History of the Federal Reserve Note

Usually referred to simply as U.S. money, a Federal Reserve Note is a banknote that acts as legal tender throughout the U.S. and other countries. These notes are not issued by the United States government but by a private banking system known as the Federal Reserve. This system has completely replaced traditional United States Notes, essentially acting as a credit note.

History

Following the establishment of the Federal Reserve System in 1913, one more year of gold certificates were issued to the U.S. Each stated it was redeemable for the dollar value of gold at a bank or the US Treasury.

Considerations

In 1914, the first Federal Reserve Note was released. This was labeled as being able to be exchanged for U.S. Treasury debt, but not redeemable in actual gold.

Significance

The final U.S. Gold Certificates were discontinued and collected in 1934. This officially ended the practice of exchanging paper money for gold.

Misconceptions

In 1963, the modern one dollar Federal Reserve Note was introduced. This is the first note that did not feature the description of "redeemable at any location." It is considered legal tender, but cannot be exchanged for U.S. debt or gold.

Effects

Due to the overwhelming amount of counterfeiting, the Federal Reserve introduced more modern notes as of 1997. They feature magnetic strips, varying colors and watermarks.

Resources

• History of Money Federal Reserve System
• Federal Reserve Note vs. United States Notes
• Legal Tender Status
• Federal Reserve Notes FAQ