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Understanding Legal Tenders, AKA United States Notes

If you are an old money collector, you have likely encountered a wealth of different legal tenders. It is interesting to see how currency has developed and changed in this country over the course of its history, particularly due to the fact that in the early days of the United States, anti-federalists were adamant in preventing the federal government from issuing currency. They wanted this to be a state right; they were unsuccessful in this regard, which is why we have government-issued notes and coins.

The Ebb and Flow of Legal Tenders

Many changes have occurred over the years, with denominations being introduced and subsequently eliminated. For instance, at one time the government printed $100,000 notes, but these were not intended for public distribution. In addition, Congress had been in a long battle over whether the penny should still be used as a form of currency in 2002, as critics argued this coin served no legitimate purpose and that it was a waste of money to produce.

 

It does cost money to make money, believe it or not. In theory, all forms of legal tender can be used to pay debts, which consist of virtually all monetary transactions. In practice, however, this is not always the case. For instance, most small retail stores will refuse payment in currency in excess of $50. They are not legally required to accept such denominations, as they can freely set the rules of their establishment so long as they are abiding by regulatory statutes.

 

Antique Money and Legal Tender Notes

United States tender notes have been printed in five issues since their inception in 1862. Each one of these contained the wording “United States Note,” although the series printed in 1869 varied the language by including “Treasury Note.” Also, the early issue notes did not have any wording at all printed on them. The legal effect and purpose of these tenders is all the same, however. One of the most interesting aspects is how the language changed throughout the series. The current wording is “this note is legal tender for all debts, public and private.”

 

It is important to remember that the key difference between legal tenders and other forms of old money such as gold and silver certificates is that the former are used for paying debts. Certificates were/are used as exchange currency. It will be intriguing to see if the government eventually will cease the production of lower denomination coins such as pennies.