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<p>[QUOTE=&quot;Conder101, post: 827084, member: 66&quot;]&quot;Legal Tender&quot; is a concept that has changed over the years.&nbsp; In the early years of the country if an item was legal tender it HAD to be accepted.&nbsp; This legal theory was handy for the government after 1862 when they first started printing greenbacks.&nbsp; Unlike the silver or gold certificates these notes had no backing other than the faith in the government.&nbsp; But they were made Legal Tender which made their acceptance mandatory.&nbsp; This understanding of Legal Tender survived until at least the mid 1870&#039;s (I don&#039;t know the exact date at this time.)&nbsp; The decision came from the Supreme Court&nbsp; hearing a case on the constitutionality of the issuance of the Greenbacks.&nbsp; The decision was that it was constitutional to issue them but not to mandate their acceptance.&nbsp; So from that point one the notes became a legally acceptable offer of payment but they could be refused.&nbsp; Interestingly the Chief Justice of the Supreme Court at the time was Salmon P Chase, the person who had come up with the idea of the legal tender greenbacks in 1862 in order to fund the war effort.</p><p><br /></p><p>As to how the limited legal tender status worked, if payment was offered that was less than the limit, the coins had to be accepted.&nbsp; If a sum greater than that was offered the receiver had the option to accept the full amount, accept just the limit, or to reject the entire amount.&nbsp; If only a partial payment was accepted it was then up to the two parties to come to an agreement as to how the rest of the payment would be tendered.&nbsp; (Contrary to popular opinion if a form of payment is declined that doesn&#039;t mean you don&#039;t have to pay.)&nbsp; And yes this applied to banks as well.&nbsp; They could and often did refuse deposits of coin amounts in excess of the legal tender limits.&nbsp; This could be a great hardship on merchants, especially in the larger cities, because most transactions were small and they received a lot of coins in payment, but the banks would refuse these coins if they tried to deposit them in great amounts than the legal tender limits.&nbsp; This meant that they would have to make many deposits during the day to keep the number of coins in any one deposit small so that the bank would have to take them.</p><p><br /></p><p>As far as I can tell the limits on the legal tender were removed by the legal tender clause of June 5th 1933.&nbsp; If there was an earlier change I don&#039;t know of it at this time.[/QUOTE]</p><p><br /></p>

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