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FEDERAL RESERVE BANK O F NEW YORK Fiscal Agent o f the United States r Circular N o. 3 9 5 4 "1 L M arch 5, 1953 J Offering o f $1,200,000,000 of 91-Day Treasury Bills Dated March 12, 1953 Maturing June 11, 1953 To all Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal Reserve D istrict: Following is the text o f a notice published tod a y : F O R R E L E A S E , M O R N IN G N E W S P A P E R S , Thursday, M arch 5, 1953. TREASU RY DEPARTM ENT W ashington T he Secretary o f the Treasury, by this public notice, invites tenders for $1,200,000,000, or thereabouts, o f 91-day Treasury bills, for cash and in exchange for Treasury bills maturing M arch 12, 1953, in the amount o f $1,200,342,000, to be issued on a discount basis under competitive and non-com petitive bidding as hereinafter provided. The bills o f this series will be dated M arch 12, 1953, and will mature June 11, 1953, when the face amount will be payable without interest. T h ey will be issued in bearer form only, and in denominations o f $1,000, $5,000, $10,000, $100,000, $500,000, and $1,000,000 (maturity value). T enders will be received at Federal Reserve Banks and Branches up to the closing hour, tw o o ’clock p.m., Eastern Standard time, M onday, March 9, 1953. Tenders will not be received at the Treasury Department, W ashington. Each tender must be for an even multiple o f $1,000, and in the case o f com petitive tenders the price offered must be expressed on the basis o f 100, with not m ore than three decimals, e.g., 99.925. Fractions may not be used. It is urged that tenders be made on the printed form s and forwarded in the special envelopes which will be supplied b y Federal Reserve Banks or Branches on application therefor. O thers than banking institutions will not be permitted to submit tenders except for their ow n account. Tenders w ill be received without deposit from incorporated banks and trust companies and from responsible and recognized dealers in invest ment securities. Tenders from others must be accom panied by payment o f 2 percent o f the face amount o f Treasury bills applied for, unless the tenders are accompanied by an express guaranty o f payment by an incorporated bank or trust com pany.' Imm ediately after the closing hour, tenders w ill be opened at the Federal Reserve Banks and Branches, following' which public announcement will be made by the Secretary o f the Treasury o f the amount and price range o f accepted bids. Th ose submitting tenders w ill be advised o f the acceptance or rejection thereof. The Secretary o f the Treasury expressly reserves the right to accept or reject any or all tenders, in w hole or in part, and his action in any such respect shall be final. Subject to these reservations, non-com petitive tenders for $200,000 o r less without stated price from any one bidder will be accepted in full at the average price (in three decimals) of accepted competitive bids. Settlement for accepted tenders in accordance with the bids must be made or com pleted at the Federal Reserve Bank on March 12, 1953, in cash or other immediately available funds or in a like face amount o f Treasury bills maturing M arch 12, 1953. Cash and exchange tenders w ill receive equal treatment. Cash adjustments will be made for differences between the par value o f maturing bills accepted in exchange and the issue price o f the new bills. T h e incom e derived from Treasury bills, whether interest or gain from the sale or other disposition o f the bills, shall not have any exemption, as such, and loss from the sale or other disposition o f Treasury bills shall not have any special treat ment, as such, under the Internal Revenue Code, or laws amendatory or supplementary thereto. T h e bills shall be subject to estate, inheritance, gift, or other excise taxes, whether Federal or State, but shall be exempt from all taxation now or here after imposed on the principal or interest thereof by any State, or any o f the possessions o f the United States, or by any local taxing authority. For purposes o f taxation the amount o f discount at which Treasury bills are originally sold by the United States shall be considered to be interest. Under Sections 42 and 11 7(a )(1) o f the Internal Revenue Code, as amended by Section 115 o f the Revenue A ct o f 1941, the amount o f discount at which bills issued hereunder are sold shall not be considered to accrue until such bills