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What is lawful money? How is it different from legal tender

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Panhead

Panhead
Admin

I could not believe it when this came out from the FED today - I think it is NO coinscidence that it was issued TODAY!! Note the last article - Is the U.S. currency still backed by gold?

What is lawful money? How is it different from legal tender?

"Lawful money" is a term used in the Federal Reserve Act, the act that authorizes the Board of Governors of the Federal Reserve System to issue Federal Reserve notes. The Act states that Federal Reserve notes "shall be obligations of the United States and shall be receivable by all national and member banks and Federal reserve banks and for all taxes, customs, and other public dues. They shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank." The Act did not, however, define the term "lawful money," but up until 1913, the only currency issued by the United States that was legally recognized as "lawful money" was various issues of "demand notes" (subsequently known as "old demand notes") and "United States notes" authorized by Congress during the Civil War.

At the time, some currency was not considered legal tender, although it could be used by national banking associations as "lawful money reserves." Thus, the term "lawful money" had a broader meaning than the term "legal tender."

In 1933, Congress changed the law so that all U.S. coins and currency (including Federal Reserve notes), regardless of when issued, constitutes "legal tender" for all purposes. Federal and state courts since then have repeatedly held that Federal Reserve notes are also "lawful money." Milam v. U.S., 524 F.2d 629 (9th Cir. 1974), is typical of the federal and state court cases holding that Federal Reserve notes are "lawful money." In Milam, the United States Court of Appeals for the Ninth Circuit reviewed a judgment denying relief to an individual who sought to redeem a $50 Federal Reserve Bank Note in "lawful money." The United States tendered Milam $50 in Federal Reserve notes, but Milam refused the notes, asserting that "lawful money" must be gold or silver. The Ninth Circuit, noting that this matter had been put to rest by the U.S. Supreme Court nearly a century before in the Legal Tender Cases (Juilliard v. Greenman), 110 U.S. 421 (1884), rejected this assertion as frivolous and affirmed the judgment.

Related Questions

Is it legal for a business in the United States to refuse cash as a form of payment?
http://www.federalreserve.gov/faqs/currency_12772.htm

What is the role of the Federal Reserve with respect to banknotes and coins?
http://www.federalreserve.gov/faqs/currency_12626.htm

Is U.S. currency still backed by gold?
http://www.federalreserve.gov/faqs/currency_12770.htm

Last update: September 29, 2011


chevy#3



"Artcle I, section 8,clause 5,of the United States Constitution,"...says the only lawful money is to be regulated by congress......but we know that's not the case! The United States congress exercises nothing in regards to money,the control of money,or to even distribute it--------that belongs to a private corporation registered in the state-of-delaware!..........we don't have a government.......we have a foriegn corporation running this country with a federal casino printing reserve press running wide open!

Panhead

Panhead
Admin

chevy#3 wrote: "Artcle I, section 8,clause 5,of the United States Constitution,"...says the only lawful money is to be regulated by congress......but we know that's not the case! The United States congress exercises nothing in regards to money,the control of money,or to even distribute it--------that belongs to a private corporation registered in the state-of-delaware!..........we don't have a government.......we have a foriegn corporation running this country with a federal casino printing reserve press running wide open!

Eloquently put....as usual Chevy....lol!

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