To illustrate how some people were confused by this, consider the following correspondence between the U.S. Treasury and citizen of Cleveland. 2
December 9, 1947
Honorable John W. Snyder
Sec. of the Treasury
Washington, D.C.
Dear Sir:
I am sending you herewith via registered mail one ten-dollar Federal Reserve note. On this note is inscribed the following:
"This note is legal tender for all debts, public and private, and is redeemable in lawful money at the United States Treasury or at any Federal Reserve bank."
In accordance with this statement, will you send me $10.00 in lawful money?
Very truly yours,
A.F. Davis
*****
December 11, 1947
Mr. A.F. Davis
12818 Colt Road
Cleveland 1, Ohio
Dear Mr. Davis,
Receipt is acknowledged of your letter of December 9th with enclosure of one ten dollar Federal Reserve note.
In compliance with your request, two five-dollar United States notes are transmitted herewith.
Very truly yours,
M.E. Slindee,
Acting Treasurer
*****
December 23, 1947
Mr. M.E. Slindee
Acting Treasurer
Treasury Department
Fiscal Service
Washington 25, D.C.
Dear Sir:
Receipt is hereby acknowledged of two $5.00 United States notes, which we interpret from your letter to be considered lawful money. Are we to infer from this that Federal Reserve notes are not lawful money?
I am enclosing one of the $5.00 notes which you sent me. I note that it states on the face,
"The United States of America will pay to the bearer on demand five dollars."
I am hereby demanding five dollars.
Very truly yours,
A.F. Davis
*****
December 29, 1947
Mr. A.F. Davis
12818 Colt Road
Cleveland 1, Ohio
Dear Mr. Davis:
Receipt is acknowledged of your letter of December 23rd, transmitting one $5 United States note with a demand for payment of five dollars.
Your are advised that the term "lawful money" has not been defined in federal legislation. It first came to use prior to 1933 when some United States currency was not legal tender but could be held by national banking institutions as lawful money reserves. Since the act of May 12, 1933, as amended by the Joint Resolution of June 5, 1933, makes all coins and currency of the United States legal tender and the Joint Resolution of August 27, 1935, provides for the exchange of United States coin or currency for other types of such coin or currency, the term "lawful money" no longer has such special significance.
The $5 United States note received with your letter of December 23rd is returned herewith.
Very truly yours,
M.E. Slindee,
Acting Treasurer
*****
It is understandable how reasonable people can become confused when studying the history of the terms 'lawful money' and 'legal tender' in U.S. history. The blame for this rests with Congress who never bothered to define lawful money when it first used the term. However, the line of thinking that it is defined by the constitution as only gold or silver coin is incorrect. The constitution makes no such definition. Moreover, the restriction that States not make anything but gold or silver a legal tender does not apply to Congress, only to the States. Congress may declare anything it wishes a legal tender. And as the history above shows, it certainly has.
http://famguardian.org/Subjects/Mone...ire/lawful.htm