shall be sold, redeemed or otherwise disposed of, and such bills are excluded from consideration as capital assets. A ccordin gly, the owner o f Treasury bills (other than life insurance com panies) issued hereunder need include in his incom e tax return only the difference between the price paid for such bills, whether on original issue or on subsequent purchase, and the amount actually received either upon sale or redemption at maturity during the taxable year for w hich the return is made, as ordinary gain or loss. Treasury Department Circular No. 418, as amended, and this notice, prescribe the terms o f the Treasury bills and govern the conditions o f their issue. Copies o f the circular may be obtained from any Federal Reserve Bank or Branch. This Bank will receive tenders up to 2 p.m., Eastern Standard time, Monday, March 9, 1953, at the Securities Department o f its Head Office and at its Buffalo Branch. Please use the form on the reverse side o f this circular to submit a tender, and return it in an envelope marked “ Tender for Treasury Bills.” Tenders may be submitted by tele graph, subject to written confirmation; they may not be submitted by telephone. Payment fo r the Treasury bills cannot be made by credit through the Treasury T ax and Loan Account.. Settlement must be made in cash or other immediately available funds or in maturing Treasury bills. A l l a n S p r o u l , President. Results o f last offering o f Treasury bills (9 1 -d a y bills dated M arch 5, 1953, m aturing June 4, 1953) Total applied for . . .$1,996,167,000 Total accepted ........ $1,300,085,000 (includes $197,423,000 entered on a non-com petitive basis and accepted in full at the average price shown below ) A verage price . . . 99.453 Equivalent rate o f discount approx. 2.164% per annum Range o f accepted com petitive bids: H igh ..................... 99.500 Equivalent rate approx. 1.978% L ow ....................... 99.448 Equivalent rate approx. 2.184% o f discount per annum o f discount per annum (17 percent o f the amount bid for at the low price was accepted) Federal Reserve District Boston ....................... N ew Y o r k ................ Philadelphia ............ C le v e la n d .................. Richm ond .............. Atlanta ....................... Chicago ..................... St. Louis .................. M inneapolis ............ Kansas City ............ Dallas ......................... San Francisco ........ Total .......... Total Applied for $ 12,888,000 1,334,309,000 50,463,000 50,920,000 13,045,000 28,676,000 241,940,000 38,829,000 8,096,000 60,603,000 36,062,000 120,336,000 $1,996,167,000 Total Accepted $ 12,888,000 756,199,000 29,803,000 44,920,000 11,545,000 28,110,000 182,885,000 31,458,000 8,096,000 50,773,000 36,062,000 107,346,000 $1,300,085,000 ( over ) 28 Y IM P O R T A N T — I f you desire to bid on a c o m p e t i t i v e basis, fill in rate per 100 and m aturity value in paragraph headed "C om petitive Bid.” I f you desire to bid on a n o n - c o m p e t i t i v e basis, fill in only the m aturity value in paragraph headed "N on -com p etitive Bid.” DO N O T fill in b o t h p a r a g r a p h s o n o n e f o r m . A separate tender m ust be used fo r each bid, except that banks subm itting bids on a com petitive basis fo r their ow n and their customers* accounts m ay submit one tender fo r the total am ount bid at each price, provided a list is attached showing the name o f each bidder, the am ount bid fo r his a ccou n t, and method o f paym ent. Forms fo r this purpose w ill be furnished upon request. N o............................ TENDER FOR 91-DAY TREASURY BILLS D ated M arch 12, 1953 M aturing June 11, 1953 Dated at To F ed era l R eserve B a n k o f N ew Y ork , Fiscal Agent o f the United States. 1953 C O M PETITIVE BID N O N -C O M P E T IT IV E BID Pursuant to the provisions o f Treasury Department Circular No. 418, as amended, and to the provisions o f the public notice on March 5, 1953, as issued by the Secretary o f the Treas Pursuant to the provisions o f Treasury Department Circular N o. 418, as amended, and to the provisions o f the public notice on March 5, 1953, as issued by the Secretary o f the Treas ury, the undersigned offers a non-competitive ury, the undersigned o f f e r s .................................... * (Rate per 100) for a total amount o f $ ........................................... (maturity value) o f the Treasury bills therein described, or fo r any