What is the history of red seal US 2 dollar bills?

Answer 1

The $2 denomination was introduced during the Civil War, partly as a way to fill the gap between the $1 and $5 denominations. Till 1890 they were all printed as United States Notes, a form of currency issued by the federal government rather than by a bank. In addition all US Notes were so-called "Fiat" bills because they were only backed by faith in the soundness of the government rather than a specific amount of silver or gold on deposit with the Treasury. Except for some bills dated 1880, all of them had red seals.

From 1890 to 1917 $2 bills were issued in several forms including Treasury Notes and silver certificates. Colors weren't standardized so it's possible to find various combinations of red, blue, and brown seals and serial number, sometimes on the same bill.

In 1928 the government started replacing all circulating bills with smaller notes of the current size (66 X 166 mm). At the same time seal colors were standardized with red representing US Notes, green for Federal Reserve Notes, blue for silver certificates, and gold for gold certificates. At that time it was decided to continue issuing $1 bills as silver certificates and $2 bills as US Notes, while other denominations were issued in more than one form depending on legal and financial requirements. In fact, $5 bills were issued in all 3 forms.

The denomination remained in regular but low use through the 1960s. Other denominations were gradually all converted to Federal Reserve Notes so $2 bills with their red seals tended to stand out and were often hoarded by people who assumed (incorrectly) that they were rare. In addition various urban legends about $2 bills continued to spread which resulted in even lower use.

By 1963 all other denominations had been fully converted to FRN's. US Notes served exactly the same purpose so the Treasury decided to phase them out by the end of the decade as a matter of cost reduction. The last $2 US Notes were printed in the 1963A series.

Legal requirements for production of US Notes were still in effect, though, so the Treasury printed one final series of US Notes in 1966. These were issued as $100 bills to minimize the number that had to be printed for a given amount of money in circulation.

Usage of $2 bills dropped to the point where the Treasury considered discontinuing them. Instead, the denomination was revived in 1976 for the Bicentennial. The new bills were familiar green-seal FRNs and had a new design featuring Trumbull's painting of the signing of the Declaration of Independence.

The bills were quite popular and the Treasury hoped they'd continue to circulate, partly because it was cheaper to print one $2 bill than two $1 bills. Unfortunately nearly all of them disappeared as keepsakes from the Bicentennial.

Enough interest remained, though, that there was a slight uptick in demand and new series have been printed every few years since 2003.