MONEY OF ACCOUNT OF THE United States of America (Union of states)(states united)
The following Notice was served to inform DOUGLAS COUNTY of possible violation of law. Right to make payment compliant to the will of the People.
April 18, 2008
NOTICE – This affidavit/notice is submitted for the record as facts that are currently known by Paul John Hansen and are directly related to the subject referred to.
This Affidavit is present to confirm delivery of notice, and duty to standing law.
a. Hansen suffers from no legal disability and all the facts testified to herein be known to Hansen personally, that all facts are admissible as evidence in any
b. Hansen is more than 21 years of age.
Notice of Sheriff’s Sale for April 30, 2008, Doc. 233 Â No. 2743.
1. It has been clearly communicated to Hansen by the, Linda Richter at, DOUGLAS COUNTY Attorney Office (located in suite 909) that the following is required to stop the above pending sale.
2. A accounting of payment required to stop the said sale as follows:
Attorney fees- ______________.
Property tax- _______________.
Other – ____________________.
Other – ____________________.
Total – ____________________.
3. I Paul John Hansen do notice DOUGLAS COUNTY and all it’s agent associated with the demand for payment required to stop the said sale of the following:
Herein, and Hereinafter “Hansen” shall mean Paul John Hansen a man on Nebraska soil by right.
4. Hansen has not knowingly waived any right as associated with said sale and alleged property tax obligation payment, and its form/species, that has been demanded by DOUGLAS COUNTY by way of said Court Order, and communication between, Attorney, Linda Richter and Hansen.
5. Hansen accepts every officer of DOUGLAS COUNTY as to their Oath of Office and it being a legally binding contract between Hansen and given agents associated
with the collection/demand for the alleged property tax due as associated with said property.
6. Hansen herein notices that, it is believed by Hansen that, DOUGLAS COUNTY agents are and have violated Hansen’s right as to form/species of payment that can
be legally demanded for payment of any tax due and owing to DOUGLAS COUNTY by Hansen.
7. Hansen has been informed that “Federal Reserve Note” is the bases of the accounting used to calculate the said Court Order as to taxes due to stop said Sheriff
Sale. Hansen herein gives notice that any payment demanded by a Nebraska government agent, as associated with the subject of this letter/notice shall be paid
only under protest.
8. Hansen gives notice that DOUGLAS COUNTY agents have therefore, demanded that Hansen cooperate/yield in this said agents violation of the law, by demanding
that Hansen make payment, based on accounting off the Negotiable debt instrument called the Federal Reserve Note, if Hansen wants to save his right to ownership
from said sheriff sale.
9. Hansen gives notice that any agent of the government that knowingly violates the law is therefore not protected by the law, loses immunity from being charged and prosecuted criminally and civilly in their personal, and/or official capacity. Hansen believes that such suits against said man in his personal capacity is bared from access from DOUGLAS COUNTY legal assistance, if in fact such actions were done outside the scope of there authority/law. Grand Jury Investigation.
10. Coinage Act of 1792
Act of 2 April 1792, 1 Statutes at Large 246
 CHAPTER XVI. – An Act establishing a Mint, and regulating the Coins of the United
SECTION 1. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, and it is hereby enacted and declared, That a mint for the purpose of a national coinage be, and the same is established * * * . SEC. 20. And be it further enacted, That the money of account of the United States shall be expressed in dollars or units, dismes or tenths, cents or hundredths, and milles or thousandths, a disme being the tenth part of a dollar, a cent the hundredth part of a dollar, a mille the thousandth part of a dollar, and that all accounts in the public offices and all proceedings in the courts of the United States shall be kept and had in conformity to this regulation. APPROVED, April 2, 1792. To do so is an breach of the constitution and can not be permitted.
11. Hansen herein gives notice to the Act of Congress above, recipients are to consult with their attorney(s) as to the legal obligation they have as an agent of the government corporation they represent. Â All agents are to consult with their attorney(s) as to the revised standing laws that have the same body of law as the above.
12. It is the duty of all agents that have participated in the collection of the tax for the said case against Hansen to confirm that the accounting amount demanded upon Hansen is calculated and in form, and species, as to conform to the standing laws of Nebraska and the United States laws as such where at the time of the creation of the constitutions of the United States, and the UNITED STATES, and THE STATE OF NEBRASKA, regardless of being revised, but are now standing. An original blue ink signed document as a duplicate of this document has been delivered to the following:
DOUGLAS COUNTY Attorney Office – ______________________________________________.
DOUGLAS COUNTY Clerk of the Court – ____________________________________________.
Paul John Hansen
c/o 1548 N 19
Omaha, Nebraska (by 68110)
County for Douglas_
Personally appeared before me the undersigned, an officer authorized to administer oaths, Paul John Hansen, who presented a valid identification with picture as
proof of his identification, and first being duly sworn, deposes and says that the forgoing 3 page instrument was subscribed and sworn before me the undersigned
Notary Public this 18 day of April 2008.
End of Â page 3.
((I need to add that one must, ideally, get a court account administrator, that collects funds for judgments, in the witness stand and demand what dollar the law requires him to demand.Â Then lay out all the dollars known to us and demand which one is demanded to satisfy the judgment. Silver Dollar, Gold Dollar, Spanish Silver Dollar, Susan B Anthony Silver Dollar, the Federal Reserve Dollar, etc. If she does not know how can you know what is demanded. One man told me he did this in a traffic case, per instruction by his brother who was an attorney, and the judge dismissed the case. He added the story so as to give the judge a way out. He said officer said he was speeding to catch me and had no red lights flashing, judge I was speeding to get to my work, this officer was speeding to get to his work, we both must get a ticket or none.)
In 1792 everyone knew what a dollar was, why not so today, law is to be exacting?
