Comparison To Federal Reserve Notes
The United States Note was a national currency whereas Federal Reserve Notes are issued by the quasi-federal Federal Reserve System. Both have been legal tender since the gold recall of 1933. Both have been used in circulation as money in the same way. However, the issuing authority for them came from different statutes. United States Notes were created as fiat currency, in that the government has never categorically guaranteed to redeem them for precious metal - even though at times, such as after the specie resumption of 1879, federal officials were authorized to do so if requested. The difference between a United States Note and a Federal Reserve Note is that a United States Note represented a "bill of credit" and was inserted by the Treasury directly into circulation free of interest. Federal Reserve Notes are backed by debt purchased by the Federal Reserve, and thus generate seigniorage, or interest, for the Federal Reserve System, which serves as a lending parent to the Treasury and the public.
As the debt purchased by the Federal Reserve System to back its notes consists primarily of Treasury and Government-sponsored enterprise debt, and because the seigniorage is largely remitted back to the Treasury as "interest on Federal Reserve Notes", the economics to the Treasury are comparable to issuing United States Notes. This stands in contrast to National Bank Notes which allowed the issuing banks to privately retain the seigniorage as profit.
Read more about this topic: United States Note
Famous quotes containing the words comparison, federal, reserve and/or notes:
“From top to bottom of the ladder, greed is aroused without knowing where to find ultimate foothold. Nothing can calm it, since its goal is far beyond all it can attain. Reality seems valueless by comparison with the dreams of fevered imaginations; reality is therefore abandoned.”
—Emile Durkheim (1858–1917)
“There are always those who are willing to surrender local self-government and turn over their affairs to some national authority in exchange for a payment of money out of the Federal Treasury. Whenever they find some abuse needs correction in their neighborhood, instead of applying the remedy themselves they seek to have a tribunal sent on from Washington to discharge their duties for them, regardless of the fact that in accepting such supervision they are bartering away their freedom.”
—Calvin Coolidge (1872–1933)
“I do not know what right I have to so much happiness, but rather hold it in reserve till the time of my desert.”
—Henry David Thoreau (1817–1862)
“The germ of violence is laid bare in the child abuser by the sheer accident of his individual experience ... in a word, to a greater degree than we like to admit, we are all potential child abusers.”
—F. Gonzalez-Crussi, Mexican professor of pathology, author. “Reflections on Child Abuse,” Notes of an Anatomist (1985)