Types of U.S. Currency
The United States has issued a number of different types of currency over the
years; the main difference between them is the way in which each type was backed or
guaranteed. Beginning with the first small-size notes in Series 1928, the different
types of currency were distinguished by different-colored Treasury seals and serial
numbers. (On the large-size currency prior to 1928, colors had no particular
significance.) Five distinct types have been issued as small-size notes:
- Federal Reserve Notes are the only note type still printed
today. They are also the type most recently introduced; they were first issued in
1914. These notes are backed by the U.S. government but issued by the twelve Federal
Reserve Banks, which are required by law to maintain assets sufficient to balance all
the notes issued. Small-size Federal Reserve Notes have green seals and serial
numbers.
- United States Notes were among the oldest types of circulating
U.S. currency, introduced during the Civil War. Also known as Legal Tender
Notes, these notes were direct obligations of the U.S. government; in
essence, they were pieces of the national debt. An act of Congress in 1878 required
the dollar value of these notes outstanding at any one time to be maintained at
$322,539,016.
By the 1960s, this amount had become a negligible percentage of all
circulating currency, so the Treasury decided that these notes no longer served any
useful purpose, and stopped actively circulating them. Still, the law requiring them
to exist was not repealed until 1994, and for the intervening twenty-five years,
roughly a million $100 U.S. Notes sat in a Federal Reserve vault to fulfill this
technicality. Small-size U.S. Notes have red seals and serial numbers.
- Silver Certificates were first issued in 1878. As the name
suggests, these notes were backed by the U.S. government's stockpile of silver, and
they could be redeemed for silver at the Treasury. Because of the rising price of
silver (and in order to free up the government's silver reserves for other uses),
production of Silver Certifcates was halted in 1963, and a deadline of June 24, 1968
was imposed for their redemption. Since that time, any Silver Certificates still in
circulation have not been redeemable in silver, but they do remain legal tender.
Small-size Silver Certificates have blue seals and serial numbers.
- Gold Certificates date back to 1863; these notes were redeemable
in gold coin at the U.S. Treasury. They were discontinued in 1933 when the U.S.
prohibited private ownership of gold, and unlike all other types of obsolete currency,
they were actually recalled and made illegal to own. (The Gold Certificates of Series
1934 were issued for use only between Federal Reserve Banks, and could not be held by
the public. Notes of this noncirculating series are distinguished from all other
small-size currency by the fact that their backs are printed in orange rather than
green.) The ban on possession of pre-1934 Gold Certificates was finally lifted in
1964, in order that surviving examples could be collected and traded openly; but, as
with the Silver Certificates, the pre-1934 Gold Certificates are no longer redeemable
in the metal. Small-size Gold Certificates have yellow seals and serial numbers.
- National Currency was introduced during the Civil War as well.
The purpose of these notes was to replace the often-worthless private currency that
had been issued by many banks and corporations until it was suppressed in 1865. Like
the earlier unregulated notes, National Bank Notes were issued and guaranteed by
private banks, but they were printed and regulated by the U.S. government, which
ensured that each issuing bank actually had the funds (and the intention) to redeem
the notes that it issued. A subtype of the Nationals, Federal Reserve Bank
Notes were an odd hybrid: they were National Currency issued by Federal
Reserve Banks, so that unlike ordinary Federal Reserve Notes, they were direct
obligations of the issuing bank, not the U.S. government. The production of National
Currency was halted in 1935. Small-size National Bank Notes have brown seals and
serial numbers.
A number of additional types were issued prior to 1928:
- Demand Notes were the first type of U.S. currency to be
printed for circulation; a one-time issue totalling $60,000,000 was authorised by
Congress in 1861 in order to provide emergency funding for the Civil War. Initially
these notes were to have been redeemable in gold on demand (hence their name), but it
soon became apparent that the government would not have sufficient gold to redeem all
the notes that were being presented, so they were made legal tender instead. Alone
among all U.S. currency, these notes carry the handwritten signatures of various
Treasury Department clerks, rather than the engraved signatures of high Treasury
officials.
- Fractional Currency, in denominations of less than $1, was issued
from 1862 to 1876 in response to a shortage of silver coin (due partially to public
hoarding in the face of the Civil War, and partially to higher silver prices abroad
which encouraged its export for melting at a profit). The initial issue was
designated as Postage Currency; the notes resembled postage stamps in
design, and some even had perforated edges. Later issues of Fractional Currency were
similar in appearance to other contemporary currency, though smaller in size.