The united States originally adopted the silver standard in 1785 when Congress based the dollar on the Spanish milled dollar. Congress codified the silver standard
in the 1792 Mint and Coinage Act. Â The federal government (thanks to Hamilton) agreed to hold its silver reserves in The Bank of the United States. Congress also
fixed the ratio of gold to the Spanish milled dollar. This was, in effect, a derivative silver standard. Â (Derivative, in this sense, means in theory since the bank was
not required to keep silver to back all of its currency, but was required only to keep enough gold or silver on hand to satisfy those who actually wanted to perform
the exchange for precious metal.) Unfortunately, this practice of not requiring reserves to be on hand resulted in the abandonment of metal as the standard. The
next step was to create a bimetallic standard for the US Dollar. However, because of the huge debt taken on by the US Federal Government to finance the
Revolutionary War, citizens began to horde silver coins. In 1806 President Jefferson suspended the minting of silver coins. Originally, the united States Treasury
dealt only in gold or silver coin. In 1848, however, the Independent Treasury Act of 1848, legally separated the accounts of the federal government from the
banking system.Silver became overvalued in relation to gold. Gresham’s law, silver poured into the US, which traded with other silver nations, and gold moved out. In 1853 the US
reduced the silver weight of coins, to keep them in circulation, and in 1857 removed legal tender status from foreign coinage.
In 1857 the final crisis of the free banking era of international finance began, as American banks suspended payment in silver. This caused severe problems
throughout the world financial markets. Under stress of the Civil War, the united States government suspended payment in gold and silver altogether. During the
War and immediate post-bellum period, (186? to 1871), there were attempts base the dollar on international standards such as the gold and silver franc. With the
huge discoveries of gold and silver in the West the rapid influx of silver from new deposits, the expectation of scarcity of silver ended.
The combination that produced economic stability was restriction of supply of new notes, a central bank monopoly on the issuance of notes directly and indirectly, a
central bank and a single unit of value. As notes devalued, or silver ceased to circulate as a store of value, or there was a depression as governments, demanding
specie as payment, drained the circulating medium out of the economy. At the same time there was a dramatically expanded need for credit,.
During this period several states chartered banks (illegally?). Still, the need for stable values of specie caused resulted in the return of the gold standard. Once
again the united States Congress embraced the gold standard by the passage of The Fourth Coinage Act in 1873. Western mining interests considered this move
by Congress as a crime. For about five years, gold was the only metallic standard in the united States. Until 1920, however, all states accepted gold and silver
coins (including the Spanish real), as legal tender.
Congress eventually saw their mistake in surrendering the dollar to market forces. Susbsequently, Congress passed the Gold Reserve Act of 1933 that required all
gold coins and gold certificates be surrendered to the Treasury. Congress effectively lied to the people. They made it appear that this was to be a temporary
measure, similar to recoinage, but then it became permanent. Americans were soon forbidden to hold gold (or gold certificates) as a store of wealth. Though gold
jewelry was allowed, this appalling, tyrannical, and unconstitutional (as discussed above) measure was allowed as “necessary” under the “necessary and proper”
The Series 1934 gold certificates, consequently, were not a public issue. Like contemporaneous Silver Certificates, the 1934 Gold Certificates specified payment “in
gold” rather than “in gold coin,” so that the value of the dollar could be easily repegged as the price of gold and silver fluctuated. Â For some time, Franklin Roosevelt
would reset the price of gold at whim almost daily.
On June 4, 1963, President John F. Kennedy signed Executive Order No. 11110 that gave the Treasury Department the power “to issue silver certificates against
any silver bullion, silver, or standard silver dollars in the Treasury.” This has never been repealed, or challenged by the Supreme Court, remains as an option for
the President. Â However,
the value of the dollar settled at 35$ a troy ounce and remained there from the 1930’s to the 1970’s when the united States abandoned the metal standard,
altogether. As a result, (with the exception of Executive Order No. 11110), it could be argued that since the federal government has legally and consciously
abandoned their authority to issue gold and silver certificates (notes redeemable by gold and silver), private enterprise is free to do so under Article 10 of the Bill of
I don’t think the federal government has the right to control individuals from trading their certificates overseas. Therefore, one can keep an account in a foreign
bank and transact their accounts with notes and certificates backed by foreign banks. Â This is easier than ever to do through the Internet.
As the state-chartered banks cannot “make any Thing but gold and silver Coin a Tender in Payment of Debts”, or make and law “impairing the obligation of a
Contract” certificates redeemable by the foreign bank would be beyond the power and control of the state and, if I understand the US government’s position,
beyond their (federal) control as well.
So why shouldn’t private enterprise be free to issue coins redeemable in silver or gold?
The simple way to do that is to have the coins themselves contain a few miligrams of silver or gold. They could be randomly sampled by a reliable laboratory on a
regular basis to make sure they contain the actual amount of gold and silver as advertized. Â Then, when a few million are in circulation here and abroad, these
coins could be redeemed by paper certificates and electronic vouchers for bullion of known purity.
See the following discussion.
Six Kinds of United States Paper Currency
On 10 July 1929 the United States replaced its large size currency, like the Series 1923 Silver Certificate One Dollar bill above (click on the image for the reverse
design), with small size notes, like the corresponding Series 1928 note following:
The purpose of this change was simply to save some money on paper, but the timing inadvertently signified a new era in United States money. When the change
was made there were no less than six kinds of United States paper currency, but only three months later the stock market crash ushered in the era of the Great
Depression, during which three of those kinds of currency would disappear. Thirty years later, two of the remaining kinds of currency would also disappear, leaving
The six kinds of currency in 1929, colored coded with the colors of their seals and serial numbers, and with the denominations they were issued in series 1928 and
1929 (though not always in those years themselves), were:
United States Notes (Series 1928: $1 $2 $5) Go!
Gold Certificates (Series 1928: $10 $20 $50 $100 $500 $1000 $5000 $10,000) Go!
