The United States dollar is currently the world’s reserve currency. One factor that has undoubtedly helped secure this coveted position is that almost all U.S. currency issued by the Treasury or Federal Reserve from 1863 to the present is still legal tender, acceptable for debts, commerce and taxes. This is exceptional, as most countries regularly demonetize old notes and withdraw them from circulation.
But demonetization simply does not happen in the United States (although obsolete notes are sometimes withdrawn from circulation). In fact, when I worked as a bank teller in the mid 1990s, I found a Series 1934 $20 Federal Reserve Note in my till. That particular $20 bill had probably been in circulation for a good 50 years, if not longer.
Many people do not realize that U.S. currency has a secret history. There have actually been 4 (or 5, depending on how you count) different types of U.S. paper money in circulation during the 20th century. Below I will reveal the untold history of U.S. paper money, concentrating on Series 1928 and later bills.
I consciously chose 1928 as a starting point because in that year all U.S. currency was radically redesigned. For the sake of convenience, these new notes were shrunk in size compared to previously issued bills. They also began to feature the presidential portraits (Lincoln on the $5, Hamilton on the $10, Jackson on the $20, etc.) that we are familiar with today.
On the whole, the average American would recognize a Series 1928 note as being essentially modern, although anti-counterfeiting design updates since 1996 have endowed newer notes with larger, off-center portraits, more color and less scrollwork.
As an FYI, a U.S. currency’s series refers to the year a design was first initiated, not necessarily the date the note was printed. So if a Series 1928 note was later followed up by a redesigned Series 1953 note, the Series 1928 note could generally have been printed anytime between 1928 and 1953.
And now let’s examine the different types of U.S. currency that were issued during the 20th century:
U.S. Gold Certificates (Gold Seal Notes)
The United States Treasury issued gold certificates from the end of the Civil War in 1865 until the Great Depression in 1934. As the name implies, these iconic U.S. notes with their characteristic gold seals were exchangeable into gold coin upon request. In fact, each one has a gold clause that unequivocally states:
“This certifies that there have been deposited in the Treasury of the United States of America XX dollars in gold coin payable to the bearer on demand”.
These beautifully engraved notes were issued in denominations ranging from $10 to $10,000. Starting in 1928, U.S. gold certificates were, like all other U.S. currency, redesigned with the presidential portraits and smaller-size familiar to us today.
Unfortunately, the advent of the Great Depression in the 1930s soon put an end to the international gold standard. The catastrophic failure of Austria’s Credit-Anstalt bank in May 1931 increased pressure on over-extended banks and governments around the world, eventually forcing the Bank of England to break the British pound’s peg to gold in September 1931. After this, the United State’s abandonment of the gold standard was inevitable.
The honor of reneging on U.S. gold certificates ultimately fell to President Franklin Delano Roosevelt, who declared a nationwide banking holiday on March 5, 1933, shortly after taking office. One month later, on April 5, 1933, FDR decreed that all U.S. gold coins and gold certificates had to be exchanged for non-gold coins and notes on pain of imprisonment. After a short grace period, it became illegal for any American to own or possess gold certificates.
But history wasn’t over for that most revered of U.S. paper currencies. In 1934, the U.S. Treasury actually printed a new series of U.S. gold certificates in denominations of $100, $1,000, $10,000 and $100,000. These non-circulating notes were distinguished from older, previously circulating series by their orange-toned reverse and amended gold clause, which reads “payable to the bearer on demand as authorized by law“.
Series 1934 gold certificates were used exclusively for bank reserves and inter-bank transfers. They are exceedingly rare and valuable today.
In 1964, the restriction on American citizens owning U.S. gold certificates was removed. Although no longer redeemable for gold coin or bullion, gold certificates are still legal tender today at their stated face value.
U.S. Silver Certificates (Blue Seal Notes)
Silver certificates were another kind of note issued by the U.S. Treasury between 1878 and 1963. They were redeemable at the rate of 0.77344 troy ounces of pure silver for each dollar. Much like gold certificates, each silver certificate had the following silver clause printed on it:
“This certifies that there is on deposit in the Treasury of the United States of America X dollars in silver payable to the bearer on demand”.
After 1928, U.S. silver certificates were issued in $1, $5 and $10 denominations, although denominations as high as $1,000 were printed in the late 19th century. Post-1928, small-size notes are easily identifiable by their blue treasury seal.
