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 Replies: 20 / Views: 5,098 |
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New Member
United States
19 Posts |
Today I was reading some articles about the legal tender status of coins. The surprising news to me was that for a large time in U.S. history, coins that did not contain silver or gold were not legal-tender. I learned a lot of fascinating information but I was left with an interesting question:
If you ran a retail store, and every day (or once a week perhaps), you deposted all your cash to the bank, did the bank keep separate balances for legal versus non-legal tender?
Keep in mind there were laws that said such things as quarters were redeemable for dollars up to ten dollars etc. Could I deposit 1000 quarters one day and then withdraw $250 in legal-tender federal reserve notes the next day?
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New Member
 United States
19 Posts |
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New Member
United States
19 Posts |
Interestingly, the UK has a current law on legal tender status of their coins. It relates to how many coins are needed to make a transaction legal. See this link http://www.royalmint.com/aboutus/po...r-guidelines. If you have 45 25p, 5 of your "quarters" are worthless. Haha! Quote: 25p (Crown) - for any amount not exceeding £10 |
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Moderator
 United States
188342 Posts |
 to the Community! Interesting questions. I do not think the banks differentiated it. I look forward to reading more commentary from our members. |
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Bedrock of the Community
United States
20753 Posts |
Always interesting to read some of the odd laws that were and may still be on the books. |
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Pillar of the Community
 United States
4591 Posts |
Legal Tender in the US has changed over the years, having to do with whether it relates to monies owed the government or private citizens (and companies) Currently, http://www.treasury.gov/resource-ce...tender.aspx:Quote:Legal Tender Status I thought that United States currency was legal tender for all debts. Some businesses or governmental agencies say that they will only accept checks, money orders or credit cards as payment, and others will only accept currency notes in denominations of $20 or smaller. Isn't this illegal? The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: " United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues." This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy. https://www.law.cornell.edu/uscode/text/31/5103-----Burton 50+ year / Life / Emeritus ANA member (joined 12/1/1973) Life member: Numismatics International, CONECA Member: TNA, FtWCC, NETCC, EveryCountry (online) coin club Owned by three cats and a wife of 40+ years (joined 1983) Author: 3rd Edition of the Sample Slabs book, https://www.sampleslabs.info/ |
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Bedrock of the Community
United States
17884 Posts |
Legal tender is an interesting concept that has changed in it's interpretation over the years. Today legal tender means a legally recognized offer of payment, in the nineteenth century it was an obligatory form of payment. It had to be accepted. But many of the coins back then had only limited legal tender standing. Gold and standard silver dollars had unlimited legal tender status and had to be accepted for any amount. That was true of the other silver coins (except the Three Cent piece) before 1853. After 1853 the smaller silver coins were only legal tender up to $5. Amounts offered above that amount could legally be refused. The base metal coins also had only limited legal tender status, the cent was not legal tender at all until 1864, the Half Cent not until the 20th century. This DID cause problems after the FE cents were introduced in 1857. The marketplace became saturated with the new coin. Since most purchases were for small amounts merchants had little choice but to accept them. But the banks can and did refuse the coins if their supplies were adequate. So the merchants accepted them, but may or may not be able to deposit them. And they really couldn't use them to purchase stock from their suppliers either. Frequently they only way to get rid of them was to sell them to jobbers at a discount. The limited tender silver was not as much of a problem because $5 was a significant amount of money and it wasn't as difficult to pass then to the bank in multiple deposits or by exchanging the silver in small amounts for gold and then depositing the gold. To get a good idea of what coinage and its use were like in the 19th century I recommend reading Neil Carothers book Fractional Money. Copies can be found for about $15 to $20 Edited by Conder101
09/01/2015 11:58 am
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Moderator
United States
188342 Posts |
Ah. So the banks did differentiate it in a sense by refusing deposit.
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New Member
United States
29 Posts |
That's interesting BStrauss3, while browsing coin videos on Youtube sometime ago I ran across one that was titled something like "Paying $80 bill with pennies". Some kid owed a tow company $80 to get his car out so he went and got $80 in pennies, when the company refused to accept them as payment the kid called the police. The police told the company that the pennies are legal and they had to take them so the company took them so long as the kid stood there and counted them out.
Seems to always be a sort of hot topic whether businesses have to accept pennies as payment or not. Even police don't usually know whether they really have to.