National Bank Notes (Series 1929: $5 $10 $20 $50 $100) Go!
Silver Certificates (Series 1928: $1) Go!
Federal Reserve Bank Notes (Series 1929: $5 $10 $20 $50 $100) Go!
Federal Reserve Notes (Series 1928: $5 $10 $20 $50 $100 $500 $1000 $5000 $10,000) Go!
The three kinds of currency that remained after the Depression were:
United States Notes (Series 1953: $2 $5) Go!
Silver Certificates (Series 1953: $5 $10 — Series 1957: $1) Go!
Federal Reserve Notes (Series 1950: $5 $10 $20 $50 $100) Go!
And all that remained by 1970 were:
Federal Reserve Notes (Series 1969: $1 $5 $10 $20 $50 $100 — Series 1976: $2) Go!
The origin and nature of these kinds of currency will be considered below. Although the color of the seals and serial numbers on Gold Certificates was yellow, here
orange is used for greater contrast. The reverse of large note Gold Certificates had actually been orange, “goldbacks” as opposed to “greenbacks”; but small note
Gold Certificates were made “greenbacks” also. (That was reversed with series 1934 Gold Certificates, which again had orange reverses, but those notes never
circulated to the public).
That was part of a process to unify the design of all the currency. The variety of large note design gave way to common elements and a common look for the small
notes. This changed little over the years, until a radically redesigned $100 bill was introduced in the 1990’s, inaugurating a gradual change in all the currency for
security reasons. United States currency had never featured anti-counterfeiting devices like watermarked paper and security threads, which had appeared in
foreign money decades earlier.
All the small notes featured a portrait of Washington for the $1 note, Jefferson for $2, Lincoln for $5, Hamilton for $10, Jackson for $20, Grant for $50, Franklin for
$100, McKinley for $500, Cleveland for $1000, Madison for $5000, and Chase for the $10,000. When one series of $100,000 notes was issued (1934 Gold
Certificates), Wilson was put on them. Although these portraits are often called “dead presidents,” three of them, Hamilton, Franklin, and Chase, were never
Presidents. Large notes had featured many more portraits, including Martha Washington, William Tecumseh Sherman, John Marshall, James Monroe, the Sioux
Indian Takokainyanka, Samuel F.B. Morse, and many others.
Salmon P. Chase, on the $10,000 bill, was an old Abolitionist lawyer and politician (from the pre-Republican Liberty Party). As it happened, he was appointed by
Abraham Lincoln to be Secretary of the Treasury and was responsible both for the introduction of federal paper money during the Civil War and for the motto “In
God We Trust,” which was introduced on the coinage at that time (but which did not appear on currency until 1957). In 1864 Chase was appointed Chief Justice of
the United States Supreme Court, and in that capacity he ruled that the “Legal Tender” United States Notes had unconstitutionally voided private gold obligations
previously contracted (Hepburn v. Griswold, 1870). Later his decision was reversed (Knox v. Lee and Parker v. Davis, 1871) with the help of politically reliable
justices appointed by President Grant, opening the way for future use of fiat paper money and the wholesale voiding of private and public gold obligations by the
New Deal court (Norman v. Baltimore & Ohio Railroad Co., Nortz v. United States, and Perry v. United States, 1935).
The largest collection of $10,000 bills, 100 (Series 1934) to make for a total value of $1,000,000, used to be on display at Binion’s Horseshoe Casino in Las Vegas,
Nevada [one note shown right] — probably not the kind of place that Salmon P. Chase would have approved of. The collection, however, was sold (January 2000)
and has now (June 2000) been broken up for individual sale. This sad outcome seems to be the result of deaths and financial disputes in the Binion family.
The reverses of small notes remained much the same, until the recent complete overhaul of the designs. The reverse of the $1 bill was changed in 1935, as
discussed under “Silver Certificates” below. The reverse of the $20 was changed after Harry Truman remodeled the White House. The subsequent image shows the
“Truman Balcony,” with more trees and adjoining structures, in contrast to the original. Now, in 1998, the redesigned $20 (series 1996) shows the front of the White
House, rather than the back, on the reverse. The new 1999 $5 reverse still shows the Lincoln Memorial, as before. The new 1999 $10 reverse has a different
perspective on the Treasury Building than the old one. Indeed, the full face view seems rather too similar to the new view of the White House, and the charm of the
vintage automobile is lost. The reverses of large notes, again, showed a lot more variety; especially in the reproduction of the great paintings of American history
such as still hang in the Rotunda of the United States Capitol. The painting of the signing of the Declaration of Independence, by John Trumbull, which was
introduced on the reverse of the “Bicentennial” $2 Federal Reserve Note in 1976, was originally on the reverse of the $100 “first charter period” (i.e. banks
chartered between 1863 and 1882) National Bank Note.
The Series 1928 notes were signed by Secretary of the Treasury Andrew W. Mellon (1855-1937), one of the great men of American History. Often called the
greatest Secretary of the Treasury since Alexander Hamilton, for reducing the United States war debt from World War I and cutting income taxes, which had soared
during the War, Mellon has nevertheless often been smeared and belittled since then for his tax program, even though the next Presidents to favor and carry out
similar tax cuts were Democrats John F. Kennedy and Lyndon B. Johnson.
