General Question

SquirrelEStuff's avatar

Why do older US dollars say "this note is legal tender for all debts, puiblic and private, and is redeemable in lawful money at the US treasury or at any federal reserve bank?"?

Asked by SquirrelEStuff (8988points) July 24th, 2009

I have a $5 bill from 1950. Instead of saying the usual “this note is legal tender for all debts, public and private,” it contains extra text. What does it mean by “redeemable in lawful money?”

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17 Answers

EmpressPixie's avatar

I believe at that time we were on the gold standard and the money could be exchanged for the appropriate amount of gold. I’m trying to find a bit more info right now here.

When we went off the gold standard, this would no longer have been true.

Phobia's avatar

@EmpressPixie I believe you are right.

Gold was the “lawful money” and the actual dollar was just a bill representing a certain worth in gold.

PapaLeo's avatar

DAMN that Nixon!!!!

Capt_Bloth's avatar

The bills that could be exchanged for gold were called gold bank notes. They looked like regular money, except said on the front that they could be exchanged for gold.

SquirrelEStuff's avatar

Nowhere on the bill does it say gold.

The only other difference I can see is instead of saying “FIVE DOLLARS,” it says, “WILL PAY TO THE BEARER ON DEMAND FIVE DOLLARS.”

PapaLeo's avatar

I’ve got some US dollar notes that are silver certificates on which it clearly states that the bill may be exchanged for the equivalent value in silver.

If it wasn’t for the damn Hunt brothers, I might have, at one time, been able to cash in. Now there’s nothing to do but wait . . . and wait . . . and wait.

bpeoples's avatar

You have yourself a 1928-edition $5 bill, not a $5 silver certificate

aprilsimnel's avatar

Well, it used to be that every friggin’ bank in the country had their own dollar notes, and it was like going from one country to another when one wanted to know the worth of a particular bank’s note. Yikes!, right?

The creation of the Federal Reserve Bank in 1913 FTFU once and for all. Obviously, it’s all a bit more complicated than what I’m saying, but the wording on those old notes from the 50s are remnants of a time before currency stabilization.

fireside's avatar

Here’s a good history of the various changes to the wording on US Currency.

The Gold standard went away in the 1930s and was replaced by bills as legal tender. So you can exchange that bill for other bills of the same monetary amount.

PapaLeo's avatar

@bpeoples True enough. And what I love about that bill is that statement: “Payable to the bearer on demand.” ON DEMAND!!! It makes me feel a tiny bit powerful. Just a tiny bit.

SquirrelEStuff's avatar

@aprilsimnel What do you mean currency stabilization?

@bpeoples It is a Federal Reserve Note, not the US Note. There was no link for the $5 bill, but it is the same as the $10.

aprilsimnel's avatar

Here‘s a succinct, yet better explanation than I could give.

AstroChuck's avatar

Because it is legal tender for all debts, puiblic and private, and is redeemable in lawful money at the US treasury or at any federal reserve bank.

Strauss's avatar

I remember when I would see more silver certificates than Federal Reserve Notes. If you look at a dollar bill (or any other denomination) you will see a round seal of the Treasury. Different colors of that seal were used to denote different types of notes. The silver certificates used to use a blue seal, and used to say something like: “This note is legal tender for all debts, public and private.” and “Silver Certificate. One dollar om silver, payable to the bearer by any bank on demand.” Notes that had the red seal would be gold certificates. When the US was on the gold standard, the dollar was tied to the price of gold, and to the price of silver relative to gold. It was illegal to own gold, but the price was set to $35 per pound.

Darbio16's avatar

I wish to uphold constitutional law in this country. The founders of our nation paid a great toll to society to ensure our freedoms. There is a great threat to our freedom. At the very core of our society, our government and each day growing power. Power to peer into our lives, power to arrest and detain without cause, power enough to create a myriad of institutions to control the ideals of society to the point that opposing opinions are left unheard .

Power in the world has many forms. The most exploited source of power being money. In America we use the dollar. On each dollar, you will also see the term “Federal Reserve Note”. It is important to note that the Federal Reserve is the source of our money. Meaning, they print our money. Under the Constitution, Congress has the only right to print and issue money. To clarify, the Federal Reserve is not the Congress. In fact, no one on the board of the Federal Reserve is even democratically elected. Nonetheless, Congress does not, as directed under the Constitution, print our money.

