NATIONAL BANK NOTE LEGAL TENDER STATUS

It is a peculiar fact that national bank notes were not accorded legal tender status by the National Bank Acts of 1863 and 1864. However, the law was explicit that they were redeemable in "lawful money," which was defined as legal tender currency. Consequently they always have been accepted by all as equivalent to legal tender (United States) notes. As the price of legal tender notes fluctuated during the Civil war, the price of nationals tracked it in lock-step. When Congress decreed that species payments would resume on January 1, 1879, both the value of legal tender notes and nationals converged on the gold dollar at that time and remained there for the duration.

There is an interesting twist to this story. The extraordinary Agricultural Adjustment Act passed on May 12, 1933, during the early days of FDRs New Deal, contained a provision that obliterated the distinctions between the various classes of coinage and currency issued under the authority of Congress. Title III, section 43, of that act states: "Such notes and all other coins and currencies heretofore or hereafter coined or issued by or under the authority of the United shall be legal tender for all debts public and private." National bank notes fell under this umbrella so from that time forward they have carried legal tender status.

Notice on the attached proof for the unissued Series of 1929A national bank notes that the redemption clause reads: "Redeemable in Lawful Money of the United States at United States Treasury or at the bank of Issue." Thanks to the Agricultural Adjustment Act, this clause was modified on the model dated May 23 1934 to read "This bank note is legal tender for all debts, public and private and is redeemable in lawful money of the United States at United States Treasury or at the bank of issue."

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