Mellon has been accused of moving the tax burden from the rich to the middle class, of practicing “soak the poor” taxation, and of justifying all this with “trickle
down economics,” i.e. the poor will get the crumbs from the tables of the rich. These accusations are equal parts lies and either confused or overtly anti-capitalist
economic myths. They are lies because the high tax rates of World War I had motivated the “rich” to hold down their incomes and escape the highest brackets,
actually reducing tax revenues. Mellon’s recommendation, which reduced tax rates for everyone, and reduced them to almost nothing for the poor (in 1929 those
with incomes under $10,000, a large sum in those days, carried only 1.3% of the tax burden), ended up increasing revenues from the highest tax brackets, as the
rich paid more as smaller percentages of higher incomes. After the same effect was seen when President Johnson cut taxes, economist Arthur Laffer explicitly
formulated the theory of the “Laffer Curve” in the 70’s, that lower tax rates can produce higher revenue. This was then implemented again by President Reagan, to
the same effect, though leftists continued to think that they would get even more revenue just by raising the rates again. The political slogan of disparaging “trickle
down economics” was based, of course, on the false notion that prosperity comes from money that is taxed by government and distributed by political largess,
rather than by private capital investment which increases productivity and production. It is the same error we see in the continuing failure to understand Say’s Law.
One peculiarity of the small note series is that until 1976 the only $2 bill issued was a United States Note. These turned up occasionally when I was a child in the
1950’s. There was also a $1 United States Note in 1928, but this was discontinued and is now very rare. All $1 bills until 1963 were Silver Certificates, but there
were no $2 Silver Certificates. Why so little use was made of the $2 denomination is a little mysterious. Part of the problem may have been the peculiar reputation
that $2 bills had gotten. They were thought of either as bad luck or as the proper tender for houses of prostitution, neither of which made them appealing for most
people. The attempt to revive the $2 bill in 1976 is discussed below under “Federal Reserve Notes.”
Issuing any notes larger than $100 was discontinued during World War II because of fears of German counterfeiting. With the development of other financial
instruments, and now wire transfers, there is now felt to be no need for larger notes — though, when a 1995 $100 bill is only worth about $22 in 1967 dollars, it has
been suggested that a $500 bill (1967 $111) might be appropriate. Another consideration, however, is that the Police State tactics used for the War on Drugs
include eliminating any money that can be used anonymously. If cash could be entirely replaced, Drug Warriors figure, the drug trade would not survive: People
could not put drug purchases on their Master Cards. This strategy means that the United States government will adopt no measure to make the use of cash easier,
like $500 bills.
Until 1963 all United States currency stated that its value was “Payable to the Bearer on Demand,” which reflected the circumstance that real money was originally
considered to be gold or silver coin, not a paper document. In that year, however, when Silver Certificates were discontinued and the first $1 Federal Reserve Note
and the last $2 and $5 United States Notes were issued, the ancient formula was deleted from the new series. A year later the last silver was eliminated from
United States coins. Thus paper and tokens became United States money. This entire process, starting with the New Deal, or perhaps even the Civil War, and
culminating in 1963, was unconstitutional. Article I, Section 10, Paragraph 1 of the United States Constitution says, “No State shall…make any Thing but gold and
silver Coin a Tender in Payment of Debts.” So the question is, if the States can’t do it, this must mean that the Federal Government can. No… The Tenth
Amendment says, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or
to the people.” The Constitution, as it happens, does not “delegate” the power to “make any Thing but gold and silver Coin a Tender in Payment of Debts” to the
Federal Government. Therefore, government at no level has the power to make anything but gold and silver coin tender in payment of debts. James Madison
himself called paper money a “wicked scheme.” It is, when its purpose is to inflate debts and license fiscal irresponsibility by government (the greatest debtor).
That is the kind of government we now have.
Personally, I don’t think that there is anything wrong with fiat paper currency. It is actually a good idea, to avoid deflation. The Bank of England handled a fractional
reserve currency rather well for more than two centuries. Bank of England notes were “as good as gold” (until the Bank was nationalized by the Labour
Government in 1946). I am not a gold bug. However, the way fiat money was introduced in the United States was dishonest and fraudulent. The Civil War notes
may have been “necessary” as a War measure, but when one deception and misuse piles on another, the result is something entirely unrecognizable. This is now
the case with American government, whose present form is something which no Founding Father would own or accept. The result of this, as the Founders would
have predicted, is corruption on a vast scale, when politicians are more than willing to use “the full faith and credit of the United States” to buy votes, and voters
actually expect unlimited free “benefits” from Federal largess. Verily, we have our reward — a peonage about which Jefferson would have said, “This is not the
government we fought for.”
United States Notes
United States Notes
United States Notes were the first permanent kind of federal paper money, the original “greenbacks.” Previously, what the Treasury had issued in wartime were
bonds and interest bearing notes. These were also issued during the Civil War, but then the innovation was introduced of Legal Tender Notes that paid no interest
but were intended for “all debts public and private, except duties on imports and interest on the public debt” — the purest kind of fiat paper money. To this was wide
objection on the grounds that the Constitution granted the federal government the power “to coin Money, regulate the Value thereof…,” which implied that “Money”
was coinage and could not simply be replaced by a paper obligation, however appropriate the latter might be for instruments of federal borrowing. As noted above,
this issue was fought out in the Supreme Court, ultimately to the advantage of the federal government. However, after the Civil War, Congress had no intention of
relying on paper money. That would have been unacceptable in international trade and finance in that day and age of the ascendant Gold Standard — when Britain
and the Bank of England set the standard for sound coinage and sound currency. Also, the evils always associated with paper money had already manifested
themselves in price inflation. This was all the more evident at the time in that gold coinage had not been withdrawn or demonetized but continued to circulate at a
premium alongside the greenbacks. So people could see day to day that gold dollars were more valuable than paper dollars.
