Federal Reserve Bank Notes
Circulating notes issued by the various Federal Reserve banks under approximately the same conditions as NATIONAL BANK NOTES issued by national banks. Federal Reserve bank notes were expected to replace national bank notes eventually, but like national bank notes are now in process of retirement.
Authority for the issuance of Federal Reserve Bank notes against any direct obligations of the United States not bearing the circulation privilege or against eligible commercial paper was repealed by the act of June 12, 1945. No interest-bearing government securities bearing the circulation privilege have been outstanding since August 1, 1935. Lawful money has been deposited for the retirement of Federal Reserve Bank notes, and thus they are being retired from circulation as soon as returned to the Treasury unfit for use.
Originally authorized in the Federal Reserve Act, Federal Reserve Bank notes were issued in small amounts in 1916 and 1917; in 1918-1920, about $250 million were issued in accordance with the PITTMAN ACT. The next large issuance occurred in the banking crisis of 1933, when it was feared that the shortage of collateral for Federal Reserve notes might create an inadequate circulation. Only about $200 million, however, of Federal Reserve Bank notes were actually issued, so that in 1942, in order to utilize the unissued stock of about $660 million of printed Federal Reserve Bank notes, the board of governors authorized the Federal Reserve banks to issue them concurrently with deposit credits to the Treasurer of the United States for equal amount, thus canceling the liability of the Federal Reserve banks for the issued Federal Reserve Bank notes.