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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

Value

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

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

Federal Reserve Notes have been issued as

Series of 1914

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

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

Series of 1918

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

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

Series 1950

Series 1963

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

Series 1969

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

Series 1976

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

Series 1990

Series 1996

Series 2004

Series issuance

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

Security

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

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

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

Category:Currencies of the United States