This note is in Crisp uncirculated condition (Left bottm corner pinhole mark see scan)
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About Federal Reserve Bank Notes
Bank Notes—not to be confused with Federal Reserve Notes—are no longer issued
and are probably the most obscure type of paper currency. Federal Reserve Bank
Notes were authorized by the Federal Reserve Act of December 23, 1913, and used
as a form of emergency currency in the early twentieth
century. While the Federal Reserve Notes we see every day are the responsibility
of the Federal Reserve System as a whole, Federal Reserve Bank Notes were
obligations of the 12 different Federal Reserve Banks that issued them. The
notes were first issued in fiscal year 1916. One of the primary purposes of the
Federal Reserve System, established in late 1913, was to eliminate the system
of National Bank
Notes and to replace it with a centrally controlled system of Federal Reserve
Notes. However, dispersing Federal Reserve Notes across the country took time
and lawmakers feared that National Bank Notes might be withdrawn from circulation
faster than the new Federal Reserve Notes could be issued. This could cause
sudden drops in the number of notes in different parts of the country,resulting in
regional scarcities of currency. In such cases, the local Federal Reserve Bank
was authorized to step in and issue its own temporary currency to make up the
deficiency. But few National Banks retired their currency as quickly as lawmakers
had feared, and there was little demand for Federal Reserve Bank Notes.
Bank Notes were next issued during World War I when the Treasury withdrew
Silver Certificates from circulation and sold the backing silver to Great
Britain in 1918. To make up the loss in circulation, Federal Reserve Bank Notes
were issued as an emergency replacement. Production of the notes ended in 1922.
By that time, the Treasury had replaced the missing silver, and Silver Certificates
were reissued as the Federal Reserve Bank Notes were retired. A small-sized
form of the notes was produced and issued in early March 1933 when President
Franklin D. Roosevelt closed all the banks for three days to stop a banking
panic during the Great Depression. The Treasury feared that once thebanks reopened
there would be a mad dash by depositors for cash, sucking all the available
National Bank Notes and Federal Reserve Notes out of the economy. To counter
this threat, Federal Reserve Banks were authorized for a limited time to issue
as many notes as they saw fit. The feared run on the banks for currency never
materialized, and many of the notes shipped by the BEP were not issued. The
existing stock of Federal Reserve Bank Notes left over from the 1933-1934 printing,
$660 million worth, was issued during World War II, much of it in December 1942,
when the Treasury was suffering a cash crunch. These notes began to be retired
as the end of the war approached; and, in the summer of 1945, Congress amended the
Federal Reserve Act to end the use of Federal Reserve Bank Notes.
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