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<p>[QUOTE=&quot;Jamericon, post: 1259580, member: 18294&quot;]Don&#039;t confuse being redeemable for gold (practical use) with being legal tender (legal use). They are not the same thing.</p><p><br /></p><p>Until 1933, only gold certificates were legal tender for all debts. United States notes were legal tender for some debts, and all other currency were not legal tender. That is the definition according to the laws authorizing each class of note.</p><p><br /></p><p>However, being redeemable for gold muddied the picture. FRNs and USNs were redeemable for gold coin, and therefore on par with gold certificates. Thus they were de facto legal tender because of this relationship, and holdings of GCs, FRNs, or USNs were just as good as gold.</p><p><br /></p><p>Legal tender had to do with what the Treasury would accept for specific debts owed to it. Federal Reserve notes, by law, were only receivable by the Federal Reserve banks and their member banks. If you tried to pay a debt to the Treasury in Federal Reserve notes, but they required legal tender, they could deny your offer. </p><p><br /></p><p>I need to correct my first post: Federal Reserve notes were backed by at least 40% with gold, not 100%.[/QUOTE]</p><p><br /></p>

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