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What are Federal Reserve Bank Notes?

2017-04-16T13:28:12+00:00

The term 'Federal Reserve Bank Notes' is included in the Economics edition of the Financial Dictionary. Get yours now on amazon in ebook or paperback format. Read more here...

Federal Reserve Bank Notes were the bank notes in the United States that were issued from 1915 to 1934. They are legal tender and acceptable in transactions in the United States. They exist alongside other historical anomalies of American paper notes, including U.S. silver certificates, United States Notes, National Bank Notes, Gold Certificates, and Federal Reserve Notes.

Federal Reserve Bank Notes possessed the exact same value as other types of notes with identical face value. These bank notes from the Federal Reserve are different from traditional Federal Reserve Notes because they are actually specifically backed up by one of the branches of the twelve regional Federal Reserve Banks instead of all of them in common. They also had the backing of U.S. bonds as with National Bank Notes. The difference is that the Federal Reserve Banks were the ones to issue them instead of the chartered National Banks. These Federal Reserve Bank Notes ceased to be issued in 1934 and are not available in circulation any longer. Since 1971, there are only the Federal Reserve Notes of the various United States bank notes that are produced and released.

It was in the year 1915 that the first larger sized Federal Reserve Bank Notes appeared. These were printed with denominations of $20, $10, and $5. They possessed a design with common elements relevant to the Federal Reserve Notes and the National Bank Notes of that day and age. By 1918, they had begun issuing $50, $2, and $1 denominations as well.

Smaller sized Federal Reserve Bank Notes appeared in 1933 in the form of a special emergency issue. They utilized the identical paper stock to the National Bank Notes. These came in denominations of from $100 down to $5 notes. A distinctive feature of such National Bank Notes was their line for the signature of the National Bank President. These smaller Federal Reserve Bank Notes contained a bar above the label for the line because Federal Reserve Banks were headed up not by presidents, but by governors. They also changed the wording to read “Secured by United States bonds deposited with the Treasurer of the United States of America Or by like deposit of other securities.”

Besides this, the twelve regional Federal Reserve Districts appear as black sequenced letters on the bills from “A” through “L.” This system is still utilized today on the $2 and $1 bills.

The smaller series had been emergency issued because of the American public hoarding cash. They did this as a result of so many different banks failing in that day. Because of the bank failures, the National Banks were limited in their abilities to issue their own notes. In the year 1934, the Federal Reserve Bank Notes smaller size was eliminated and not offered by banks anymore from 1945.

The small size notes contain both serial numbers and brown seals. This is like the National Bank Notes of the time. Although they both look similar and each says “National Currency” on the obverse top, their issuers remained different. This is why they are deemed separate kinds of bills.

These Federal Reserve Bank Notes are never to be confused with the Federal Reserve Notes, which are the bills utilized as American dollars today. Federal Reserve Notes are produced by the Bureau of Engraving and Printing and issued by the Federal Reserve Bank via the Federal Reserve System in the United States. They are printed on a special paper which only Crane & Company of Dalton, Massachusetts produces uniquely for them. It is up to each of the regional Federal Reserve Banks to adequately distribute these Federal Reserve Notes to the various commercial banks throughout each of their respective territories today.

The term 'Federal Reserve Bank Notes' is included in the Economics edition of the Financial Dictionary. You can get your copy on amazon in Kindle or Paperback version. See more details here.