Congress therefore determined to withdraw the paper currency. This, however, helped produce a deflation, which hurt debtors, especially politically powerful
farmers. The Greenback Party thus promoted more paper money, to inflate debts, not less. This political agitation stopped the actual withdrawal of the greenbacks,
but the rapid growth of the United States economy nevertheless continued the deflation (see “Say’s Law”). By 1878 greenbacks were trading at par with gold
dollars, and the United States government “resumed specie payments,” i.e. began to honor all its gold obligations and would “pay the bearer on demand” gold
dollars. United States Notes were then frozen at a total value of $346,681,016. This permanently ended the power of the Treasury to directly create new fiat paper
Over time, United States Notes became an increasingly minor part of United States currency, and the large notes conservatively reflected designs of Civil War
currency, as can still be seen in the Series 1917 $1 [reverse] and $2 [reverse]. By 1910, U.S. Notes only accounted for a tenth of all currency, and by 1960 for
only a hundredth. Thus, this form of currency came to be considered a nuisance. In 1966 it was decided to discontinue current issues ($2 in 1966 and $5 in 1968)
and to simply concentrate on satisfying the law of 1878 with a new $100 note issue. Few of these, however, made their way to the public. The Treasury adopted the
practice of moving notes into a certain room where they were regarded de jure as being in circulation. By the 1990’s, when U.S. Notes would count for less than a
thousandth of U.S. currency, it was considered about time to end this farcical, dishonest procedure, and Congress finally eliminated the statutory requirement that
the Treasury issue them.
The 1966 $100 United States Note has the distinction of having introduced a new seal for the Treasury of the United States, which has been used on all subsequent
notes. The old seal (left) had said “THESAUR. AMER. SEPTENT. SIGIL.,” a Latin abbreviation for “Seal of the Treasury of North America,” while the new seal (right)
simply says, “The Department of the Treasury.”
Gold Certificates were first issued in 1863, perhaps to reassure people that the United States Government did not intend to replace all U.S. money with greenbacks.
The distinctive orange reverse marked them as different in kind. A “Certificate” signified that the notes were backed by 100% reserves of gold coins, for which they
could be redeemed on demand. This was the hardest of hard money short of gold coin itself, since for other currencies the Treasury would never maintain more
than a fractional gold reserve. The $10 large note of series 1922 showed Michael Hillegas on the obverse [& orange reverse]. Hillegas, the Treasurer of the United
States under the Articles of Confederation (1775-1789), was such an obscure historical figure, then as now, that he was identified in small print under his name
(“First Treasurer of the U.S.”).
In small notes, the orange reverse of Gold Certificates was abandoned. This might be seen as a portent of the future; for once the Depression started, and the
widespread failure of banks, as the Federal Reverse System refused to support their liquidity, led to a massive deflation, gold came under attack, as it had in the
previous century, as the culprit. The refrain that there “wasn’t enough money” was heard again, and Congress decided to give President Roosevelt the power to call
in all the gold coinage, “regulate the Value therefore,” and create more money. The Gold Reserve Act of 1933 thus required that all gold coins and gold certificates
be surrendered to the Treasury. This was at first said to be a temporary measure, as would have been consistent with age old practices of recoinage, but then it
became permanent. Americans were soon forbidden to hold gold (or gold certificates) as a store of wealth, though amusement (e.g. jewelry) was allowed. This
appalling, tyrannical, and unconstitutional (as discussed above) measure was allowed as “necessary” under the “necessary and proper” clause, though all it
accomplished was to turn Fort Knox into the tomb for a grotesquely Mediaeval or Pharaonic hoard of useless metal.
The Series 1934 gold certificates, consequently, were not a public issue. They were only intended to circulate among Federal Reserve Banks and therefore read,
“Payable to the Bearer on Demand as Authorized by Law” — and the restored orange back would never see the light of day. Like contemporaneous Silver
Certificates, the 1934 Gold Certificates also now specified payment “in gold” rather than “in gold coin,” so that the value of the dollar could be easily repegged.
Indeed, for some time Franklin Roosevelt would reset the price of gold at whim almost daily — though eventually the value settled at 35$ a troy ounce and
remained there from the 1930’s to the 1970’s.
It became legal to hold gold certificates on April 24, 1964. The obligation, of course, to “pay the bearer on demand” in “gold coin” would not be honored. By the
1970’s Americans could again freely own and trade gold, but this was probably allowed only because President Nixon ceased redeeming U.S. dollars held by foreign
governments for gold. The amount of U.S. Currency (Federal Reserve Notes at that point) had come to exceed what could be covered even by the reserves of Fort
Knox; and, after all, the federal government still wanted to maintain its hoard.
National Bank Notes
National Bank Notes,
National Bank Notes, or “National Currency,” were established by the National Banking Act of 1863. This was in part a device to raise money for the federal
government, since it required that National Banks that wished to issue banknotes deposit United States Securities with the Treasury as backing for the notes. This
effectively multiplied the money with which such securities were purchased, turning the money itself over to the Treasury, for its purposes, but then enabling the
banks to issue currency against it. The desire of the federal government to monopolize banknotes is evident in the tax that was subsequently levied on all
banknotes issued by State banks. This effectively eliminated them — and incidentally inaugurated the federal practice of pretending to (constitutionally) tax things
when its real purpose was to (unconstitutionally) forbid them. This dishonest device was later extended to opium, marijuana, etc.; so that today there is a general
impression that the federal government can forbid anything.
The other rationale for the National Banking Act was to “protect” the public from fraudulent and poorly managed banks, whose banknotes might become worthless.
The device of “National Currency” did make the notes obligations of the Treasury, which meant they were good even if the banks failed; but why the solvency of
the banks otherwise was thought to be a federal concern, when the States were perfectly capable of regulating their own banks, is a good question. Indeed, aside
from the evident self-interest of the federal government in raising money for the Treasury during the Civil War, the principal motivation seems to have been a
political debt that the Republican Party owed to its Whig and Federalist Party antecedents. Nevertheless, while the Federalists had always wanted, and for a time
had, a real Central Bank (the Bank of the United States), nothing of the sort was politically possible in 1863. The National Banking Act therefore simply chartered
individual National Banks, whose bona fides and solvency could be supervised by the Comptroller of the Currency.
