David, I was also looking at the Treasury site FAQ, specifically these 2 questions and answers:
Question: What are Federal Reserve notes and how are they different from United States notes?
Answer: Federal Reserve notes are legal tender currency notes. The twelve Federal Reserve Banks issue them into circulation pursuant to the Federal Reserve Act of 1913. A commercial bank belonging to the Federal Reserve System can obtain Federal Reserve 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.
Federal Reserve Banks obtain the notes from our Bureau of Engraving and Printing (BEP). It pays the BEP for the cost of producing the notes, which then become liabilities of the Federal Reserve Banks, and obligations of the United States Government.
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 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 not redeemable in gold, silver or any other commodity, and receive no backing by anything. This has been the case since 1933. The notes have no value for themselves, but for what they will buy. In another sense, because they are legal tender, Federal Reserve notes are "backed" by all the goods and services in the economy.
Question:What are United States Notes and how are they different from Federal Reserve notes?
Answer: United States Notes (characterized by a red seal and serial number) were the first national currency, authorized by the Legal Tender Act of 1862 and began circulating during the Civil War. The Treasury Department issued these notes directly into circulation, and they are obligations of the United States Government. The issuance of United States Notes is subject to limitations established by Congress. It established a statutory limitation of $300 million on the amount of United States Notes authorized to be outstanding and in circulation. While this was a significant figure in Civil War days, it is now a very small fraction of the total currency in circulation in the United States.
Both United States Notes and Federal Reserve Notes are parts of our national currency and both are legal tender. They circulate as money in the same way. However, the issuing authority for them comes from different statutes. United States Notes were redeemable in gold until 1933, when the United States abandoned the gold standard. Since then, both currencies have served essentially the same purpose, and have had the same value. Because United States Notes serve no function that is not already adequately served by Federal Reserve Notes, their issuance was discontinued, and none have been placed in to circulation since January 21, 1971.
The Federal Reserve Act of 1913 authorized the production and circulation of Federal Reserve notes. Although the Bureau of Engraving and Printing (BEP) prints these notes, they move into circulation through the Federal Reserve System. They are obligations of both the Federal Reserve System and the United States Government. On Federal Reserve notes, the seals and serial numbers appear in green.
United States notes serve no function that is not already adequately served by Federal Reserve notes. As a result, the Treasury Department stopped issuing United States notes, and none have been placed into circulation since January 21, 1971.
United States notes are obligations of the United States issued directly into circulation by Treasury Department.
Federal Reserve notes are, 1) obligations of the Federal Reserve Bank; 2) obligations of the United States; 3) liabilities of the Federal Reserve Bank; 4) represent a first lien on the assets of the Federal Reserve Bank, and on the collateral specifically held against them, and; 5) move into circulation through the private Federal Reserve System.
A
United State note, 1)
is not an obligations of the Federal Reserve Bank; 2)
is not a liability of the Federal Reserve Bank; 3)
does not represent a first lien on the assets of the Federal Reserve Bank, and on the collateral specifically held against them, and; 4)
are not issued through the Federal Reserve System.
Are either of the notes "lawful money" as the words are used at 411?
Are "obligations" and "liabilities" of a person, "lawful money", or would they be more properly the subject matter of contracts?
What, if any, additional terms and conditions are imposed upon people choosing to make use of the private Federal Reserve System?
David, via the non-endorsement, are you bypassing the private Federal Reserve System and looking specifically to the public "obligations of the United States" - or in other words, using the 'public side' of the Federal Reserve note?
You say, you are "redeeming FRN's for lawful money", and that, "they (FRN's) are United States Notes in the form of FRN's." I see that both a FRN and a US note are "obligations of the United States".
