Why does a 1953 5 dollar red seal indicate US Note rather than Federal Reserve?

Answer 1

U.S. Notes were first issued back in the 1860s. They were among the first currency not backed dollar-for-dollar with gold or silver, but simply with the "faith and credit" of the government. The concept was, and still is, that a strong government can be relied upon to try to maintain the purchasing power of its currency, and so long as individual citizens rely on that, precious metal backing is not always necessary. Unbacked currency also gives the government the ability to expand or contract the money supply in an effort to smooth out economic cycles.

U.S. Notes were issued directly by the Federal Government, alongside silver and gold certificates, and eventually Federal Reserve Notes issued by the central bank. When certificates were discontinued, U.S. Notes and FRN's became effectively the same form of unbacked currency. The government then decided to combine all currency production and distribution under the central bank to eliminate duplication of effort. Because many more FRNs were in circulation than U.S. Notes, the latter were discontinued in the early 1960s.