New Type of Money Soon To Be Issued (1914)

Sep 15, 2022 | Debt, Economic Collapse, Financial Literacy, Monetary Education, Uncategorized

Federal Reserve Notes Amounting to Many Millions in Contemplation.


Five Denominations Submitted- $5 to $100 Plans for Uniform Design in Paper Currency

Millions of dollars’ worth of paper money of a new type will be put into circulation upon the establishment of the federal reserve bank within the next few weeks. Under the Federal Reserve Bank act each of the twelve Federal Reserve banks will receive advances from the Federal Reserve board in the form of Federal Reserve notes, a distinctly new sort of paper money. Commercial paper will be the collateral advanced by the various banks as security for these notes.

Controller of the Currency Williams has samples of this new paper money now under consideration. At his request, Joseph K. Halph, Director of the bureau of engraving: and printing, prepared notes of $5, $10. $10, $50 and $100 denominations and these have been submitted to Secretary McAdoo. It is not likely, however that the samples will be officially accepted until the members of the federal reserve board have been confirmed by the Senate and can confer with Secretary McAdoo and Controller Williams concerning the new notes.

No Estimate of Volume
At present no official of the Treasury Department is able to make any estimate of the amount of Federal Reserve notes which will probably be put into circulation this year. Federal Reserve banks are required, under the new law, to keep gold reserves of not less than 40 per cent against Federal Reserve notes in actual circulation. The amount of these notes required by the Federal Reserve banks will depend largely on the amount of money required by member banks for the re-discounting of commercial paper.

Last year at harvest time Secretary McAdoo permitted banks in the west and south to borrow money or commercial paper and about $37,000,000 was loaned. “The immediate demand for federal reserve notes will probably be far in excess of that sum, as the harvest loans were limited to the farming sections, while the entire United States will draw on the Federal Reserve board for money to rediscount agricultural, industrial and commercial paper. The money for harvest emergencies was limited to twenty-eight states and none of it went to New York and New England.


Designs of New Notes

The new five-dollar note submitted by Mr. Ralph is typical of agriculture. The portrait on the face of the note is Lincoln’s, and the back shows a harvesting machine and allegorical figures typical of farming. The ten dollar note bears a portrait of Cleveland and a manufacturing scene. The twenty-dollar note bears Jackson’s portrait and is typical of commerce, having a steamship, train and other mediums of trade on the back. Grant’s picture is shown on the fifty-dollar note, and Franklin’s portrait adorns the one-hundred-dollar bill.

Both of these larger bills are typical of the arts. All the bills will be printed in green ink on the back, while black ink will be used on the faces. For some time the Treasury Department has been anxious to make all paper money more uniform. At present different portraits appear on different sorts of paper money of the same denomination. It is likely that the portraits selected for use on the Federal Reserve notes will also be used on other paper money. So in the future all bank notes, gold certificates, silver certificates and Federal Reserve notes of $5 denomination will probably bear Lincoln’s portrait, and so on through the series up to $100.

Redemption Fund

Of the 40 per cent gold reserve banks maintain against their outstanding Federal Reserve notes at least 5 percent will be kept in the United States Treasury for the redemption of such notes. It is provided under the new law that when one federal reserve bank receives federal reserve bank notes issued by another bank it must return them immediately to the issuing bank, and a heavy penalty is provided for a bank which pays out notes other than its own.

Article first appeared in the Evening Star on June 17, 1914 (Here)

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