less amount that may be awarded, settlement therefor to be made at your Bank, on the date stated in the public notice, as indicated below : □ By surrender o f maturing Treasury bills tender for a total amount o f $. (N ot to exceed $200,000) (maturity value) o f the Treasury bills therein described, at the average price (in three deci mals) o f accepted competitive bids, settlement therefor to be made at your Bank, on the date stated in the public notice, as indicated b e lo w : □ By surrender o f maturing Treasury bills amounting t o ................... $------------------------------------ amounting t o ................... $------------------------------------ □ □ B y cash or other immediately available funds By cash or other immediately available funds *Price must be expressed on the basis o f 100, with not more than three decimal places, f o r example, 99.925. The Treasury bills for which tender is hereby made are to be dated March 12, 1953, and are to mature on June 11, 1953. This tender will be inserted in special envelope marked “ Tender f o r Treasury Bills.” Name o f Bidder B y ....................... (Please print) (T itle) (Official signature required) Street Address (C ity, T ow n or Village, P. O. N o., and State) If this tender is submitted by a bank for the account o f a customer, indicate the customer’ s name on line below : (N am e o f Customer) (C ity, T ow n o r Village, P . O . N o., and State) IM P O R T A N T IN STR U CT IO N S: 1. N o tender for less than $1,000 will be considered, and each tender must be for an even multiple o f $1,000 (maturity value). 2. If the person making the tender is a corporation, the tender should be signed by an officer o f the corpora tion authorized to make the tender, and the signing o f the tender by an officer o f the corporation will be construed as a representation by him that he has been so authorized. If the tender is made by a partnership, it should be signed by a member o f the firm, w ho should sign in the form “ ............................................................................................. . a copartnership, by ................................................................................................................................ a member o f the firm.” 3. Tenders will be received without deposit from incorporated banks and trust companies and from respon sible and recognized dealers in investment securities. Tenders from others must be accompanied by payment o f 2 percent o f the face amount o f Treasury bills applied for, unless the tenders are accom panied by an express guaranty o f payment by an incorporated bank or trust company. 4. If the language o f this tender is changed in any respect, which, in the opinion o f the Secretary o f the Treasury, is material, the tender may be disregarded. P a y m e n t b y c r e d i t t h r o u g h T r e a s u r y T a x a n d L o a n A c c o u n t tv ill n o t b e p e r m itt e d . http://fraser.stlouisfed.org/ TENTB— 1184-a Federal Reserve Bank of St. Louis (over) A t C i r c u l a r N o. 3 9 5 4 F Reserve Bank ederal of N ew York N ew Y o r k 45, N. Y. March 3, 1953 COINS AND CURRENCY BOOKLET To t h e C h i e f E x e c u t i v e O f f i c e r s in o f Member Banks the Second Federal R e s e r v e D i s t r i c t : For the past year we have been circulating a coin and currency exhibit among member banks for lobby display purposes. Because of the public interest shown in the exhibit, we have prepared an illustrated booklet, Coins and Currency, for distribution to your customers and other interested persons, par ticularly students. A copy of the booklet is enclosed. It contains a short history of money, and traces the coinage and currency of the United States from Colonial days to the present time. The cover of the booklet has been designed so that you can imprint the name of your bank on it. If you contemplate showing the exhibit in your bank, you may wish to distribute the booklet at that time. We can make copies available to you at $1.00 per 100. Should you desire a supply of the booklets, please fill out the order form below and return it to our Bank Relations Department. ALLAN SPROUL, President. ( Dat e) To Federal Reserve Bank of New York, Bank Relations Department: Please send u s _____ copies of the booklet Coins and Currency at $1.00 per 100 copies and charge our reserve account for the cost (plus New York City sales tax, if applicable). (Name o f bank) By__________ __ _____________________- _________________ ___________________ (Official signature required) (Title) (Street ( Ci t y, address) Town o r V i l l a g e , P. O. No . , and S t a t e ) The story of money dates back almost as far as man himself. It began when man learned that he need not produce for himself everything that he needed or desired, that he could trade things he had for things he wanted. Difficulties were met, A b r ie f s u m m a r y of however, because there was no common standard of value. A fisherman, for example, couldn't get much wheat from a farmer who didn't like fish. GOINS AND Before long man learned to set up a prized orna ment or a long-lasting item of food as a standard to which all other things were compared. These CURRENCY standards — beads, shells, stones, furs, fish hooks, grain and cattle, to name a few — all have been given a turn as money from time to time. Money, then, should be a generally acceptable medium of exchange. When mankind learned that money was usually more generally acceptable if it was durable and easy to carry, metal money began to gain favor. Our earliest record of this type of money dates back to 2,500 B.C., when the Egyptians produced rings that bark paper, bearing the red seal of Kubla and the were used for exchange. Cubes of gold became signatures of his treasurers. The earliest specimen money in China about 400 years later. The first metal of paper money known to exist today is the K uan, coins were made in Asia Minor, about 700 B.C., by a Chinese note issued during the Ming Dynasty the Lydians. These coins, struck from an alloy of (1368-1399 A .D .). The K u a n is about the size of a gold and silver called electrum, were bean-shaped sheet of typewriter paper. and were stamped with rough impressions. In the Middle Ages when travel became more The Greeks and Romans contributed much to the common, metal coins were looked upon by many as art of coinage. Some of the most beautiful coins ever a burden, for they were too heavy to carry from produced were made by the Greeks during their place to place. Then, too, travelers were always Golden Age — 400 to 300 B.C. As time went on, easy prey to robbers. Those who traveled began to coins became the favored medium of exchange the leave their coins with a goldsmith. In turn the world over. The origins of paper money probably go back to a robber. This custom grew in popularity and to the clay tablets of Babylon about 2,500 B .C On gradually the receipts were transferred from one traveler received a receipt which was of no value these tablets were written due bills, receipts and the person to another in payment of debts, instead of like. Marco Polo, returning from his 13th century withdrawing the actual coin. In effect, this was voyage to China, reported that paper money was in paper money at work. use there. He also reported that Emperor Kubla When the early colonial settlers departed for Khan, in 1273 A.D ., issued notes printed on mulberry North America, they left behind them a well-devel- oped coinage system. The few foreign coins that the colonists brought with them were used to pay for European trade. In their new homeland they soon found themselves engaged in primitive barter or using Indian wampum as money. A group of settlers soon learned to counterfeit wampum, how ever, and it lost its value. For home trade, then, the product most widely used in an area became money. For example, in Virginia it was tobacco and in Massachusetts it was grain, fish, and furs. Through out all of the Colonies gun powder and bullets were frequently used for small payments. After trade with the West Indies was developed, Spanish eight-reales pieces were widely circulated. These coins, known as p ieces o f eight, became standard money and remained in circulation with official sanction until 1857. To meet the need for small change, colonists frequently cut these “ Span ish dollars” into fractional parts. A half section of the dollar therefore became “ four bits” — a quarter section was “ two bits.” The men of the Massachusetts colony were the signifying “ time flies.” Below the dial was the first to attempt their own coinage in British Amer phrase M ind Y our Business — ica. In 1652 a mint was opened in Boston where the diligence, pine tree shilling, so named because it bore the Because these expressions were suggestive of the spirit of Poor Richard, it became known as the impression of a pine tree, was minted. Sixpence and threepence