This certificate also was a document, a certificate of credit, signed by the proper government officials, giving evidence or proof that the bearer had a just claim for a certain amount of silver. The additional statement saying it was legal tender for public (government) debts gave it its face value, rather than its value in silver. That meant the government would receive (not redeem) it at its face value in payment for taxes. When the government would receive it at its face value, other people would also receive it at its face value.
The value in silver of the silver certificate was, until the summer of 1967 less than its face value. For many years the silver for which a one dollar silver certificate could be redeemed was worth less than fifty cents. Beginning in the summer of 1967 and lasting until June 24, 1968, the value for the silver that could be claimed by the certificate was above its face value. On May 19, 1968, advertisements in some newspapers were offering $1.60 for each $1 silver certificate. After June 24, 1968 the government did not redeem the silver certificates.
When the value of the silver which could be claimed with a silver certificate was less than its face value, none were presented to the government for the purpose of obtaining the silver for which they were a claim. But when [p. 34] the value of the silver which could be claimed by the silver certificate was greater than its face value, the certificate was no longer used as a medium of exchange. People saved the certificates for the purpose of redeeming them for silver.
So during the many years when the face value of the silver certificate was more than the value of the silver for which it was a claim, the silver certificate was accepted as a medium of exchange at its face value because the government accepted it at its face value in payment for taxes, not because it was redeemable in silver. Nevertheless, it was a document, a certificate of credit; it was used as a medium of exchange on which no interest was paid. It was not loaned to the government or to the bearer.
UNITED STATES NOTES
Let us now study the United States notes. Before the Coinage Act of 1965, the following was written on the United States notes:
Since the (Coinage Act of 1965) we find written on the United States notes the following:
We see that this note, the one in use in 1969, does not contain the words which were on the previous note: at its face value and will pay to the bearer on demand. This shows how the wording on the document has been changed. However, it still is a document. It states it is legal tender for all debts, public and private. It is signed and stamped with the United States Seal by the proper officials. It is not the same document as the previous note. It really is not a note. A note is always written with a promise to pay. The bearer is no longer promised to be paid five dollars. He now is only told that it is legal tender for all debts, public and private.
Nevertheless, it is a document. It serves as a medium of exchange on which no interest is paid when it is brought into circulation. The fact that we have official signatures and seals on our paper money is sufficient to have them properly classified as documents. But what type of document is the present United States note? It is not a certificate of credit. It is not, as it ought to be, a tax credit certificate. What is it? It appears to this writer that it is a government issued paper token that is accepted (not redeemed) in the payment of federal taxes. [p. 36]
FEDERAL RESERVE NOTES
The Federal Reserve notes are issued by the Federal Reserve Banks. We shall show how the wording on the notes has been changed since 1914, when the Federal Reserve notes were first issued. Keep in mind that these notes are documents. They give important information.
On the face of a $20 Federal Reserve note of the 1914 series was written the following:
On the reverse of the same note we read the following:
This note is receivable by all National and Member banks and Federal Reserve Banks and for all taxes, customs and other public dues. It is redeemable in gold on demand at the Treasury Department of the United States in the city of Washington, District of Columbia or in gold or Lawful Money at any Federal Reserve Bank.
That was a real document. It was a bona fide note. It also was a bona fide certificate of credit. A person could read it and understand for what it was a claim. It was not labeled legal tender. Nothing was said about private debts. Note the difference between the words receivable and redeemable. It was receivable for taxes (not redeemable for taxes) but it was redeemable for gold or lawful money.
On the reverse of the same note was written only, THE UNITED STATES OF AMERICA at the top and TEN DOLLARS at the bottom.
This was a shorter document than the one belonging to the 1914 series, but it was still specific regarding what could be done with it. It was a certificate of credit. It stated that it could be redeemed for $10 in gold. It also was a bona fide note because it had a promise to pay ten dollars.
A ten dollar Federal Reserve note of the 1950 series had the following written on the face of it:
The above Federal Reserve note (document) has been changed; it is no longer redeemable in gold. Instead of being redeemable in gold it states that it is Legal Tender for all debts, public and private. But it still was a document even though it was not a certificate of credit.
The next Federal Reserve note, the type being issued in 1969, is classified with the 1963 series. Note the change again:
The above note is also a document. It fulfills the definition of a document. It gives information that it is legal tender. It is signed and stamped with the appropriate seals.
