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Various Federal Reserve Notes
Various Federal Reserve Notes
Notes are missing serial number imprints.

A Federal Reserve Notes or FRN(pronounced as "ferns") is the current type of paper money used in the United States.

Federal Reserve Notes are currency, with the words "this note is legal tender for all debts, public and private" printed on each bill. (See generally 31 U.S.C. § 5103). They are issued by the Federal Reserve Banks and have replaced United States Notes which were once issued by the Treasury Department.

Overview

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History

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Features of a Federal Reserve Note

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Value

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The authority of the Federal Reserve Banks to issue notes comes from the Federal Reserve Act of 1913. Legally, they are liabilities of the Federal Reserve Banks and obligations of the United States Government. Although no longer issued by the Treasury Department, Federal Reserve Notes carry the (engraved) signature of the Treasurer of the United States and the United States Secretary of the Treasury.

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 government 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 fiat currency, which means that they are not redeemable in gold, silver or any other commodity. This has been the case since 1968. The notes have no value for themselves, but for what they will buy. They have no backing other than the "full faith and credit of the U.S. government" (i.e., the government's ability to levy taxes to pay its debts). In another sense, because they are legal tender, Federal Reserve Notes are "backed" by all the goods and services in the economy. (i.e., a currency is worth only what it can buy, but keep in mind that the U.S. economy is worth nearly $12 trillion.)

How a federal reserve note enters the money system

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U.S. Federal Reserve Notes are printed by the United States Bureau of Engraving and Printing (BEP) and, like coins minted by the United States Mint, are provided to the U.S. Federal Reserve at nominal cost.

A commercial bank belonging to the Federal Reserve System can obtain the 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.

Design evolution and overview

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Federal Reserve Notes have been issued as

Series of 1914

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Denomination Portrait on obverse Design on reverse
$5 Abraham Lincoln Columbous sigthing land to the right
Landing of Pilgrims at Plymouth Rock to the left
$10 Andrew Jackson Scenes of agriculture (at right) and commerce (at left)
$20 Grover Cleveland Automobile, train, air plane, and ship
$50 Ulyses S. Grant Allegorical feminine representation of Panama between Atalantic and Pacific ocean with ships
$100 Benjamin Franklin Allegorical representations of labor, plenty, America, peace, and commerce

Series of 1914 Federal Reserve Notes were for the most part uniform in style. The basic layout of both the obverse and reverse

Common features among denominations

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Obverses of the notes contained the following:

  • A border seperating outer lathe work and inner design elements
  • Four denomination numerals in
  • "FEDERAL RESERVE NOTE" in the top and bottom of the lathe work
  • UNITED STATES OF AMERICA below the bottom border
  • WILL PAY TO THE BEARER ON DEMAND below United States of America (except on the $20 note)
  • Portrait in the center of the note
  • Denomination in words below the portrait
  • The statement, "AUTHORIZED BY FEDERAL RESERVE ACT OF DECEMBER 23, 1913"
  • A Federal Reserve Bank Seal with a letter and number corresponding to a Federal Reserve Bank
  • Federal Reserve Bank number and letter with a dash inbetween; located at 4 corners inside of the border of the note
  • A serial number with a prefix letter corresponding to a Federal Reserve Bank and an incremental suffix letter
  • Signatures of the Treasurer of the United States and the Secretary of the Treasury
  • The U.S Treasury Seal with scalloping around the outside of the seal

Reverse of the notes

Unique features among denominations

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Series of 1918

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Denomination Portrait on obverse Design on reverse
$500 John Marshall Columbous sigthing land to the right
$1000 Alexander Hamilton Bald Eagle clutching arrows and U.S. Flag
$5,000 James Madison George Washington resigning his commission
$10,000 Salmon P. Chase The Enbarkment of the Pilgrims

Series of 1928

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Denomination Portrait on obverse Design on reverse
$5 Abraham Lincoln Lincoln Memorial
$10 Alexander Hamilton U.S. Treasury building
$20 Andrew Jackson White House
$50 Ulyses S. Grant United States Capitol
$100 Benjamin Franklin Independence Hall
$500 William McKinley Numeral 500 surrounded by lathe work inclosed in a geometric design
$1000 Grover Cleveland The phrases "UNITED STATES OF AMERICA and "ONE THOUSAND DOLLARS"
$5000 James Madison 5000 superimposed on a dollar sign inside of a geometric design
$10,000 Salmon P. Chase Ornate numeral 10,000

Series of 1934

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Series 1950

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Series 1963

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The $1 bill was first introduced as a Federal Reserve Note

Series 1969

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Federal Reserve Notes began using the new U.S. Treasury Seal with wording in English instead of Latin

Series 1976

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The $2 bill was first introduced as a Federal Reserve Note

Series 1990

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Series 1996

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Series 2004

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Series issuance

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U.S.
Treasurer
Secretary
of the
Treasury
Terms of
office
Series of:
Denomination
$1 $2 $5 $10 $20 $50 $100
Tate Mellon