pieces were also products of this not the caustic an admonition to expression of today. Franklin cent, although Benjamin Franklin is not mint, which was closed by the English Government known to have had anything to do with the coin. in 1686. During the time following the Declaration of known as the Excelsior cent and bore a design Independence and up to the adoption of the Con New York State in 1787 issued a coin that was resembling the Great Seal of the State. stitution, a number of State legislatures authorized After the adoption of the Constitution, Congress the issuance of coins. The first attempt of any signif established a United States mint in Philadelphia in icance on a national basis, however, came in 1787, 1792, and the nation’s first cents and half-cents when James Jarvis was engaged by the national were struck in 1793. They were copper and about Congress to make copper one-cent coins. On one the size of present-day quarters and nickels. A side of this coin the design consisted of a circular silver half-dime, half-dollar, and dollar were added chain of 13 links enclosing the motto W e A re One. in 1794, and the next year the eagle ($10 gold coin) On the other side was a dial with the hours of the and half-eagle appeared. At that time the eagle was day marked on it. Above the dial was the noonday the gold and the dollar the silver monetary unit. sun, and beside it the word fu gio, The motto E Plu ribu s Unum was first used on the the whole half-eagle of 1795. The next year our first quarters and dimes were issued. In 1690, men from Massachusetts returned, tired and beaten, from an unsuccessful siege of Quebec. T h ih t Booty from the anticipated victory, it was thought, would finance the expedition. Tables were turned, however, and debts for ships, cannons, muskets, powder, and shot mounted. And then there were hundreds of hungry soldiers, threatening mutiny if not fed and paid. All this was met with a nearly C o n t in e n ta l c u rr e n c y empty treasury. Out of this dire need, Bills of Credit (in effect mere promissory notes) — the C o l o n ia l p a p e r c u r r e n c y first paper money in America and in the entire British Empire — were issued by the colony. Other colonies followed by printing paper money of their own. It circulated freely and notes were even torn into pieces to substitute for coins in mak ing change. Issues were excessive, however, and some of them quickly sank to small fractions of the intended value. Despite the disadvantages, however, S ta te b a n k n o te [ Sh iiliic s . , early colonial paper money seems to have helped to So bitter was the feeling toward paper money solve some of the difficulties caused by a shortage that a provision giving Congress the right “to emit of metallic money in an expanding community. bills on the credit of the United States” was struck Then came the American Revolution and huge out of the first draft of the Federal Constitution, and expenses with no adequate power of taxation. The the Constitution as adopted carried a provision for Continental Congress, in June of 1775, authorized bidding the states to “emit bills of credit.” Not the first issue of paper money, to be limited to $2 until more than 70 years later, in 1862. was paper million. Soon, however, several other issues were put money again issued by the Government of the United States. out and the total in circulation greatly exceeeded all reasonable needs. Rapid depreciation of value resulted. George Washington, in commenting on the con ditions, said, “a wagon-load of money will scarcely purchase a wagon-load of provisions.” The vanishing value of the currency of the Continental Congress led to the term for worthlessness tiiat has remained to this day — “ not worth a continental.” Congress in 1790 authorized the Treasury to accept the con tinental notes at a rate of 100 to 1, in payment for bonds of the new Federal Government. Between 1790 and the Civil War no paper cur rency was issued by the Government. On several occasions (1812-15, 1837-43, 1846-47, 1857, 1860-61) connected with wars and depressions, the Treasury issued small amounts of notes, almost always inter est-bearing, in denominations ranging down to $50. Some of these notes appear to have had some limited use as circulating currency, but at no time was there much in circulation, and of course they were not intended to serve as currency. Until 1836 the larger part of paper currency in circulation consisted of issues