Federal Reserve Notes, Silver Certificates & Legal Tender Notes

JFK vs. the Federal Reserve System?

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The Federal Reserve has a monopoly on the issuance of currency in the United States – The Federal Reserve Note.

Federal Reserve Notes are issued by the Board of Governors of the Federal Reserve System and are backed only by the force of law.

It wasn’t always that way.

Did President John Kennedy Challenge the Federal Reserve System By Issuing Silver Certificates and United States Notes?

Except for its use in coins, silver serves no useful monetary function.– John F. Kennedy Excerpts From Annual Message to the Congress: The Economic Report of the President January 21, 1963

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United States Currencies of the 1960’s

There is a oft repeated Internet myth that John F. Kennedy issued Legal Tender Notes and Silver Certificates as a challenge to the Federal Reserve System. As we review the types of paper currency circulating in the United States, you’ll see that point of view is nothing more than a projection of heroic status onto an act that JFK never intended. Indeed, JFK favored and worked for the de-monetiation of silver and the replacement of Silver Certificates with Federal Reserve Notes during his administration.

In the early 1960’s there were three types of paper currency circulating in the United States: Federal Reserve Notes, Silver Certificates and Legal Tender Notes.

Today, there are only Federal Reserve Notes.

The dimes, quarters and half dollar coins in circulation were made of 90% silver.

Today dimes and quarters are made of copper and nickel and half dollar coins are no longer minted for circulation.

Here are descriptions of the bills in circulation circa 1963.

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Federal Reserve Notes


$5 Federal Reserve Note

Issuer: The Federal Reserve

Federal reserve notes are issued by the Fed in amounts as they deem necessary. Federal reserve notes have no backing other than the "full faith and credit of the United States"

Federal Reserve notes are issued by the Board of Governors of the Federal Reserve, not the U.S. Treasury, and are considered “lawful money” in the United States.

Federal Reserve Notes (FRNs) are issued by the Board of Governors of the Federal Reserve System and are “lawful money”. FRNs are not issued by the U.S. Treasury but rather by a private bank, the Federal Reserve, which was created by an act of Congress in 1913. FRNs are an unbacked currency. Indeed, the Federal Reserve holds no gold or silver for its own account.

FRNs are considered lawful money in the United States.

While Article I, Sec. 8 of the United States Constitution says that Congress has the power to coin Money, regulate the Value thereof and Article I, Sec. 10 says no State shall make any Thing but gold and silver coin a Tender in Payment of Debts, U.S. courts have long held in a series of legal tender cases that “lawful money” does not have to be gold or silver and that notes issued by the U.S. Treasury or the Federal Reserve constitute “lawful money”.

In 1884, the United State Supreme Court in Julliard vs. Greenman, 110 U.S. 421, ruled that United States Legal Tender Notes (see below) issued by the U.S. Treasury pursuant to the Act of May 31, 1878 were deemed to be constitutionally issued.

In 1974, a U.S. Circuit Court in Milam v. U.S., 524 F.2d 629 , relying on the ruling in Julliard, held that the United States did not have to give Milam $50 in gold or silver in exchange for a $50 Federal Reserve Bank Note, holding that Federal Reserve notes would suffice as “Congress is authorized to establish a national currency, either in coin or in paper, and to make that currency lawful money for all purposes, as regards the national government or private individuals”

The Milam court further ridiculed Milam’s claim to be paid in gold or silver deeming it “frivolous”:

“While we agree that golden eagles, double eagles and silver dollars were lovely to look at and delightful to hold, we must at the same time recognize that time marches on, and that even the time honored silver dollar is no longer available in its last bastion of defense, the brilliant casinos of the houses of chance in the state of Nevada. Appellant is entitled to redeem his note, but not in precious metal. Simply stated, we find his contentions frivolous.”

Federal Reserve Notes and Legal Tender Notes have their value because the Federal Reserve and the U.S. Treasury says that they do. This is what is commonly known as fiat (from the Latin- “let it be done”) currency, or to avoid any confusion with an Italian car manufacturer – “because we say so” currency.

For more information on legal tender laws and the ability of governments to issue money and determine its value click here.

Federal Reserve notes are printed in amounts deemed necessary by the Federal Reserve. Most of the dollars in circulation, however, are in digital form, not in note form.

Indeed, more than 50% of the Federal Reserve Notes in circulation are held outside the United States.