Large size National Bank Notes had displayed wonderful design work and are still avidly collected, both because of that and because of their association with local
banks, many of which still exist. Designs were uniform for each “charter period,” i.e. for each 20 year period after which the Banking Act had to be renewed (a
provision now replaced by perpetuities). A $20 note [reverse] from the “third charter period” shows Hugh McCulloch, the first Comptroller of the Currency (1863-
1869), with real ink pen signatures of the President and Cashier of the First Marine Bank of Erie, Pennsylvania. Small size National Bank Notes, however, were a
miserable affair, indistinguishable in most design elements from other small currency. Even the characteristic traditional practice of displacing portraits and
vignettes so as to center the name of the bank on the face of the note was abandoned.
If the problem during the Great Depression had really been that there was “not enough money,” then it would be surprising that National Bank Notes were
suppressed in 1935 — the bonds that had been issued to secure banknotes were all discontinued. If, however, it is understood that the political answer to the Great
Depression was that only the federal government can be trusted with power over the economy, banking, and money, then the move is self-evident. That the
Depression dragged on for another four or five years has never been taken as evidence against this inference — as it has rarely been noticed for any other
purpose in American politics.
Since National Bank Notes were not directly backed by gold, the obligation, like that of United States Notes, stated that they were not for the “payment of duties on
imports or interest on the public debt.”
Silver Certificates were created by Act of Congress on February 28, 1878. This was a response to “Free Silver” agitation. If the partisans of inflation could not get
paper currency, then retaining the monetary status of silver seemed like the next best choice. Putting the United States on the Gold Standard in 1873 (the “Crime
of 1873”) had set off the controversy. But while the United States was never formally off the Gold Standard, Congress did respond to Free Silver forces with various
laws for the Treasury to purchase and coin silver (as dollars, on the 1837 weight). This continued for many years after 1878, though fatal blows were dealt against
it in 1894 by Grover Cleveland, who was a hard money Democrat, and the defeat of William Jennings Bryan in 1896. While Bryan contended that ordinary people
were being crucified on a “Cross of Gold,” he ended up crucified on his own Cross of Silver.
Although cowboys (and later Las Vegas) may have liked silver dollars, heavy coins were never popular with most people. Silver Certificates therefore allowed the
Treasury to mint its silver dollars, let them sit, and just issue paper instead. Silver Certificates originally were in denominations up to $1000; but after 1896, notes
were kept to $10 and under. The Series 1896 $1, $2, and $5 Silver Certificates were the stunning and celebrated “Educational Series,” featuring various allegorical
designs, such as “History instructing youth” on the $1 [& reverse]. These rare and valuable notes have probably the most elaborate designs (subsequently never
repeated) of any United States currency.
Except for the rare 1928 $1 United States Note, all small $1 bills until 1963 were Silver Certificates. Starting in 1934, these simply said they were redeemable “in
silver” instead of “in silver dollars”; and, strangely enough, they could be redeemed in silver (small bars) at the United States Treasury all the way until 1968 — the
last hard money activity of the United States government.
The major change in design that took place in the history of Silver Certificates was that the reverse of the 1928 $l bill was replaced in the Series 1935 notes with
the familiar Great Seal of the United States design, though still without “In God We Trust,” which only appears starting with Series 1957.
Federal Reserve Bank Notes
Federal Reserve Bank Notes,
Identical to National Banks Notes in form and function but issued by Federal Reserve Banks, these notes were retired in 1945.
This variety of notes was originally, as large notes, much more distinctive, sharing elements with the traditional design of National Bank Notes but unified in design
with the new Federal Reserve Notes. Thus the Federal Reserve Bank Note $5 of Series 1914 simply displaced the portrait of Lincoln to the side from the
contemporaneous Federal Reserve Note $5 and replaced it in the center, as in National Bank Notes, with the name of the bank. The reverses are identical, except
that “National Currency, Federal Reserve Bank Note” replaces “Federal Reserve Note” and the obligations are different — Federal Reserve Notes were redeemable
in gold, while National Currency could not be used for duties on imports or payments on the public debt.
One of the most popular and valuable notes of all U.S. currency was the Series 1918 Federal Reserve Bank Note $2. The reverse of this note displays the picture of
a Battleship — hence the “Battleship $2.” For many years, it was not clear whether the ship was intended to be the battleship Texas, which survives on public
display at the San Jacinto Battlefield outside Houston, Texas, or its sister ship, the New York. Recently the Bureau of Printing and Engraving, however, announced
that the ship was supposed to be the New York. Why it was necessary to wait more than 70 years to do this, especially when the announcement would then look
like a political snub against Texas, is not clear. The companion Federal Reserve Bank Note $1 [reverse] is much more common.
The large Notes from the Federal Reserve Bank of New York will be seen to be signed by the Governor of that bank, Benjamin Strong, who powerfully influenced
the policy and actions of the entire Federal Reserve System, especially the Governors Committee on open market operations, which was responsible for the
purchase of securities (the principal means of expanding the money supply), until his death in 1928.
Evaluation of Strong and his role reveals the division in Free Market economists between the Monetarists and the Austrians. For Milton Friedman, Benjamin Strong’s
policy of maintaining price levels in the 1920’s, during which there was no deflation despite tremendous economic growth, and his willingness to maintain the
liquidity of banks during Panics — both tasks accomplished through the open market purchase of securities by the Federal Reserve — was precisely the job, and a
good one, that the System had been created to do. Thus, Friedman quotes Clarence A. Woolley, one of the directors of the New York Federal Reserve Bank in
1932, as remembering, “Governor Strong had said further that if this power were used in a big way, it would stop any panic which might confront us” [Friedman &
Schwartz, A Monetary History of the United States, 1867-1960, Princeton, 1963, p. 412]. But by the time the banking crisis started in the Depression, the leadership
of the Federal Reserve System had forgotten the purpose that Strong understood so well. They let the banks fail, to catastrophic consequences. Evidently Mr.
