Federal Reserve Note Definition

• Federal Reserve notes are the paper money we use in transactions every day.
  
  

United States Note Definition

• United States notes are the paper money issued between the years 1862 to 1971. At different points in U.S. history, these notes were redeemable for silver or gold. Today, these notes are no longer redeemable and serve the same purpose as Federal Reserve notes.
  
  

Shared Traits

• Both have been used by the United States at some point in its history as paper money.
  
  

The First Difference: Who Issued the Note

• The Federal Reserve issues Federal Reserve notes as an intermediary between the U.S. Treasury and U.S. citizens. The United States note was issued by the U.S. Treasury.
  
  

The Second Difference: What the Note's Worth

• The U.S. note was worth the amount stated on the bill and was interest-free. This type of dollar is called a "bill of credit." Because the bills were not redeemable, printing stopped in 1971.
  The current Federal Reserve note is more like an I.O.U. we use as currency, and is not interest-free. These bills are not backed by anything such as silver or gold, and are only redeemable for other Federal Reserve notes. Their value lies in what they buy.