April 28-1/29

1928 1928 1928
Woods

1/29-February 32

1928A
1928B
1928A
1928B
1928A
1928B
1928
1928A
1928
1928A
Mills

February 32-3/33

1928C 1928C 1928C
Woodin

3/33-May 33

1928D
Julian

June 33-December 33

Morgenthau

1/34-July 45

1934
1934A
1934
1934A
1934
1934A
1934
1934A
1934
1934A
Vinson

July 45-July 46

1934B 1934B 1934B 1934B 1934B
Snyder

July 46-May 49

1934C 1934C 1934C 1934C 1934C
Clark

June 49-1/53

1934D
1950
1934D
1950
1934D
1950
1934D
1950
1934D
1950
Priest Humphrey

1/53-July 57

1950A 1950A 1950A 1950A 1950A
Anderson

July 57-1/61

1950B 1950B 1950B 1950B 1950B
Smith Dillon

1/61-April 62

1950C 1950C 1950C 1950C 1950C
Granahan

1/63-3/65

63 1950D
1963
1950D
1963
1950D
1963
1950D 1950D
Fowler

April 65-10/66

1963A 1950E
1963A
1950E
1963A
1950E
1963A
1950E
1963A
1950E
1963A
(Granahan) Barr

December 68-1/69

1963B
Elston Kennedy

May 69-September 70

1969 1969 1969 1969 1969 1969
Kabis

September 70-February 71

1969A
Connally

February 71-July 71

1969B 1969A 1969A 1969A 1969A 1969A
Bañuelos

December 71-May 72

1969C 1969B 1969B 1969B 1969B
Shultz

June 72-May 74

1969D 1969C 1969C 1969C 1969C 1969C
Neff Simon

June 74-1/77

1974 1976 1974 1974 1974 1974 1974
Morton Blumenthal

September 77-August 79

1977 1977 1977 1977 1977 1977
Miller

August 79-1/81

1977A 1977A 1977A
Buchanan Regan

3/81-July 83

1981 1981 1981 1981 1981 1981
Ortega

September 83-1/85

1981A 1981A 1981A 1981A 1981A 1981A
Baker

1/85-August 88

1985 1985 1985 1985 1985 1985
Brady

September 88-June 89

1988 1988 1988 1988
Villalpando

November89-1/93

1988A 1988A 1988A
1990
1988A
1990
1990 1990
Withrow Bentsen

3/94-December 94

1993 1993 1993 1993 1993 1993
Rubin

1/95-May 99

1995 1995 1995 1995 1995
1996
1996 1996
Summers

July 99-1/01

1999 1999 1999 1999 1999
Marin O'Neill

August 01-December 02

2001 2001 2001 2001 2001 2001
Snow

February 03-June 03

2003 2003 2003 2003 2004 2004 2003
Cabral

December 04-

2003A 2003A 2003A 2004A 2004A 2004A 2003A

Criticisms

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Security

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Despite the relatively late addition of color and other anti-counterfeiting features to U.S. currency, critics hold that it is still a straightforward matter to counterfeit the bills. They point out that the ability to reproduce color images is well within the capabilities of modern color printers, most of which are affordable to many consumers. These critics suggest that the Federal Reserve should incorporate holographic features, as are used in most other major currencies, such as the British pound, Canadian dollar and euro banknotes, which are much more difficult and expensive to forge. Another robust technology, developed for the Australian dollar and adopted for the New Zealand dollar, Romanian leu, and a few other currencies, produces polymer banknotes.

However, U.S. currency may not be as vulnerable as it is said to be. Two of the most critical anti-counterfeiting features of U.S. currency are the paper and the ink. The exact composition of the paper is confidential, as is the formula for the ink. The ink and paper combine to create a distinct texture, particularly as the currency is circulated. These characteristics can be hard to duplicate without the proper equipment and materials. U.S. notes, however, remain less secure than most other notes, and while a bank might be able to detect fine differences in paper and ink technology, counterfeit notes generally receive far less scrutiny at a point of sale.

The differing sizes of other nations' banknotes are a security feature that eliminates one form of counterfeiting to which U.S. currency is prone: Counterfeiters can simply bleach the ink off a low-denomination note, typically a single dollar, and reprint it as a higher-value note, such as a $100 bill. To counter this, the U.S. government has considered making lower-denomination notes slightly smaller than those of higher denomination. Current proposals suggest making the $1 and $5 bills an inch shorter in length and a half-inch shorter in height; however, having two sizes of banknotes but seven denominations, rather than incrementally increased sizes, would not eliminate the problem of their usability for the blind.

Differentiation

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Critics also note that U.S. bills are often hard to tell apart: they use very similar designs, are printed in the same colors, and are the same size. Advocates for the blind have argued that they should be printed in increasing sizes according to value and employ Braille codes to make the currency more usable by the vision-impaired, since the denominations cannot easily be distinguished from one another non-visually. Though some vision-impaired or blind individuals say that they have learned to determine the different denominations by feel, many others rely on currency readers; still others have their bills each folded differently to quickly identify the denomination. For the blind, this initially requires the assistance of a mechanical device or a sighted person.

By contrast, other major currencies, such as the euro and pound sterling, feature notes of differing sizes: the size of the note increases with the denomination and are printed in different colors. This is useful not only for the vision-impaired; they nearly eliminate the risk that, for example, someone might fail to notice a high-value note among low-value ones, a common problem in the United States. Tourists also frequently encounter difficulties with U.S. money, as they are less familiar with the design cues that distinguish the various denominations.

Multiple currency sizes were considered for U.S. currency, but makers of vending machines and change machines successfully argued that implementing such a wide range of sizes would greatly increase the cost and complexity of such machines. Similar arguments were made in Europe prior to the introduction of multiple note sizes, but these arguments were obviously not successful.

Alongside the contrasting colors and increasing sizes, many other countries' currencies contain tactile features missing from U.S. banknotes to assist the blind. For example, Canadian banknotes have a series of raised dots (though not standard Braille) in the upper right corner to indicate denomination.

References

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This article incorporates text from the website of the US Treasury, which is in the public domain.

Category:Currencies of the United States