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 the U.S. Having been current for more than 100 years, they were issued for longer than any other form of U.S. paper money. They were known popularly as "greenbacks", a name inherited from the earlier greenbacks, the Demand Notes, that they replaced during 1862. Often termed Legal Tender Notes, they were named United States Notes by the First Legal Tender Act, which authorized them as a form of fiat currency. During the 1860s the so-called second obligation on the reverse of the notes stated:

This Note is Legal Tender for All Debts Public and Private Except Duties On Imports And Interest On The Public Debt; And Is Redeemable In Payment Of All Loans Made To The United States.

They were originally issued directly into circulation by 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 the small-size format, starting 1929, are very similar to contemporary Federal Reserve Notes with the distinction of having red U.S. Treasury Seals and serial numbers in place of green ones.

Existing United States Notes remain valid currency in the United States; however, as no United States Notes have been issued since January 1971, they are increasingly rare in circulation.

During 1861, 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 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.

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