The only exceptions to this rule were a couple of World War II emergency issues. The first of these was a $1 silver certificate with a brown seal and the word “Hawaii” over-printed in several areas. The other was a set of $1, $5 and $10 yellow seal silver certificates intended for circulation among U.S. troops in allied-occupied North Africa. Both types of these distinctive notes were issued so that they could be easily demonetized if those territories were overrun by Axis forces.
By the early 1960s, it had become increasingly apparent that the rising price of silver would soon render it impossible for the U.S. Treasury to continue redeeming silver certificates. As a result, the legal obligation to exchange these notes for silver dollars was suspended on March 25, 1964, with a provision that they could still be redeemed for the appropriate weight of raw silver granules or bullion bars until June 24, 1968. It has been speculated that the U.S. treasury modified the redemption of these notes from coins to bullion in an attempt to dissuade people from cashing them in.
Much like U.S. gold certificates after 1933, U.S. silver certificates ceased to be exchangeable for any precious metal after 1968. However, they still remain legal tender.
United States Notes (Red Seal Notes)
United States Notes were another variety of paper money issued by the U.S. Treasury during the 20th century. These notes, which are also known as Legal Tender Notes, are characterized by their red seals. They were first issued during the Civil War in 1863 and last released into circulation in 1971.
Since 1928, red seal United States notes have been issued in $1, $2 and $5 denominations, along with the singular and uncommon Series 1966 $100 bill.
United States Notes have not been redeemable for specie since the U.S. abandoned the gold standard in 1933. Consequently, they were eventually determined to be redundant, and were gradually withdrawn from circulation in favor of Federal Reserve Notes in the 1970s. However, like all of the other currencies detailed here, United States Notes continue to be legal tender.
U.S. Federal Reserve Notes (Green Seal Notes)
Federal Reserve Notes are the most recognizable of 20th century U.S. currency types because they are the paper money we still use today. First printed in 1914 (in a large-size format), Federal Reserve Notes have been issued in denominations ranging from the lowly $1 bill to the mammoth $10,000 note.
The chief distinction between red seal United States Notes and green seal U.S. Federal Reserve Notes is that the latter have been issued by the Federal Reserve instead of the United States Treasury.
In addition, Congress has decreed that Federal Reserve Banks must retain collateral that is equal in value to all outstanding Federal Reserve Notes. This collateral primarily consists of gold certificates (including the intriguing Series 1934 gold certificates mentioned above) and U.S. Treasury securities. Theoretically, Federal Reserve Notes held by the public have a first lien on these assets, but are not redeemable for them.
Federal Reserve Notes eventually displaced gold certificates, silver certificates and United States Notes to be the only form of paper money issued in the U.S. by the late 20th century. All Federal Reserve Notes ever issued are still legal tender.
High Denomination U.S. Paper Currency
High denomination U.S. currency refers to anything larger than a $100 bill. These include the $500 note featuring President William McKinley, the $1,000 note with President Grover Cleveland, the $5,000 note with President James Madison and the $10,000 note with Treasury Secretary Salmon P. Chase. The U.S. Treasury even issued an elusive $100,000 gold certificate with the portrait of President Woodrow Wilson on it. However, only a handful of these ultra-rare $100,000 bills survive – all of which are in the possession of the Federal Government.
Although I’ve placed high denomination U.S. currency in its own category, all of these notes technically belong to one of the previously discussed types: gold certificates, silver certificates, United States Notes or Federal Reserve Notes.
High denomination U.S. paper money was regularly printed in the late 19th through the mid 20th century. In most instances, these monster notes were used primarily by banks and other financial institutions. Few individuals ever saw a circulating, high denomination bill due to their immense purchasing power.
For example, a $1,000 bill issued 90 years ago in 1928 would be equivalent to almost $15,000 in 2018 dollars, due to inflation.
High denomination U.S. currency was last printed in 1946, although they remained in circulation until they were actively withdrawn in 1969. The decision to withdraw large denomination bills was largely driven by political anxiety over their potential use in organized crime, although there was never any explicit evidence that this happened systematically.
As a result, high denomination U.S. currency is very scarce today, especially denominations above $1,000. Because there are a fair number of counterfeit notes targeting collectors, buyers of high denomination notes are advised to only purchase bills that have been third-party certified by Paper Money Guaranty (PMG) or PCGS Currency.
One of the most interesting high denomination notes is the Series 1900 $10,000 bill. It is the only U.S. high denomination note found in the wild that is not currently legal tender. Consequently, when these notes occasionally come up for sale, they sell for significantly less than face value – something that collectors love.
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