"Legal Tender"?

In researching the history of the Flying Eagle cent, I came across these entries:

"The new cent was issued in exchange for the worn Spanish colonial silver coin that had circulated in the U.S. until then, as well as for its larger predecessor. So many cents were issued that they choked commercial channels, especially as they were not legal tender and no one had to take them."

Wikipedia

"Like the Large Cent, the Small Cent was not legal tender, so it should have come as no surprise that it, too, would be rejected by bankers and merchants."

CoinFacts

I understand (thanks to Google) that "legal tender" means "coins or banknotes that must be accepted if offered in payment of a debt." (emphasis added)

So... what does that mean, really? Banks did not *have* to accept them? Nobody had to accept them?

What good were they then?

 

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I don't know the exact answer to your question...but this definition is not accurate. There is no coin or banknote that must be accepted if offered in payment of a debt...not in the US anyway.

 

Legal tender, currently defined in 31 U.S.C. 5103, merely identifies money that is valid as payment for debts when tendered to a creditor. There is no separate statute mandating that a private entity must accept currency or coins for payment as good and/or services.

 

Now, there is something I didn't know. So, I learned something today. Thanks Doug.

Do you know why this was the case? I initial thought is...the government didn't want to deal with collecting its debts in really small units. If someone owned them money...it would likely be more work than it's worth (due to the employee overhead and such) to accept payments in the smallest units. But...that is just a guess. Do you know the actual reason?

 

Fair enough...very interesting. Thanks.

 

What a mess! Here's a condensed summary of Coinage Acts by Congress.
Lance.

1864 - The cent and 2-cent pieces were made legal tender but limited to 10c and 20c respectively.

1865 - The new 3-cent nickel could be tendered up to 60c. The cent and 2-cent were dropped to just 4c (but weren't allowed to be exchanged by the Treasury for 3c pieces).

1866 - The new nickel could be tendered up to $1. The half cent, cent and 2-cent pieces were prohibited except to buy stamps (but the PO could not redeem them through the Treasury).

1871 - The half cent, cent and 2-cent pieces were tendered.

1873 - The cent, nickel and 3-cent nickel were tender up to 25c. The T$ was given legal tender status.

1874 - All S$'s minted before 1874 were no longer legal tender.

1875 - The 20 cent piece was legal tender up to $5.

1876 - The T$ lost legal tender status but was to continue being struck for trade.

1878 - The S$ was restored to legal tender. No cap to all new S$'s (Morgans).

1879 - Fractional silver was limited to $10.

1887 - No more T$'s could be minted.

1933 - T$ and half-cent given legal tender status. The 1873 and 1879 limits were lifted. (Not a Congressional Act but combination of a Joint Resolution and a Public Law.)

1965 - All limits, for all coins, lifted including the fuzzy T$ and half-cent (see above).

 

First off, skip Wikipedia and read real references.
Second, I'm not a lawyer and I'm not staying in a Holiday Inn Express


Legal Tender - today - means legal TO tender (as in offer). But as said above, there is no requirement that a private entity accept your tender.

They can choose not to accept your offer to buy if that is your tender. For example a store can post a sign saying no bills larger than $20 and refuse to accept your offer to buy the goods on the belt if you tender a $50.

If you go to the cable company to pay your bill and the sign says No Cash Accepted, then they don't have to accept your cents. Rolled OR thrown at them.

It's a little murkier if they don't post the policy (some places like NYC have laws that require signs to be posted in particular places and particular sizes). Sometimes the debt itself can define terms (like some old paper money was payable in "lawful money of the United States").

Most places of business can fall back on the right to refuse service (as long as the refusal isn't based on a protected class). You can quite legally discriminate against people who try to spend $2 bills.

 

I would definitely add the Coinage Act of 1857 to your list as it was the act that eliminated the legal tender status of certain foreign coins that previously circulated.

 

There's really nothing wrong with Wikipedia unless you are trying to publish a thesis. Since you are not a lawyer, are you publishing a thesis? Otherwise, post what is wrong with this information.

 

I don't think he is attacking the information as inaccurate, but is merely stating that Wikipedia isn't a reliable resource. This is true because anyone can edit the entries including individuals who have no knowledge of the subject at hand. As for those that might correct mistakes or troll entries, those individuals cannot be around 24/7.

 

Correct.

Any decent Wikipedia article lists several primary sources, which often provide better, more accurate information.

 

There have been several studies that show Wikipedia is reasonably accurate in terms of what it includes. Its main problems like in the area of completeness. Most of those studies that I am aware of, however, tend to use scientific articles as their basis for comparison, and my experience matches up well with these general conclusions. I do not know how well Wikipedia fares in other areas, like law, social science, and the like.

 

Essentially the same. It is generally accurate in a board sense, the very specific details can be hit or miss but the broad terms are usually pretty accurate.

 

Sometimes lack of completeness can be as bad as factual inaccuracies. Another problem is that the content is dynamic. An article that might be correct now could be altered at any time by anyone with an internet connection, so those studies may or may not have been accurate snapshots at the time, and even if accurate at the time, may not be correct now.

As was mentioned by the other poster, the well written entries will contain citations to primary resources (or at least reliable resources) and those are the better resources to use and cite.

 

@Paul M. Imagine a Wikipedia entry on the Moonlight Mint for instance (no I'm not going to derail this thread). It would read differently depending on the author. Maybe the best piece would be written by someone in the middle, but it would likely contain views at the extremes.

 

Valid point, but like he said it can be a good starting point. While true that it shouldn't be the only source or blindly trusted, most legitimate subjects its a good starting point for people with no idea

 

That's true, but that's why they have their "Neutral Point of View" policy. They do reasonably well on that front. A hypothetical Wikipedia article on the Moonlight Mint would probably cite his web site as well as forum posts on both sides of the issue.

 

"Legal Tender" is a slippery concept In 19th century it was taken to mean that it HAD to be accepted, but that concept began slipping in the early to mid 20th century and became merely that it was a lawfully accepted form of payment the tendering of which constituted a legal offer of payment. And having made a legally acceptable offer of payment, late charges etc could not be added to the debt if the offering was declined.

A couple things to add to Ikeigwin's list

1851 the 3C silver was limited to I believe 60 cents in legal tender

1853 all silver coinage less than $ was limited to $5 in legal tender

The listings for 1874 and 1878 are wrong, the standard silver dollar was discontinued as a production coin during that period, but it never lost it's unlimited legal tender status

Doug was incorrect about this but I think it was just an oversight

The half dime was unlimited legal tender from the beginning of its coinage trough early 1853 when its legal tender status was reduced to $5 untill it was discontinued in 1873

In amounts above their limited legal tender limit , banks, merchants, or anyone else were under no obligation to accept them. They were a convenience. At that point in time the general belief was that only gold or silver were real money and coins had to contain almost their full face value in metal content. But a base metal coin with the full value in metal would be too large and unwieldy. And people tended to object to having to accept money that wasn't "real money". Silver coins for amount less than 5 cents though would have the problem of being too small to use. But they had to have something to use for change and smaller purchases. (In purchasing power nothing smaller than a half dime for them would be like us having nothing smaller than a five dollar bill.) So coins of base metal with less than their intrinsic value were made for public convenience, but no one was forced to accept an unlimited amount of them.

This did still cause problems for the merchants though. While they never had to accept a large amount from any of their customers, they did still accumulate in the til and if they weren't careful they could acquire enough of them that the banks would refuse them when they made their deposits. And the banks had similar problems because they would get too many of them and the Treasury wouldn't accept them. (When you were being paid more than a very small amount, EVERYONE wanted to receive "real money".)