of the first (17911811) and the second (1816-1836) Bank of the United States, a private Federal-chartered bank. At the time of closing in 1836 the Bank of the United States had outstanding note liabilities of SOM E OF THE M ORE c h a n g e fro m c o in in g press. hand p re ss to ste a m -o p e ra te d silv e r d o lla r h a s fig u r e o f L ib e rty se a te d , a d e s ig n u se d o n a ll silve r c o in s th e re a fte r (e x ce p t f o r stiver d o lla r s) until 1 8 9 1 . $23,100,000. Afterward, notes issued by State-char tered private banks were the chief form of paper C o n g r e s s a u th o r iz e d c o in a g e o f a d o u b le e a g le ( $ 2 0 g o ld p ie ce) a n d a g o ld d o lla r. currency. These notes had varying degrees of ac ceptability, were not always redeemable in gold or silver on demand, and the issues of many banks frequently circulated at a substantia] discount from face value. Each bank chose its own design for its W it h the d is c o v e ry o f g o ld in C a lif o r n ia , a n d a n e e d fo r a c c e p t a b le m o n e y there, so m e p ri v a te firm s b e g a n m in tin g the ir o w n g o ld coins. m in tin g o f silv e r three-cent p ie c e s o f a lm o st p a p e r thinness; s o o n d r o p p e d a s im p ra c tica l. notes, and they differed in size, color, and appear ance. By 1860. it is estimated, there were notes of 8,000 banks in circulation. Under these circum c o in a g e o f t h re e -d o lla r g o ld piece. e sta b lish m e n t o f S a n F ra n c isc o m int. stances. it is not strange that counterfeiting fluorished as never before or (fortunately) since. Bank F ly in g e a g le cent, m a d e o f c o p p e r a n d nickel. failures were common throughout the period and people regularly suffered losses on the notes they received and held. circ u la tio n o f fo r e ig n c o in s p ro h ib ite d ; the S p o n is h silv e r d o l la r c e a se d to b e le g a l ten de r. S IG N IF IC A N T LATER DATES IN THE HISTORY OF O U R COINAGE first In d ia n h e a d cent. e sta b lish m e n t o f D e n v e r m int. b ro n z e tw o-cen t p ie ce , the first co in to u se the m oto In G o d W e Trust. first "p o r t r a it c o in , " the L in coln cent. three -ce nt p ie ce o f nickel, d isc o n tin u e d 1 8 9 0 . first nickel five-cent p ie c e (the re w e re e a rlie r silve r h alf-dim es). first b u ffa lo nickel. first m in tin g o f L ib e rty (fu ll-le ngth ) h a lf-d o lla r, first m in tin g o f p re se n t L ib e rty h e a d silve r d o lla r. c o in a g e o f t ra d e d o lla r s, slig h t ly la r g e r th a n s t a n d a r d silv e r d o lla rs, in te n d e d f o r u se in the C h in a t ra d e w h e re th e y " c o m p e t e d " w ith the M e x ic a n p e so . W it h d r a w n fro m circ u la tio n in 1 8 8 7 b e c a u s e th e y d id n ot h e lp F a r East trc b u t te n d e d to c irc u la te a t h om e. c o in a g e o f 2 0 -c e n t p ie ce, d isc o n tin u e d 1878. first L ib e rty h e a d nickels, a lm o s t im m e d ia te ly w ith d ra w n b e c a u s e the r e v e rse b o re o n ly a R o m a n letter V a n d c o u n te rfe ite rs p la t e d them th in ly w ith g o ld to p a s s them cfF a s fived o lla r co in s. T h e n e xt issu e o f the c o in re a d " V ce n ts." W a s h in g t o n q u a rte r. Je ffe rso n n ickel. silv e r ( 3 5 % ) " n i c k e l " p ro d u c e d to s a v e nickel, d isc o n tin u e d 1 9 4 5 . Z in c -c o a te d steel ce n t p r o d u c e d to s a v e strate g ic c o p p e r a n d tin ( o n ly y e a r m inted). R o o se v e lt d im e. F r a n k lin h a lf-d o lla r. K K N C T ft The first paper money actually issued by the Government of the United States consisted of noninterest-bearing Treasury notes issued in 1861 and 1862. These notes were payable on demand at cer tain designated sub-treasuries, and soon became known as demand notes. The amount first author ized was $50 million but a second issue of $10 million was also paid out. In 1862, Congress pro vided for the issuance of United States notes, and they were substituted for the demand notes, which were retired. The United States notes were first issued in the amount of $150 million and were designated as legal tender for all debts, except duties on imports and interest on the public debt. They were popularly referred to as “ greenbacks” or “ legal tenders." A second issue of $150 million was also authorized in 1862 and a third issue of the same amount in 1863. The highest amount