Woolley did not have the power or influence to get done what he knew Governor Strong would have done.
On the other hand, Austrian School economists like Murray Rothbard have seen Benjamin Strong as a villain for expanding the money supply beyond its hard
money base. Without that expansion, there could have been no credit collapse, no banking crisis, and the Depression would not have begun. This kind of criticism,
however, is based on the ideas that (1) any kind of fractional reserve banking is fraudulent in the first place and (2) that inflation is not an overall rise in prices but
any expansion of the money supply beyond a commodity base (specifically gold). These are both strange ideas. Fractional reserve banking cannot be “fraudulent”
when there is nothing secret about it and when it is clear that people would have to pay for banks to hold their savings with 100% reserves, while banks will pay
them for savings that can be (prudently) loaned to others. Similarly, redefining “inflation” not to refer to price levels ignores the importance of prices, especially the
economic and political damage that deflation can cause — as was caused by the 1865-1896 deflation and was avoided by the maintenance of prices in the 1920’s.
As Friedman would agree, expanding the money supply too much does cause inflation, and this has been the evident policy of the Federal Reserve System for
decades now, constituting a continuing regime of theft by the Federal Government; but the maintenance of price levels by monetary expansion is not inflation and it
actually prevents the theft which results from the deflation of debts, which bankrupted many people and businesses in the 19th Century and at the beginning of the
Depression. Thus, although Rothbard has a perfectly valid criticism of the irresponsibility of the Federal Reserve in maintaining a regime of constant inflation, what
he would prefer instead is really a kind of utopianism that ignores both the good faith, contractual validity of fractional reserve banking and the real economic
damage done by deflation.
Perhaps the most noteworthy thing about the small Federal Reserve Bank Notes is that there is absolutely nothing to distinguish them in any of the ways that the
large notes were distinctive. Even the names of the banks seem printed in a perfunctory way; and the pre-printed “President,” to show where the name of the
president of the bank is to be printed, is simply blacked out with an overprinted bar, since Federal Reserve Banks had “governors,” not “presidents”! Such a
hideous device testifies to a sudden lack of interest in the aesthetics of the currency, or at least this particular currency.
Federal Reserve Notes, until 1981
Federal Reserve Notes
A new kind of currency was created by the Federal Reserve Act of December 23, 1913. This was in part a response to continuing political agitation for the creation
of a Central Bank for the United States, but the more immediate prod came from the Banking Panic of 1907. The Aldrich-Vreeland Act of 1908 had expanded the
securities that banks could use to secure their currency, but this was regarded as unsatisfactory for the long run. There did not seem to be good provision in the
banking system to support the liquidity of banks during panics and runs. The banks themselves had survived the Panic by suspending cash payments and relying on
checks and “clearing house certificates” in lieu of cash. This had actually worked well enough, but the argument was made that it had been irregular and illegal and
that something needed to be done about it.
So the United States got the Federal Reserve System. Since a Central Bank was still anathema, under the fading but still happy and adequate influence of Thomas
Jefferson and Andrew Jackson, the Federal Reserve System was designed to be a decentralized organization of no less than twelve Federal Reserve Banks: Â Boston
(1-A), New York (2-B), Philadelphia (3-C), Cleveland (4-D), Richmond (5-E), Atlanta (6-F), Chicago (7-G), St. Louis (8-H), Minneapolis (9-I), Kansas City (10-J),
Dallas (11-K), and San Francisco (12-L). The names of the banks and their characteristic number or letter have always appeared on Federal Reserve Notes and
Federal Reserve Bank Notes issued by them. This assignment clearly reflects the distribution of population and economic development in 1914. It has not been
The first Federal Reserve Notes, like the $5, $10, and $20, were handsome and dignified, initiating design features that would become permanent in small notes.
The allegorical reverses, never repeated, are reminiscent of the “Educational” Silver Certificates. The reverse of the $5 shows the landings of Columbus and the
Pilgrims, the reverse of the $10 images of agriculture (no tractor yet) and industry, and the reverse of the $20 transportation, by land (i.e. railroad, with the auto
and airplane as minor details) and sea (with the Statue of Liberty in the background). The reverse of the $50 was an allegorical figure of Panama, flanked by a liner
and a battleship in each ocean. The $500, $5000, and $10,000 notes repeated historical paintings, by John Trumbull and others (which hang in the Rotunda of the
United States Capitol), that had already appeared on first charter period National Bank Notes. The only such painting to subsequently reappear on Federal Reserve
Notes was the Signing of the Declaration of Independence (by Trumbull), originally on the first charter period (series 1863 & 1875) $100 notes, on the Bicentennial
The significance of the multiple Federal Reserve Banks and the decentralized system, however, has declined. The system was made a lot more centralized in the
1930’s, as part of the aforementioned conclusion that only the federal government can be trusted with power over the economy, banking, and money. The
Depression at the time was seen as resulting from the misbehavior of “speculators” and loose practices by the financial and stock markets. However, it is now much
clearer that one of the prime villains at the beginning of the Great Depression was the Federal Reserve System itself, whose mistakes had nothing to do with lack of
power or centralization. Indeed, the System could have responded better if it had been even less, not more, centralized than it was. Nevertheless, centralization
continues, and the new, redesigned Federal Reserve Notes no longer bear the seal of their bank of issue, though the bank is still indicated, without name, by the
letter and number code. Compare the Series 1996 $50 Federal Reserve Note with the previous Series 1993 $50 Federal Reserve Note [reverse].
