Asked in US Banknotes
Why did they print five dollar bills in 1963 with different colored seals?
January 07, 2008 2:25AM
Up till the 1960s there were 3 major types of bills in circulation:
> Federal Reserve Notes, issued through the Federal Reserve system. These have green seals.
> United States Notes, issued at the Federal level by the Treasury Department. These have red seals.
> Silver Certificates, also issued at the Federal level. Every silver certificate printed had to be backed by a matching amount of fixed-price silver on deposit in the Treasury vaults. This is distinct from the other 2 types that are "fiat" money, whose value is based on their acceptance by the general public at the amounts stated, due to the stability of the Federal Reserve and Treasury systems.
When demand for silver rose in the early 1960s the government was forced to abandon its fixed-price policy and let the metal's value float freely on the open market. However, that meant that the purchasing power of a silver certificate could also fluctuate along with the metal's value, so the government was forced to end their production. At that point U.S. Notes and FRNs were essentially equivalent so there was no need to print and maintain two parallel types of money. The Treasury made the decision to also discontinue U.S. Notes as an economy and efficiency move.