IMHO, it's simply an immature act to pay in pennies when you could go cash them in at a bank, I'd never do it just on the basis that I'd never want it done to me haha...
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Moderator
United States
188342 Posts |
Yeah, do not be a jerk.  |
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Pillar of the Community
1325 Posts |
Now I am curious. Since the Mint is the only leagal producer of coins in the US, what are the beer tokens the bar gives considered? They look like poker chips make of hard plastic and have the bars name on them and give no change in return, but they are gotten by exchanging the price of a beer.
Are they considered gift certificates? Arcades for years have made tokens to get your full dollar up front and then you have to pay with the token in the machine. So If a business used ONLY tokens for payments and put token amounts as the prices, would that work and be legal under that law? They only sell tokens for cash, and then all items can be got from trading in token, like PuttPutt does with its prize tickets.
Isn't that in effect creating your own currency?
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Bedrock of the Community
United States
17884 Posts |
Such a situation as you describe with the bar tokens is perfectly legal BUT the tokens can only be used internally. Using them in between businesses or accepting tokens from other businesses is not legal. The casinos in Las Vegas ran into this problem in the mid sxties. When the silver dollars disappeared they created their own "chips" to replace them and the government didn't mind at first. But tourists wander from one casino to another and would use chips from one casino in the slots on on the gaming table at another. Rather than lose the money by refusing them the casinos would accept them and then redeem them later at the issuing casino. When that started the government DID put their foot down and put a stop to it. So now you can still get chips at a casino, but they are only usable at that casino.
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Pillar of the Community
United States
7390 Posts |
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Valued Member
United States
95 Posts |
Many 1960s casino chips had distinctive edging, so that when stacked it would be obvious to the table dealer that an "illegal" chip was present. At first, the first chips varied in size, the Hurrah's chip was gigantic (1965). I am not sure that the casinos accepted chips from another casino!! Many of the chips have stamped "for use only at..." or,..."this token for use by player only" (such as on the Wagon Wheel Casino and Hotel token). Some did accept chips from a networked casino, such as Hurrah's in Reno and Lake Tahoe. Chips at casinos came into existence because the mint stopped issuing (or the banks did) silver dollars, especially the Morgan and Peace dollars. So in 1965, the casino's secured the special chips from the Franklin Mint (primarily). The practice ended when the US mint issued the Eisenhower dollars. Today many of the old obsolete casino chips are quite collectible, and becoming scarce. (and hence many surviving Eisenhower dollars show much abuse)!! Edited by GSDykes
09/14/2015 3:11 pm
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Pillar of the Community
1325 Posts |
Quote:
Such a situation as you describe with the bar tokens is perfectly legal BUT the tokens can only be used internally. Ok, so maybe I have asked this before but that TV show with the guy, I think he was married to Teri Hatcher (Lois Lane) at one time, had "BerkShares" mentioned on it. The law says you can't mint money, only the US Mint can, so these BerkShares were like bills. the "bar token" is like a poker chip, or a coin. Doesn't that mean even internally these are coins? Could a business issue change only in its own "exchange tokens"? or is the smallest limit $1 since anything less at this time would be considered a "coin"? If the business had no change to give and everything was rounded (including tax) to a dollar? Someone goes into a store, buys $200 worth of store tokens, they function like gift certificates for example, right? So what is the smallest size gift certificate, in token form? Considering 25-cent style arcade tokens still exist and all... |
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Bedrock of the Community
United States
17884 Posts |
It really depends on how much they want to go after you. For example the arcade tokens you mention. Companies have been making a using those for decades with no interference, But if the government wanted to they could go after them and shut them down because they are illegal under Title 18 Chapter 25 Sec 336 and 491. Sec 336 says
Whosoever makes, issues, circulates, or pays out any note, check, memorandum, token, or other obligation for a less sum than $1, intended to circulate as money or to be received or used in lieu of lawful money of the United states, shall be fined not more than $500 or imprisoned not more than six months. (This was the law that was used to end the Civil War tokens in 1863.)
The first part of Sac 491 says Whosoever, being 18 years of age or over, not lawfully authorized, makes issues, or passes any coin, card, token or device in metal or its compounds intended to be used as money....Shall be fined not more than $1000, or imprisoned not more than one year, or both.
Now they haven't used these laws against the arcade people, or the casinos, but they are on the books and they could use them at any time they so chose.
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Replies: 20 / Views: 5,098 |
Posted 09/01/2015 06:10 am
