At the beginning of the civil war 1861-1865, under the overwhelming impact of the costs incurred during the civil war, the federal government gradually ran out of reserves. On February 25, 1862, the U.S. Congress passed the Legal Tender Act authorized the federal government to issue up to 150 million in paper money to pay bills incurred by the war. These bills were considered as United States Notes or Legal Tender Notes which were not redeemable in gold and silver coins but could be used to pay "all dues" to the federal government.
The Legal Tender Notes were first issued from 1862 until 1971. Undoubtedly, its 109-year lifespan was what made them one of the longest-lasting US paper money. The United States Notes were issued under two varieties size of paper. Before 1929, all of the notes existed in large-size paper money. And from 1929 onward until 1971 they were shrunk to a smaller size which is very similar to contemporary Federal Reserve Notes or Gold Certificates.
The Large-Size Legal Tender Notes
There are five issues were released following the Act of February 25th ,1862, July 11th, 1862 and March 3th 1863. All of the United States Notes were printed as large-size paper money.
- First Issue: Act of February 25th 1862 authorized the issuing of the first Legal Tender Notes series of 1862 consisting of seven denominations $5, $10, $20, $20, $50, $100, $500, and $1000. This issue first bears the seal of the United State Treasury printed in red ink on the right side. The reverse carried the ornate green design which make them famous for the name “Greenbacks”.
- Second Issue: The next issue of Legal Tender Notes was released in the same year following the authorization by the Act of July 11, 1862. There were two denominations were issued $1 and $2. The 1862 $1 Legal Tender Note bears a portrait of Treasury Secretary Salmon P. Chase and the $2 bears a portrait of Alexander Hamilton whom was the first secretary of the Treasury.
- Third Issue: There were seven denominations which were $5, $10, $20, $50, $100, $500 and $1000 issued under the Act of March 3th 1863. All of them carried the same design of its predecessor. These series was engraved by American Bank Note Company.
- Fourth Issue: There were seven different dates from this issue which were 1869, 1874, 1878, 1880, 1907, 1917, and 1923. This is the most complicated and diversion issue of Legal Tender Notes. From now on, the silk red/blue fiber paper was applied to the notes as a security feature improvement.
- The notes from the series of 1869 are referred as “Rainbow Notes”. So named because of the vibrant look of the obverse design, which includes a red Treasury seal and serial numbers, a green frame around the serial number, a green tint at the top of the note, and a vertical blue tint.
- From this issue, the serial number might be found in two different color which were red and blue.
- During the fourth issue period. There was various design and color of the treasury seal: Small Red with rays, Large Brown, Large Red and plain, Large Red with spike, and Small Red Scalloped.
- Fifth Issue: The $10 series of 1901 was the only denomination released from the last issue. Since it depicted a centered buffalo which made it famous for the numismatic nickname “Bison Note”.
The Small-Size Legal Tender Notes
After the paper money resizing and redesign recommendation were approved with the purpose reduce the costs of production, paper and ink also speed up the printing production. The first legal tender notes debuted as small-size with the series of 1928 and consisted of only low denominations which were $1, $2, and $5. The serial numbers and the treasury seal were printed in red ink. And it is also a factor to identify the Legal Tender Notes.
The Small-Size Legal Tender Notes carried the same design resembling a different series of U.S. Paper Money at that time. It kept continued to be released with another series until the mid 1960s. And the $100 series of 1966 was the last issue released under Legal Tender Note.