outstand ing at any one time was $449,338,902 in early 1864. By 1878 the amount outstanding had been reduced to $346,681,016, and this amount is still outstanding today, mostly in denominations of $2 and $5. much smaller in size than our present currency, were known as “ shinplasters” and were issued in It was also during the Civil War (on January 3, 1862) that the Federal Government denominations of 3, 5, 10, 25, and 50 cents (a small suspended amount of a 15-cent denomination was also issued). specie payments — that is, dropped the provision After the end of the war, when coinage was re for redeeming United States notes in coin. It was sumed, this not until January 1, 1879 that specie payments were needed, and in 1875 and 1876 Congress provided resumed. Following the suspension in 1862, subsid iary silver coins largely disappeared from circula for its redemption and retirement. One of the most interesting of the few coins minted during the Civil tion as they were hoarded. For a time their place War was the two-cent bronze piece, the first of our coins to bear the motto In G od W e Trust. was taken by tickets, due bills, and other forms of fractional currency was no longer private obligations issued by merchants and others whose business required them to make change. Con The first gold certificates were authorized in 1863, gress then first authorized the use of postage stamps when Congress directed the Secretary of the Treas for change (after people had begun to use them called postal currency. Finally, fractional paper ury to receive deposits of gold coin and bullion and to issue certificates therefor in denominations of not less than $20. (Later certificates were issued in the currency was issued in denominations corresponding $10 denomination also.) The first issue was made to the silver coins. Congress authorized an issue of in 1865, and gold certificates continued in circula $50 million, the highest amount outstanding at any tion until 1933. The Treasury was authorized to one time was $49,102,660.27. These “ paper coins,” issue silver certificates in 1878; like the gold cer- for this purpose), and later issued a modified stamp tificates, they were given out in return for the deposit of silver dollars with the Treasurer of the United States. In 1934 this authority was increased to authorize issuance of silver certificates equal in value to silver purchased by the Treasury. Before I M M M B r f M i 175740 1. \i g * * * £ £ * * » » 23 u < KExnzEnmm M 3 this latter date, however, the Congress in 1890 directed the Secretary of the Treasury to purchase each month $4,500,000 ounces of silver at the market price and to issue in payment “ Treasury N a t i o n a l b a n k n o te ( o l d s iz e ) notes of the United States.” These notes, usually called “ Treasury notes of 1890,” were redeemable on demand in either gold or silver coin at the dis cretion of the Secretary of the Treasury and were legal tender. The authority for purchase of silver in this manner was repealed in 1893. when almost B910385A K E H e p H H ^ K K l I 11\.\ i* I 'l V K $156 million of the notes were outstanding. Congress later provided for the cancellation and retirement of this issue. Most of the paper currency in circulation between F e d e r a l R e s e rv e b a n k n o t e ( o l d s iz e ) the Civil W ar and the First World War, however, These notes a re re p ro d u ce d b y s p e c ia l perm ission o f the S e cretary o f th e T re a s u ry ; fu rth e r re p ro d u c tio n , in w h o le o r in p a r t, is s tric tly p ro h ib ite d . consisted of national bank notes. This currency, some cash in a special account to pay for these uniform in size and general appearance, was issued notes as they are presented. by The Federal Reserve Act of 1913 authorized the issuance of Federal Reserve Bank notes against banks chartered under the National Bank Act of 1863, which provided that these banks were required to deliver to the Treasurer of the United States a certain amount (based on their capitaliza tion) the deposit of United States bonds. These notes were, in effect, very much like the national bank of registered Treasury bonds bearing the notes. In 1918 Congress authorized the issuance of “circulation privilege.” The banks were then en Federal Reserve Bank notes in place of retired silver titled to receive from the Comptroller of the Cur certificates, but by 1922 almost all had been retired. rency paper money equal to 90 per cent of