The original notion behind Federal Reserve Notes was to replace the “clearing house certificates” upon which banks had relied instead of cash during banking
panics. Since Federal Reserve Notes were redeemable in gold (though perhaps only at the United States Treasury), they would have been just the kind of
reassuring currency to supply to banks during a run. Since there was only a fractional reserve behind the Notes, however, the temptation would always be there to
overextend them for political purposes. Although the Treasury had been unable to print money since 1878, it was now given an indirect ability to do so, whenever it
could persuade the Federal Reserve to create money by buying United States securities itself, either directly from the Treasury or indirectly off the open market.
Nevertheless, things seemed to work well enough during the 1920’s. The beginning of the System had coincided with a sharp inflation, so perhaps too much money
had been abruptly pumped into the economy. But then during the Twenties, despite swift economic growth and confusing factors like large foreign lending and
investment, remarkable price stability was maintained. As long as the Federal Reserve System saw this as its goal, then it could well have aspired to a reputation
like the Bank of England, whose notes were thought to be “as good as gold.”
The problem is what happened during the Depression. Banking panics were nothing new — that is what the Fed was created for. But when banking panics started
(as unemployment abruptly jumped from 6% to 15% at the end of 1930), the Federal Reserve suddenly didn’t trust banks enough to back them up. If the banks
were insolvent, evidently, they must be allowed to fail. Unfortunately, so many banks were seen as insolvent and allowed to fail that it took the whole United States
economy down with it. But the Federal Reserve could be proud of being financially solid itself! This served no purpose, however, beyond bureaucratic ass-covering.
This turns out to be a classic example of bureaucrats who do not have to pay the cost that results from their actions. The banks may fail, the economy may
collapse, but they still have their jobs! Indeed, if the Depression could be blamed on “speculators,” the bureaucrats could actually see their status, pay, and power
increase! In 1907, it is obvious that the banks could work out their own salvation because they actually did not want to fail. Failed banks mean bankers out of a job.
Perhaps even bankers committing suicide. But among all the Depression stories about window leaps on Wall Street, there don’t seem to be any about leaps from
the nearby Federal Reserve Bank of New York.
Thus the Federal Reserve System has become the last thing that was supposed to be possible in America: A Central Bank. And a political football. The inflation of
the 1970’s never was blamed on the Federal Reserve expanding the money supply too quickly, even though the popular economic theory of the time, Neo-
Keynesianism, held that inflation could cause prosperity. The System might have wanted to claim credit. But the strategy didn’t work out very well, as
unemployment increased with inflation. It has been more obvious recently that the lower inflation of the 1980’s and 90’s has been the result of restraint in money
creation. On the other hand, President Clinton was appointing Keynesians to the Federal Reserve Board, and there are still complaints about “tight money.” So the
potential still exists for follies equivalent to the 1930’s or 70’s.
Until the new anti-counterfeiting designs that have now come in (the Series 1996 $100 Federal Reserve Note, obverse and reverse, the Series 1996 $50 Federal
Reserve Note, obverse and reverse, the Series 1996 $20 Federal Reserve Note, obverse and reverse, the Series 1999 $10 Federal Reserve Note, obverse and
reverse, and the Series 1999 $5 Federal Reserve Note, obverse and reverse), the only major change in design of Federal Reserve Notes was on the “Bicentennial”
$2 bill, introduced in 1976 and featuring a different reverse, showing the signing of the Declaration of Independence, from the traditional picture of Jefferson’s
home, Monticello. This new reverse still appears on the current, series 1995, notes. The introduction of the Bicentennial $2 bill was intended, with the Susan B.
Anthony $1 coin, to accompany the phasing out of the $1 note. However, the $1 coins were not popular, and the public also seemed to maintain mixed feelings
about the $2 bill. The $1 thus continues in its traditional role. With new designs introduced now down to the $5 note, and with no plans to introduce new designs for
the $2 or $1, another attempt may be made to phase out the $1 bill. A new brass $1 coin is now being introduced (misleadingly called the “golden coin” by the
Treasury), with a handsome portrayal of Sacagawea, the Indian interpreter of Lewis and Clark. Unlikely to be confused with the quarter (as the Susan B. Anthony
was), this design cleverly combines the politically correct themes of (1) a woman, (2) a Native American, and (3) an uncontroversial figure from American History.
Despite these political considerations, the result is a handsome design. Whether this will be used as a pretext to launch another effort to replace the $1 bill has not
yet become clear.
Late in 2002, it looked like the Sacagawea dollar is not catching on. Actually, I rather like them. But the only place I’ve been getting them is from the stamp
machine at the post office (when it gives change at all, rather than eating all the money). Now I have begun to get Susan B. Anthony dollars from the machines as
well. I don’t like them; and if the Treasury really wants Sacagawea to make it, the way to do it is not to start slipping Susan B. Anthonys out with them. This makes
it look like they still just want to unload all the old stuff that nobody wanted.
In 2007, the Sacagawea dollars are still being minted, are invisible to any circulation that passes through my hands, are still being mixed with Susan B. Anthonys at
the post office, and receive no public promotion that might go with retiring paper dollars. At the same time, a new commemorative series of dollar coins featuring
United States Presidents has been introduced. Although these are the same size, weight, and color as the Sacagawea dollars, so far it doesn’t look like they are
intended for circulation. But they should be, if the Treasury really wants to create public support for a dollar coin.
Paper Money of the United States, Robert Friedberg, The Coin and Currency Institute, Inc [102 Linwood Plaza, Fort Lee, NJ 07024], 10th Edition, 1978
Standard Handbook of Modern United States Paper Money, Chuck O’Donnell, Krause Publications [700 E. State St., Iola, WI 54990], 7th Edition, 1982
Monetary Policy in the United States, by Richard H. Timberlake, The University of Chicago Press, 1993
Money Mischief, Episodes in Monetary History, Milton Friedman, Harcourt Brace Jovanovich, 1992
A Monetary History of the United States, 1867-1960, Milton Friedman & Anna Jacobson Schwartz, Princeton University Press, 1963, 1990