The silver certificates were authorized by Congress in 1878, to facilitate the circulation of the standard silver dollar. They are redeemable in silver only and are not legal tender, but are receivable for all public debts, customs, and taxes. By the Act of 1878 the denominations issued were i,000's, 5oo's, Ioo's, 50's, 20's, Io's, 2's, and I's. In 1891 an act was passed limiting the denominations to $ro and under, except that one-tenth of the total issue might, in the discretion of the United States Treasurer, be issued in denominations of 20's, 5o's, and ioo's. The large notes, when redeemed by the Treasurer, are retired and canceled, and certificates of the denominations of io's or less substituted. The Pittman Act of 1918 made provision for the reduction of silver dollars to bullion for shipment to India. This forced the retire ment of silver certificates representing the silver dollars. The federal reserve banks issued a request to the member banks to forward at their expense all silver certificates above $5 denomina tion and to receive in their place federal reserve bank notes; a little later smaller denomination certificates were called in and federal reserve bank notes given in exchange. This process ended in 1919, as the emergency of the war passed. These federal re serve bank notes are being replaced by silver certificates as silver is purchased by the government to replenish its stock.
Gold Order Certificates One other form of government certificate is the gold order certificate, issued at the discretion of the Treasurer of the United States, against deposits of gold coin or gold bearer notes, of ten thousand denomination only. Prior to July 1, 1914, the sub treasury in New York issued this form of certificate to the order of the New York Clearing House in settlement of its debit bal ances. Such certificates were formerly carried by the national banks as part of their reserve.
Federal Reserve Notes The federal reserve notes are obligations of the United States government and are, strictly speaking, a form of government paper money, but their qualities and the method of issue can be more easily treated in Volume II, Chapter XIX.
Method of Issuance The United States Treasury has Divisions of Issue and Redemption, to which are assigned respectively the accounts relat ing to the issue and redemption of United States notes, gold certif icates, silver certificates, and currency certificates. The federal reserve notes, the federal reserve bank notes, and the national bank notes, against which redemption funds are specifically kept, are issued and redeemed through the Comptroller of the Currency. The reserve fund for redemption of United States notes and treas ury notes, the gold coin and bullion held against outstanding gold certificates, and the silver dollars and bullion held against out standing silver certificates, are held as separate trust funds for the redemption of the notes or certificates for which they are re spectively pledged, and can be used for no other purpose.
New United States notes are issued upon request in return for United States notes unfit for circulation, also for federal reserve notes, federal reserve bank notes, national bank notes, subsidiary silver coin, or minor coin, received for redemption or exchange. Gold certificates are issued by the Treasurer upon deposit of gold coin and silver certificates upon deposit of standard silver dollars.
Method of Redemption United States notes and gold certificates are redeemable by the Treasurer in gold coin, treasury notes of 1890 in gold coin or silver dollars, and silver certificates in silver dollars. National bank notes and federal reserve bank notes are redeemable in lawful money by the Treasurer, and also over the counter of the issuing bank. Federal reserve notes are redeemable in gold by the Treasurer.
Since the abolition of the subtreasuries in 192o-1g21, the federal reserve banks have redeemed United States currency, national bank notes, federal reserve bank notes, and coin for non-member banks, business concerns, and individuals. It is not necessary to effect such redemptions for the member banks inasmuch as they may forward paper money or coin, whether fit or unfit for circulation, to the federal reserve bank for credit to their reserve account, and they may order paper money or coin fit for circulation from this bank as needed.
All United States notes, treasury notes, and gold and silver certificates unfit for circulation, when not mutilated to a greater extent than two-fifths of the whole, are redeemed by the govern ment at their full face value. All notes mutilated so that less than three-fifths, but clearly more than two-fifths, remain, are redeemed by the Treasurer at Washington at one-half the face value of the whole note. Fragments less than three-fifths may be redeemed at full face value if accompanied by an affidavit of the owner that the missing portions have been totally destroyed; this affidavit must state the cause and manner of the mutilation and must be sworn to by a notary.
When remittances are received for redemption by the Treas ury from a place in which there is no federal reserve bank or branch bank, returns are made in new United States notes, sub sidiary silver, or minor coin, by mail (postage and insurance deducted) unless requested otherwise, in which case the charges for transportation are paid by the consignee. If the remittances are received from a place in which there is a federal reserve bank or branch bank, the Treasurer may make returns by check pay able at the federal reserve bank or branch bank, if it suits his convenience.