June 18, 2024 

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Paper currency issued and authorized by the Federal Reserve System and used along with Treasury coins and checkable deposits as the M1 money supply for the U.S. economy. Federal Reserve notes were first issued in 1913 and currently circulate in denominations of $1, $2, $5, $10, $20, $50, and $100. These notes underwent a major redesign to prevent counterfeiting in the 1990s.
Federal Reserve notes are a major component of the M1 money supply for the U.S. economy. This paper currency is issued by the Federal Reserve System and constitutes about half of M1. It comes in seven denominations ($1, $2, $5, $10, $20, $50, and $100). Larger denominations ($500, $1,000, $5,000, and $10,000) were issued in the later 1920s and early 1930s, but have since been removed from circulation.

Modern Federal Reserve notes have been in circulation since 1928, with only modest design changes. The most recent redesign, intended to thwart counterfeiters, was undertaken in 1996. The modern notes are actually a second set of Federal Reserve notes. The first set, which were about 25 percent large, were in circulation from 1914 to 1928.

Current Currency

Federal Reserve notes that currently circulated about the U.S. economy surface in one of seven denominations. Combined with metal coins, these different denominations make it easier to correctly match the prices of different commodities. The seven denominations are: $1, $2, $5, $10, $20, $50, and $100. Larger denominations ($500, $1,000, $5,000, and $10,000) were once issued but are no longer in circulation.
  • $1: The most common Federal Reserve note carries a $1 denomination. The everpopular George Washington adorns the front and a big "ONE" appears on the back. This bit of currency has been largely unchanged for several decades, with the exception of different signatures.

  • $2: The third President of the United States, Thomas Jefferson, appears on the front of this seldom seen Federal Reserve note. A representation of the signing of the Declaration of Independence is on the back. First issued in 1976 and reissued in 1995, this denomination remains in circulation but has never really caught the public's fancy.

  • $5: This five-dollar bill, also called a "fin" or a "fiver," has President Abraham Lincoln's portrait on the front and the Lincoln Memorial on the back. It was redesigned in 1996, enlarging and moving Lincoln's portrait to the left. A series of security measures to prevent counterfeiting were also included in the redesign.

  • $10: Alexander Hamilton, the first Secretary of the Treasury, appears on the front of this Federal Reserve note, one of two modern bills that do not memorialize a past President. The back of the ten-dollar bill, the old "sawbuck," presents an engraving of the Treasuring Building. It too underwent a redesign in 1996, with a larger left-shifted portrait.

  • $20: This "double sawbuck" has the image of President Andrew Jackson on the front and the White House on the back. Ironically, Jackson, the seventh President of the United States, refused to renew the charter of the Bank of the United States. Due to its widespread use, the twenty-dollar bill was the first Federal Reserve note to under a major redesign in 1996. It then underwent another, slightly less spectacular redesign in 2004.

  • $50: President Ulysses S. Grant been a long-time resident on front of the 50-dollar Federal Reserve note. He shares this piece of currency with the capital building on the reverse side. Like other currencies (excepting the $1 and $2), the fifty was redesigned in 1996.

  • $100: This the largest of the modern Federal Reserve notes in circulation is also occupied by a nonpresident, Benjamin Franklin. Appropriately, the back of this bill has a representation of Independence Hall in Philadelphia. This was also redesigned in 1996.

Out of Stock

The seven denominations listed above are not the only ones that have carried the Federal Reserve note designation. Four other denominations--$500, $1,000, $5,000, and $10,000--were once available, but have long since been removed from circulation.

And even though they were technically "available" these bigger bills were primarily used for interbank transfers. However, technological improvements in the transfer of reserves and assets between banks eliminated the need for these bills.

For sake of completeness, here is an overview of each.

  • $500: This denomination, issued in the late 1920s and early 1930s, carried the portrait of President William McKinley on the front and a relatively simple design featuring the number "500" on the back.

  • $1,000: This thousand-dollar bill had a parallel existence to the half-value sibling, surfacing in the late 1920s and early 1930s. It has the likeness of President Grover Cleveland on the front and the words "The United States of America" on the reverse.