It could be called a poorly written document, however it is called a note, it does not have a promise to pay. A note is always a promise to pay. It says it is legal tender for all debts public and private, but it does not say by what authority it is legal tender. The previous Federal Reserve notes stated that they could be redeemed for lawful money. This one, without any explanation, now says that it is lawful money (legal tender). Remember, it is not issued by the government; it is issued by a Federal Reserve Bank. The Federal Reserve Banks are not owned by the government; they are owned by all the local banks that are members of the Federal Reserve System.
Before 1965, when the Federal Reserve Banks issued the Federal Reserve notes, and had printed on the face of [p. 39] the notes that they were redeemable in lawful money, it could be said that those notes were not lawful money because they were not issued by the government. But now it stated on the note that it is legal tender for all debts, public and private, but no longer redeemable in lawful money. That is the same as saying it is now lawful money. It is proper to ask, by what authority can the Federal Reserve Banks call their notes legal tender or lawful money? Of course the answer will come that the Congress of the United States gave them that authority, by the passage of the Coinage Act of 1965.
The next question to be asked is what authority did the Congress have to delegate the issuing of lawful money to anyone? The Constitution gives only the Congress the power to coin money. Remember again,
17 before 1965, the Federal Reserve notes were not lawful money. It was written on the notes that they could only be redeemed in lawful money.
Nevertheless, these Federal Reserve notes are documents even though they are not certificates of credit. They cannot be called a bona fide medium of exchange. They are however, documents which are used as a medium of exchange. The government accepts them as payment for taxes, thus giving them their value.
As the years passed, since 1914, less and less information lion has been written on these notes. Now there is not enough writing on them to inform the bearer of their exact significance. They are called notes but have no promise to pay.
Let us review some interesting facts regarding the Federal Reserve notes. When the first notes were issued in 1914, the Federal Reserve Banks got the United States government to agree to redeem those notes in gold. The Federal Reserve Banks made the profit by issuing them and loaning them out for interest, but the government, which at that time made no profit on them, had the obligation to redeem them in gold. To be sure, the Federal Reserve Banks also agreed to redeem them in gold or lawful money. However, the Federal Reserve Banks could [p. 40] choose to redeem them with lawful paper money; the government had to redeem them in gold.
The Federal Reserve notes of the 1928 series were redeemable in the same manner as were the notes of the 1914 series.
The Federal Reserve notes of the 1950 series were redeemable by the United States treasury or any Federal Reserve Bank in lawful money, but not in gold by anyone.
The Federal Reserve notes of the 1963 series (the ones in circulation in 1969) are not now redeemable in gold or in lawful money. Now the government just says they are lawful money (legal tender); that is, notes of private corporations (banks) now are lawful money.
That is certainly interesting, but the most interested fact about all of this is that the officials of the United States government used their official power to give value to those notes by agreeing to redeem them, first in gold, then in lawful money, and now by accepting them as payment for taxes. All of the time the United States government has been borrowing those notes for the purpose of using them as media of exchange. They could use their legal power to issue United States notes or tax credit certificates without borrowing and without going in debt. Interesting, is it not?
COINSGOLD OR SILVER
Are coins documents? A gold or silver coin, in which the commodity value of the metal is about equal to the face value of the coin, would not be a document. It would not be evidence of a claim for goods or services. It would be a good in itself. It is not issued or coined to be a document. It serves as a medium of exchange because it is a valuable and convenient item that can be exchanged for some other valuable item. (The exchanging of goods and services by the use of such coins, is really a convenient way for direct bartering.)
A document giving evidence of a claim for some goods or services would be destroyed when the goods or services [p. 41] for which it was issued were given up. Such a gold or silver coin would have no occasion to be destroyed because it was a written claim. Thus we see that a gold in which the commodity value of the metal or silver coin, is about equal to the face value of the coin, would not be a document.
COPPER AND/OR NICKEL COINS
Every copper and/or nickel coin now used in the United States is a document. It gives evidence that it will be accepted as payment for taxes etc. As the coin now appears it does not have all the necessary information written on it, but the information does exist in the Congressional Record.
The Coinage Act of 1965 passed by the United States The Congress states the following:
Section. 102 All coins and currencies of the United States ., regardless of when coined or issued, shall be legal tender for all debts public and private, public charges, taxes, duties and dues.
That information, if it were written on the coin, would make it evident that it is a document. It would state, among other things, that the coin is legal tender and that it will be accepted as payment for taxes. So even though that information is not on the coin, the information (Law) is in the Congressional Record and it is applied to the coin just as if it were written on each coin. [p. 42]