value of In the banking emergency of 1933 and 1934, Con the bonds. The total amount of currency for all gress once again authorized the issuance of Federal banks was limited to $300 million until 1870, when Reserve Bank notes secured by direct obligations it was increased; in 1875, the limitation was re of the United States or by eligible commercial moved. By 1913, national bank notes amounting to paper. By the end of 1933 the value of these notes almost $700 million were in circulation and the in circulation reached a peak of $208 million; they Treasury, of course, held bonds having the “circula were retired over the next two years. During World tion privilege” as backing. The last of these bonds War II a stock of unused Federal Reserve Bank matured in 1935 and national bank notes have since notes was issued in order to save paper and labor been retired from circulation as they are deposited that would have been used to produce other needed in Federal Reserve Banks. The Treasury still keeps currency. These notes are being retired gradually. By far the largest portion of paper currency in circulation today consists of Federal Reserve notes issued by the twelve Federal Reserve Banks. These notes are obligations of the United States and aie first liens on all assets of the issuing Federal Reserve Bank. Since 1933 they have been full legal tender for all debts, public and private. Each Federal A f r ic a n b r o n z e r in g Reserve Bank was originally required to maintain a reserve in gold of at least 40 per cent against its notes in actual circulation. In 1945 this require A z t e c g o l d im a g e s ment was reduced from 40 to 25 per cent, but in recent years all the Federal Reserve Banks have A la s k a n b r o n z e fish h o o k s actually had gold reserves well in excess of the 25 per cent requirement. Federal Reserve notes, issued in denominations from $5 to $10,000, are furnished to the Federal Reserve Banks through the Comp troller of the Currency, and under the supervision of the Board of Governors of the Federal Reserve System. They are made by the Bureau of Engraving and Printing, which also produces currency for the M o n e y is n o t a lw a y s c o in s a n d p a p e r c u r r e n c y : p e o p le Treasury. t h r o u g h o u t th e w o r l d h a v e u s e d m a n y c u rio u s m a te ria ls A Federal Reserve Bank desiring to in o d d f o rm s , f r o m ir o n n a ils to h u g e sto n e sla bs. obtain Federal Reserve notes applies for them to the Federal Reserve agent of its district (who is cisco). There is also a numerical identification about an inch in from each of the corners (1 for a representative of the Board of Governors) and Boston, 2 for New York, and so on). submits collateral equal in value to the notes re eligible In addition to these Federal Reserve notes, the commercial paper, gold or gold certificates, and direct obligations of the United States. (New cur only other kinds of currency being issued today are United States notes (issued only in denominations quested. This collateral can consist of rency can also be obtained in exchange for notes of $2 and $5 and limited to an aggregate amount of no longer fit for circulation.) No Federal Reserve $346,681,016) and silver certificates (issued only in Bank is permitted to pay out the notes issued by denominations of $1, $5, and $10). The chief dis another Bank, and therefore notes of one Bank tinguishing mark for the three types of notes is the deposited in another Federal Reserve Bank are re turned to the issuing Bank (or to the Treasury color of the seal to the right of the portrait on the Department for final destruction by burning). The notes, red on United States notes, and blue on silver Federal Reserve Bank of issue is designated on a certificates. There is one other note series, but this note by the round seal which appears to the left of “ currency.” consisting of gold certificates issued by the portrait on the face of the note. The full name of the Bank is given in the outer edge of the seal, the Treasury to the Federal Reserve Banks, does not circulate among the public. The certificates are and a large letter within also identifies the Bank issued in denominations of $100, $1,000, $10,000, (A for the Boston Reserve Bank, B for New York, C for Philadelphia, and so on to L for San Fran monetary gold stock of the United States. face of a note: the seal is green on Federal Reserve and $100,000. and they represent pledges of the