tender (e.g. in federal territories or elsewhere). Article I, Section 8 of
4104-493: The power to issue paper money, but rather ruled that the notes could not be used as legal tender for pre-existing debts. The Supreme Court overruled Hepburn v. Griswold in the Legal Tender Cases , holding that United States Notes could be used to repay preexisting debts. The Legal Tender Cases primarily involved the constitutionality of the Legal Tender Act of 1862, 12 Stat. 345 , enacted during
4176-659: The removal of the exceptions during 1933. By the First Legal Tender Act, Congress limited the Treasury's emission of United States Notes to $ 150,000,000 ; however, by 1863, the Second Legal Tender Act , enacted July 11, 1862, a Joint Resolution of Congress, and the Third Legal Tender Act , enacted March 3, 1863, had expanded the limit to $ 450,000,000 , the option to exchange the notes for United States bonds at par had been revoked, and notes of $ 1 and $ 2 denominations had been introduced as
4248-456: The rest in coin, but Juilliard would not accept the U.S. notes. The tendered notes were originally issued under an act of Congress passed on February 25, 1862, and March 3, 1863, during the Civil War. An act of May 31, 1878 provided to "forbid the further retirement of United States legal tender notes." In an 8–1 decision resting largely on prior court cases, particularly the jointly-decided cases Knox v. Lee (1871) and Parker v. Davis (1871),
4320-712: The small-size format, starting 1929, are very similar to contemporary Federal Reserve Notes of the same denominations with the distinction of having red U.S. Treasury Seals and serial numbers in place of green ones. Also, while a variety of denominations were issued as United States Notes during the large-size era, only the $ 1, $ 2, $ 5, and $ 100 denominations were ever issued as small-size notes. Existing United States Notes are still fully usable and are considered legal tender . However, as no United States Notes have been issued since January 1971, all issues have all but disappeared from circulation, and command higher prices than face value as items of numismatic interest. During 1861,
4392-403: The so-called Rainbow Notes . The notes were again redesigned for the Series of 1874, 1875 and 1878. The Series of 1878 included, for the first and last time, notes of $ 5,000 and $ 10,000 denominations. The final across-the-board redesign of the large-sized notes was the Series of 1880. Individual denominations were redesigned in 1901, 1907, 1917 and 1923. On small-sized United States Notes,
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#17327651100404464-423: The true springs of public prosperity." He further stated that the issuance of paper money by the states had resulted in "an accumulation of guilt, which can be expiated no otherwise than by a voluntary sacrifice of the power which has been the instrument of it." United States Notes A United States Note , also known as a Legal Tender Note , is a type of paper money that was issued from 1862 to 1971 in
4536-502: The use of greenbacks when applied to debts established prior to the First Legal Tender Act as the five Democrats on the Court, Nelson , Grier , Clifford , Field , and Chase , ruled against the Civil War legislation in a 5–3 decision. Secretary Chase had become Chief Justice of the United States and a Democrat, and spearheaded the decision invalidating his own actions during the war. However, Grier retired from
4608-429: The value of the note, but it would deviate from the meaning of the term "to borrow money". He asserted that the meaning of the terms "to coin money" was certain: "It is to mould metallic substances into forms convenient for circulation and to stamp them with the impress of the government." He argued that in the clause authorizing Congress "to provide for the punishment of counterfeiting the securities and current coin of
4680-537: Was a limited issue of $ 1 notes in the Series of 1928 , most of which were released in 1948 in Puerto Rico , and an issue of $ 100 notes in the Series year of 1966, mainly to satisfy the legacy legal requirement of maintaining the mandated quantity in circulation after the $ 2 and $ 5 denominations had been discontinued in August 1966. The BEP also printed but did not issue $ 10 notes in the 1928 Series. An example
4752-488: Was a significant figure at the time, it is now a very small fraction of the total currency in circulation in the United States. The year 1879 found Sherman, now Secretary of the Treasury, in possession of sufficient specie to redeem notes as requested, but as this brought the value of the greenbacks into parity with gold for the first time since the Specie Suspension of December 1861, the public voluntarily accepted
4824-622: Was bank-issued money. For example, paper notes were issued by the First Bank of the United States , which was a private corporation chartered by the federal government. Congress had also authorized paper money (e.g. Continentals ) even before the Constitution was adopted. The Continental was issued by both the individual states and the Continental Congress under the Articles of Confederation . Those Articles specifically allowed
4896-472: Was banned in 1933 (a ban that would be lifted in 1974), all of the remaining types of circulating currency, National Bank Notes , silver certificates , Federal Reserve Notes , and United States Notes, were redeemable by individuals only for silver . Eventually, even silver redemption stopped in June 1968, during a time in which all U.S. currency (both coins and paper currency) was changed to fiat currency . For
4968-469: Was calculated as $ 447,300,203.10 . The Union's reliance on expanding the circulation of greenbacks eventually ended with the emission of Interest Bearing and Compound Interest Treasury Notes , and the passage of the National Banking Act . However, the end of the war found the greenbacks trading for only about half of their nominal value in gold. The Secret Service was founded on July 5, 1865, to minimize counterfeiting , which accounted for up to half of
5040-552: Was displayed at the 1933 Worlds Fair in Chicago. Section 5119(b)(2) of Title 31, United States Code, was amended by the Riegle Community Development and Regulatory Improvement Act of 1994 (Public Law 103–325) to read as follows: "The Secretary shall not be required to reissue United States currency notes upon redemption." This does not change the legal tender status of United States Notes nor does it require
5112-445: Was removed and the statement "This Note is a Legal Tender" was added. Legal tender status guaranteed that creditors would have to accept the notes despite the fact that they were not backed by gold, bank deposits, or government reserves, and had no interest. However, the First Legal Tender Act did not make the notes an unlimited legal tender as they could not be used by merchants to pay customs duties on imports and could not be used by
5184-634: Was thus contentious. The United States Congress had enacted the Legal Tender Acts during the U.S. Civil War when southern Democrats were absent from the Congress, and thus their Jacksonian hard money views were underrepresented. After the war, the Supreme Court ruled on the Legal Tender Cases to determine the constitutionality of the use of greenbacks. The 1870 case Hepburn v. Griswold found unconstitutional
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