  • $5,000: The third among this family of big-denomination bills was also issued in the late 1920s and early 1930s. The portrait on the front is President James Madison on the back the simple design features the number "5000" and the phrase "The United States of America."

  • $10,000: This the largest Federal Reserve note every printed sports likeness of a fellow named Salmon P. Chase, Secretary of the Treasury under Abraham Lincoln and Chief Justice of the Supreme Court, with a reverse side also containing the phrase "The United States of America" and a "10,000" numerical designation.

Phase Two

The eleven Federal Reserve notes listed above, issued beginning in 1928, were actually the second set to be issued by the Federal Reserve System. A previous set of notes were first issued in 1914, shortly after the Federal Reserve System was created in 1913.

The first series of Federal Reserve notes were in denominations of $5, $10, $20, $50, $100, $500, $1,000, $5,000, and $10,000. While the designs were slightly different from the later series, the most noted difference was size. The earlier notes are about 25 percent larger. While Lincoln, Grant, and Franklin occupied their present day positions on the $5, $50, and $100, respectively, Andrew Jackson rather than Alexander Hamilton was on the $10 and Grover Cleveland rather than Andrew Jackson was on the $20.

Money, Money Everywhere

Federal Reserve notes are only the latest in a long list of paper currency used in the United States.

Prior to the Civil War, paper currency was highly fragmented, coming in many different shapes, sizes, and colors. Each state issued its own currency. Individual banks also offered its own currency.

Attempts to consolidate currency came with the Civil War. Among the more important national currencies in circulation between the civil war and the introduction of Federal Reserve notes were: United States Notes available from 1862 to 1923, National Bank Notes from 1863 to 1922, Gold Certificates from 1865 to 1922, and Silver Certificates from 1878 to 1923. These currencies like the first series of Federal Reserve notes sported the larger size.

Even after modern smaller-sized Federal Reserve notes were issued in 1928 they were not the only paper currency in circulation. Three other smaller-sized versions. United States Notes were available from 1928 to 1966. Silver certificates were available from 1928 to 1957. And gold certificates could be found in circulation from 1928 to 1934.

Making Changes

In 1996, modern Federal Reserve notes underwent the first major redesign since they were introduced in 1928. The primary reason for the changes was to prevent counterfeiters from plying their trade. Improvements in computer technology--scanners, copiers, printers--made it exceedingly easy for counterfeiters to produce reasonable copies of pre-1996 currency.

Some of the design changes are stylistic. Some reflect a change in Federal Reserve Systems control philosophy. But most are intended to thwart counterfeiters.

A few of the design changes include:

  • The portrait on the front is enlarged and moved off center, slightly to the left.

  • Extremely small "microprinting" is placed around the portrait, printing so small that it can not be reproduced by copy machines.

  • Color "morphing" ink which changes color when viewed from different angles is used to print one of the currency denomination numbers.

  • A watermark of the portrait, which also cannot be copied or scanned, is near the right edge of the bill.

  • A thin vertical strip containing "USA" and the denomination of the bill is embedded on the left side of the bill, running from top to bottom.

  • The seal reflecting the specific Federal Reserve Bank (designated 1 through 12 and A through L) distributing the currency into circulation is replaced by a seal for the Federal Reserve System.


Recommended Citation:

FEDERAL RESERVE NOTES, AmosWEB Encyclonomic WEB*pedia,, AmosWEB LLC, 2000-2024. [Accessed: June 18, 2024].

Check Out These Related Terms...

     | monetary aggregates | M1 | M3 | L | currency | checkable deposits | near monies | plastic money |

Or For A Little Background...

     | money | money functions | money characteristics | fiat money | commodity money | medium of exchange | liquidity |

And For Further Study...

     | money creation | fractional-reserve banking | banking | Federal Reserve System | monetary economics | monetary base | monetary policy | debit card | monetary economics |

Related Websites (Will Open in New Window)...

     | Federal Reserve System | Federal Reserve Education | U.S. Department of the Treasury | The Currency Gallery | Bureau of Engraving and Printing |

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