Series* of Issuance of $5 Federal Reserve Notes:

$5 Federal Reserve Notes (Large Size) 1914, 1915, 1918

$5 Federal Reserve Notes (small size) 1928 (with NATIONAL CURRENCY legend), 1929, 1934, 1934-D, 1950, 1950-A-E, 1963, 1963-A, 1969, 1969-A-C, 1974, 1977, 1977-A, 1981, 1981-A, 1985, 1988, 1988-A, 1993, 1995, 1999, 2001, 2003, 2009 (pictured above)

Silver Certificates


$5 Silver Certificate

Issuer: The United States Treasury

Silver Certificates circulated from 1878 to 1964 and were issued by the United States Treasury and enabled the holder to redeem them in exchange for silver bullion.

Silver Certificates certified that there was on deposit at the U.S. Treasury an amount of silver necessary to redeem the face value printed on the certificates.

A government does not have to issue its currency via an independent privately held central bank like the Federal Reserve. Rather, it can, if it wishes, issue its own currency and back that currency by precious metals. The United States Treasury did just that when it issued silver certificates from 1878 to 1964 and gold certificates from 1863-1933. In accordance with an Act of Congress, dated February 28, 1878, the Department of the Treasury issued to the public Silver Certificates which could be exchanged for silver dollars.

Silver and gold certificates were legal tender AND entitled the holder to redeem them for the equivalent value of silver or gold. Gold and silver certificates were issued by the United Treasury and were backed by the precious metals held at the Treasury. To redeem a gold or silver certificate holders presented them at a bank to receive the equivalent value in silver or gold coins then in circulation in the United States.

Redemption of gold certificates ended in 1933 with Franklin Roosevelt’s executive order nationalizing (confiscating) the United States citizens’ gold.

In 1878 when silver certificates were first issued, a holder would receive Morgan Silver dollars. In 1963 silver certificate holders could receive Morgan Silver dollars (years minted:1878-1904 and 1921) or Peace Silver Dollars (years minted: 1921-1928, 1934 and 1935). Silver dollars, however, were in short supply by the early 1960’s

Pursuant to the Act of June 4, 1963 (31 U.S.C. 405a-1) U.S. Treasury C. Douglas Dillon announced in March 1964 the end of redemption of silver certificates to coincide with the cessation of mintage of silver coinage at the end of that year**. The Act allowed the exchange of silver certificates for silver bullion until June 24, 1968.

Silver certificates are still considered legal tender, like FRNs. Silver certificates,however, command a premium to their face values among collectors.

You can buy a $5 silver certificate in good condition for less than $15.

The Unites States purportedly still holds 8,000 + tons of gold but no silver.

Series of Issuance of $5 Silver Certificates:

1934-B, 1934-C, 1934-C, 1953, 1953-A, 1953-B, 1953-C

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Legal Tender Notes – United States Notes


$5 United States Note

Issuer: United States Treasury

United States Notes are issued by the United States Treasury. The last series of US Notes were issued pursuant to an executive order by President Kennedy in 1963.

United States Notes with their distinctive red seal were issued from time to time by the U.S. Treasury from 1878 to 1963.

A government can issue non redeemable backed or unbacked currency.

The United States issued such a currency. Pursuant to Act of May 3 1878, United States Notes, or Legal Tender Notes, were like Silver Certificates, issued by the U.S. Treasury. They were backed by silver but NOT redeemable in silver.

United States Notes/Legal Tender Notes have a distinctive red treasury seal and red serial numbers. Rather than the containing the legend “Federal Reserve Note” at the top center of the note, these notes read “United States Note”. United States Notes were issued in $1, $2, $5 and $100 denominations.

While the Federal Reserve has been roundly criticized for printing money, any entity given the power to create currency out of thin air will potentially abuse that power.

The Federal reserve has the power to print dollars in unlimited quantitites

The Federal Reserve has increased the money supply four-fold since 2009.

The U.S. government has in its history been no more prudent in the issuance of its currency than the Federal Reserve. The U.S. Treasury has issued unbacked currency in large amounts.

The U.S. Continental was issued by the Continenal Congress to fund the American War for Independence in such large amounts that the phrase “not worth a Continental” became synonymous with worthless money. Lincoln funded his war with the South with massive sums of currency printed out of thin air by the U.S. Treasury. For more on the issues that could arise if the U.S. Treasury were to be given a monopoly on printing the nation’s currency see Tom Woods’ critique of the “Greenbackers”.

United States Notes, however, were issued in accordance with the limits of the Act of 1878 requiring that $346,681,016 always be in circulation.

Small $5 United States Notes featuring Abe Lincoln on the front were issued in various series from 1928-1966. Older Large $5 United States Notes featured Andrew Jackson.

John Kennedy vs. The Federal Reserve?

Was John F. Kennedy Challenging the Federal Reserve By Issuing a Competing Currency to the FRN?