Instead, in 1913 under the Woodrow Wilson administration, Congress enacted the Federal Reserve Act. The act was voted on during Christmas break when most congressman were at home with their families. At the time of the enacting of this bill, American dollars displayed text reading “Redeemable for Gold”. As it were, America had been on a Gold Standard. The paper we all flaunt today, was then nothing more than a receipt for the real money…gold. Our money now states “This note is legal tender for all debts, public and private”. We are no longer on a gold standard. The whole reason behind the idea of the Federal Reserve was to create stability in the markets and protect against inflation. How cunning though that an institution publicly stating the contrary would be the source of inflation. Inflation is a fancy term for the devaluing of the dollar. Did you ever wonder why your grandfather paid only a nickel for a candy bar while now you pay a dollar or more some places? The reason is simple.

The Federal Reserve, now in charge of printing and issuing our currency in place Congress, loans the money to the Treasury. As with most loans there is also interest on the loan. That is the very source of inflation. It creates a debt based society. Simply put, if you follow the flow of money, it get very depressing. First, the Federal Reserve prints the money. Then, with a hefty amount of interest attached upwards of over 30%, it is loaned to our nation. Say, for example, we are loaned 1 Trillion dollars. Unknown to most of the public, that interest must be paid back. 30% of a Trillion is approximately 3.33 Billion dollars. That is the amount that must be paid back on top of what has been borrowed. Totaling to 1.333 trillion dollars. Here is where is really messed with your mind. If there were only 1 Trillion printed, how could we possibly pay back 1.333 trillion, it just doesn’t exist. The answer is, you can’t pay it back, ever. When the loan is finally called in we are forced to pay all that we have and then borrow more to cover interest payment and living expenses.

To guarantee themselves interest payments, along side the Federal Reserve Act was the Income Tax law know as the 16th Amendment to the Constitution. Prior to 1913 there was no such thing as an income tax. The sole purpose of this tax was to make payments to the Federal Reserve to the issuance of our currency. But here is another real brain buster. The money that the Federal Reserve Loans us doesn’t even exist. They have a printer, not a stockroom of gold and cash. The money comes out of thin air. That style of banking is known as “fractional reserve lending”. Break down that statement and it becomes clear. Fractional Reserve lending is easy to understand. Let’s say you start a bank, and you have your self 10 million dollars that you could begin to loan out. Fractional reserve banking enables you to loan out more money than you actually have. I have 50 million in my bank, but under our current system I could loan out 400 million or more. Sounds ridiculous but it is more than true, its scary. The banking industry learned long ago that most people would not come to the bank and withdraw all of there money. The whole system would fall apart if even 10% of Americans would withdraw all money from all of their accounts. Evidence of this was during the Great Depression. When the stock market crashed, people began surging to their banks to withdraw their funds only to have the doors of the bank locked when they arrived. The reason the bank doors were locked was because the money doesn’t exist. Ever see the classic movie starring Jimmy Stewart. During the bank run scene, people were demanding their money but of course it wasn’t there. At the same time, businesses were desperately selling all they could to get money. In that movie “Potter” was the evil banker that sought to own all in the town. He began buying up all the towns financial institutions. That actually happened during the real great depression as well.

It was, in fact, the Federal Reserve that created the depression in the first place. For an institution like the Fed, its an easy feat. First they just made credit readily available. Once enough currency was in circulation, they cut off all credit, called in all old loans and refused new ones.

It makes alot of sense when you look at it from the point of view of the bankers. These days money transactions are not handled by exchanges of tangible money, but through computer transaction. This makes our current corruption possible. I can loan out way more money than I have and begin collecting interest payments on money that doesn’t even exist, let alone belong to me. Ever wonder why Congress has no problem spending all the money they want, with out regard. It is because you can fund anything you want when you have a money printing machine

I could go on all day about it, but to better explain the situation we are in, you should watch “America: Freedom To Fascism”. This documentary will blow your mind. Hopefully it was also open up your mind to the possibility that all is not as it would seem.

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