- National Gold Bank Notes were another subtype of the National
Currency. Like the regular National Bank Notes, they were primarily obligations of
private banks; but they were also redeemable in gold, which the issuing banks were
required to keep on reserve. These notes were first authorised in 1870, mainly for
the purpose of overcoming public resistance to paper currency in California, where the
economy was still largely based on gold only. No bank outside California ever issued
these notes; but in fact few banks in California did so either. Eventually
the banks issuing these notes were given permission to revert to ordinary National
Currency, and all did so by 1884.
- Currency Certificates were issued in small numbers beginning in
1872. These notes, in denominations of $5000 and $10000, were intended to facilitate
large cash transactions between banks; they were redeemable only in U.S. Notes. At
the time, the only other notes of such large value were Gold Certificates, and these
were in short supply as the Treasury's gold reserves were still depleted after the
Civil War. As Gold Certificates became more available, the need for the Currency
Certificates disappeared, and they were discontinued in 1900.
- Treasury Notes, also known as Coin Notes, were
introduced in 1890. Congress required the Treasury to pay out these notes when
purchasing silver bullion, and to redeem them "in coin"--but, significantly, not
necessarily in silver coin. The creation of these notes was a massive favor
to the politically powerful silver mining industry: In the late 19th century, so much
silver was being mined in the U.S. that its value was declining sharply. By selling
silver to the Treasury for Coin Notes and immediately redeeming these in gold
coin, the silver mines obtained much larger profits than they could otherwise. The
silver industry took such advantage of this situation that the U.S. Treasury was
perilously close to bankruptcy by 1893, at which time President Cleveland ordered that
the Coin Notes be redeemed in silver only. Deprived of their political purpose, these
notes were no longer in much demand, and they were discontinued a few years
later.
- Additionally, several types of early interest-bearing notes functioned as
something intermediate between circulating currency and government securities.
Interest-Bearing Treasury Notes were issued intermittently from 1812
until the Civil War era; but each time these were issued, they were intended more as
an emergency measure to resolve a temporary shortage of funds than as what we would
consider regular currency. Continuing in this tradition, Compound Interest
Treasury Notes were Civil War emergency issues. Each note of these types
stated not only its initial face value but also its interest rate--and it appears that
these notes actually did manage to circulate, though it must have been awkward to have
to compute their current value when spending or receiving them! A later
interest-bearing issue, the Refunding Certificates of 1879, were
something like our modern Savings Bonds; they were created as a convenient investment
for the average citizen. They were, however, payable to bearer, and they saw at least
some limited circulation.
Denominations of U.S. currency
U.S. currency has been issued in denominations ranging from three cents to
$100,000. The chronologies of small-size and large-size notes show which types were issued in which
denominations at various times. In general, most types were issued in a wider range
of denominations during the large-size era than during the small-size era. For
example, silver certificates of up to $1000 were issued in several series before 1900,
but small-size silver certificates were printed only in the $1, $5, and $10
denominations. Aside from the Fractional Currency, however, the denominations printed
as small-size notes are all those that the U.S. has ever issued: $1, $2, $5, $10, $20,
$50, $100, $500, $1000, $5000, $10,000, and $100,000. (An 1865 law did allow for a $3
National Bank Note, and designs were engraved for a potential $3 Legal Tender Note
around the same time, but in each case no $3 notes were ever actually printed for
circulation.) Fractionals were issued in denominations of 3¢, 5¢, 10¢, 15¢, 25¢, and
50¢.
Denominations larger than $100 were withdrawn from circulation in 1969 due to lack
of demand--indeed, none of these notes had been printed since the 1940s. Surviving
high-denomination notes are still removed from circulation and destroyed whenever they
reach the Federal Reserve or the Treasury, but most of those still in the hands of the
public are held by collectors. The $100,000 note has never reached the public at all:
It was issued only as a Series 1934 gold certificate, and that series was not
authorised for release outside the Federal Reserve System, so none of these notes have
ever entered general circulation.
Contrary to popular belief, the $2 note is still a circulating denomination. From
1928 to 1966, the $2 denomination was printed only as a United States Note, and in
fact the $2 was discontinued in 1966 when small-denomination U.S. Notes went out of
production. But a $2 Federal Reserve Note, with a different back design commemorating
the Declaration of Independence, was introduced in 1976 for the Bicentennial, and $2
FRNs are still printed and issued as demand requires.
Main Page