Pittman Act of 1918 made provision for the reduction of silver dollars to bullion for shipment to India. This forced the retire-
ment of silver certificates representing the silver dollars. The
federal reserve banks issued a request to the member banks to forwardattheirexpenseallsilver certificatesabove$5denomina-
tion and to receive in their place federal reserve bank notes; a little later smaller denomination certificates were called in and federalreservebanknotes giveninexchange. Thisprocessended
in 1919, as theemergency of the war passed. These federalre- servebanknotesarebeing replacedbysilver certificates as silver is purchased by the governmentto replenishitsstock.
Gold Order Certificates
One other form of government certificate is the gold order certificate,issued at the discretionof theTreasureroftheUnited
States, against depositsof goldcoin or goldbearer notes, of ten-
thousand denomination only. Prior to July i, 1914, the sub- treasury inNew York issuedthis form ofcertificate to theorder of the New York Clearing House in settlement of its debit bal- ances. Such certificates were formerly carried by the national banks as part of their reserve.
FederalReserve Notes
The federalreservenotesare obligations of theUnitedStates govermnent and are, strictly speaking, a form of government paper money, but their qualitiesand themethod of issuecan be moreeasily treated inVolumeII, Chapter XIX.
Methodof Issuance
The United States Treasury has Divisions of Issue and Redemption,towhichareassigned respectively theaccountsrelat- ing totheissueand redemptionofUnitedStates notes,goldcertif- icates, silver certificates, and currency certificates. Thefederal reserve notes, the federal reserve bank notes, and the national
banknotes, againstwhich redemptionfundsarespecifiicallykept, are issuedand redeemedthroughthe ComptrolleroftheCurrency.
Thereser^'efundforredemptionofUnitedStatesnotesandtreas- urynotes, the gold coinandbullionheldagainstoutstandinggold certificates, and the silver dollars andbullion held against out- standing silver certificates, are held as separate trust funds for the redemption of the notesorcertificatesforwhich theyare re- spectivelypledged, andcan be usedfornootherpurpose.
New UnitedStatesnotesare issueduponrequestinreturnfor
United States notes unfit for circulation, also for federal reserve notes, federalreservebanknotes,nationalbanknotes, subsidiary silver coin, or minor coin, received for redemption or exchange.
Gold certificates are issued by the Treasurer upon deposit of gold coin and silver certificates upon deposit of standardsilver dollars.
Method ofRedemption
United States notes and gold certificates are redeemable by
the Treasurer in gold coin, treasury notesof 1890in goldcoin orsilver dollars, andsilvercertificatesin silver dollars. National bank notes and federal reserve bank notes are redeemable in lawful money by the Treasurer, and also over thecounterofthe issuingbank. Federalreservenotes areredeemableingoldbythe Treasurer.
Since the aboHtion of the subtreasuries in 1920-1921, the federal reserve banks have redeemed United States currency, national bank notes, federal reserve bank notes, and coin for
non-member banks, business concerns, and indi\dduals. It is
not necessary to effect such redemptions for the member banks inasmuch as they may forward paper money or coin, whether
fitor unfit for circulation, to the federal reservebank for credit to their reserve account, and they may order paper money or coin fit for circulation from this bankas needed.
All United States notes, treasury notes, and gold and silver
GOVERNMENT PAPER OR CREDIT MONEY 6l
certificates unfit for circulation, whennot mutilated to a greater extentthan two-fifths of the whole, areredeemed by thegovern- ment at their full face value. All notes mutilated so that less
than three-fifths, but clearly more than two-fifths, remain, are redeemed by the Treasurer at Washington at one-half the face value of the whole note. Fragments less than three-fifths may
beredeemed atfullface value if accompanied by anaflSdavit of theownerthatthemissingportions have been totallydestroyed
;
this affidavit muststate thecause and mannerofthe mutilation and mustbeswornto bya notary.
When remittances arereceived for redemption by the Treas- ury from a place in which there is no federal reserve bank or branch bank, returns are madein new UnitedStatesnotes,sub- sidiary silver, or minor coin, by mail (postage and insurance deducted) unlessrequested otherwise, in which case thecharges fortransportation arepaidbytheconsignee. Ifthe remittances are receivedfrom aplacein whichthereisafederalreservebank
orbranch bank, theTreasurer may make returns bycheck pay- able at the federal reserve bank or branch bank, if it suits his convenience.
Papercurrencyforredemption must beassortedbykindsand denominations, and each loo notes or less enclosed in a paper strap marked with the amount. The Treasury gives other in- structions in case of largepackages. Witheachpackage should beenclosed a memorandumgivinganinventoryofthecontents, the sender'sname andaddress,and the disposition tobemadeof the proceeds. United States notes, treasury notes of 1890, gold certificates, andsilver certificates maybesentin the samepack- age and should be marked "Unfit United States currency for redemption." National bank notes, federal reserve notes, and federal reserve bank notes may be sent in the same package, marked "National andfederalreservecurrencyforredemption."
Chargesarepaidbythegovernment onunfitnationalbanknotes, federalreserve notes,andfederalreservebanknotes,whensent to