On June 4, 1963, JFK issued Executive Order 11110 There is a popular myth surrounding the issuance of the Executive Order 11110. The myth or conspiracy theory argues that John Kennedy issued silver certificates as a direct challenge to the Federal Reserve.
1964 Kennedy Half dollar 90% silver, the last year of mintage1964 Kennedy stamp

JFK’s Executive Order 11,110 – An Administrative Act, Not A Challenge to The Federal Reserve

Since John Kennedy was notorious for not knowing the difference between monetary and fiscal policy, it is unlikely he was issuing any direct challenge to the Federal Reserve. Instead, he was faciliating the phasing out of Silver Certificates in favor of Federal Reserve Notes.

The issuance of U.S. Notes, which some falsely believe were issued pursuant to Executive Order 11,110, were done to keep with the requirement of the 1878 Act. The Act of May 31, 1878 required that $346,681,016 of Legal Tender notes always be in circulation.

JFK Urges the Demonetization of Silver

Indeed, JFK authorized the further issuance of Silver Certificates as a stop gap measure while the U.S. government phased out silver certificates to replace them with Federal Reserve notes pursuant to the Act of June 4, 1963.

JFK not so famously said in urging the demonitization of silver (except for use in coins):

“I recommend authorization… for the Federal Reserve System to issue notes in denominations of $1, so as to make possible the gradual withdrawal of silver certificates from circulation.” Except for its use in coins, silver serves no useful monetary function.”

So why did JFK order the issuances of Silver Certificates?

Kennedy did not act alone!

The order to issue Silver Certificates against existing Treasury silver was an intermediate step in Kennedy’s goal to remove Silver Certificates from circulation and was issued in conjunction with the passing of the Act of June 4, 1963 (31 U.S.C. 405a-1). (the same day as Executve Order 11110). If Kennedy was trying to undermine the Fed he would have issued an order increasing the number of Silver Certificates in circulation and increasing the silver monetary reserves backing those certificates.

Instead, Kennedy issued Executive Order 11110 to enable the Act of June 4, 1963 in order to phase out Silver Certificates.

On June 6, 1963 the Spokane Daily Cronicle reported on the Act of June 4, 1963:

“Under the new law pushed by the Administration, the Treasury will be able to retire Silver Certificates paper money now backed by silver bullion as the silver is melted down for coinage. The Silver Certificates would be replaced by Federal Reserve Notes.

Kennedy’s goal of de-monetizing silver realized after his death

Pursuant to the Act of June 4, 1963, U.S. Treasury C. Douglas Dillon announced in March 1964 the end of redemption of silver certificates to coincide with the cessation of mintage of silver coinage at the end of that year. The Act allowed the exchange of silver certificates for silver bullion until June 24, 1968.

Click here for further analysis of JFK vs. the Fed.

The last “Red Seal” United States Note Series were issued under the Johnson Administration in 1966 in the form of $100 notes to keep within the requirement of the Act of 1878. If a message had been “sent” to Kennedy not to challenge the Fed by issuing United States Notes, seems Lyndon Johnson missed it!

The Act of 1878 requiring United States Notes to be kept in circulation was finally discontinued in 1994 via the Riegle Improvement Act that relieved the Treasury of the requirement of issuing U.S. Notes.

United States Notes are considered legal tender and can be redeemed for Federal Reserve Notes. Like the Silver Certificates, United States Notes are collectibles and you can buy one for less than $15.

Series of Issuance of $5 Legal Tender Notes:

Small United States Notes: 1928, 1928-A, 1928-B, 1928-C, 1928-D, 1928-E, 1928-F, 1953, 1953, 1953-A, 1953-B 1953-C, 1963 & 1966 ($100)

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The early 1960’s were a simpler more prosperous time
1960's blender1960's transitor radio1960's television set with rabbit earsearly 1960's car

Images: Can Stock Photo

*the year of issue of the currency may be later than the date of the series, as series of currencies may be issued over a period of years.

**silver coins dated 1964 were minted well into 1965 at the U.S. Mint.

Further Reading:

JFK Favored Federal Reserve Notes and The De-Monetization of Silver

G. Edward Griffin on JFK and the Fed

Twelve Ways Silver Is Different Than Gold

Gold and Silver Manipulation – Suspected

Gold and Silver Manipulation – Actual

The Price of Silver in 1979/80 compared to 2013/2014

The US Mint used 550 Ounces of Silver to Produce 1964 Dated Dimes, Quarters and Half Dollars

Think the Fed Destroyed the Dollar?

Debunking the Federal Reserve Conspiracy Theories

How To Buy Gold

How To Buy Silver

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