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Lawful Money

Lawful money is any form of currency that is backed by the U.S. Treasury and is accepted as a payment option by legal tender statutes. It currently includes gold, silver and certain standard U.S. coins, such as the Lincoln penny and the Jefferson nickel. Treasury-issued Treasury notes, bonds and certificates of indebtedness can also be considered lawful money, but these items are rarely seen in everyday commerce. The main purpose of lawful money is to enable the government to obtain payments for goods and services they are owed, while also protecting the soundness of the currency by establishing a secure and reliable form of exchange that is trusted by its citizens.

In the U.S., lawful money has been in circulation since 1792, when Congress established a U.S. mint. At that point, gold, silver and copper coins became the standard form of legal tender. Since then, the U.S. has gone through several changes to the definition of lawful money, often adding more flexible forms of payment. Since 1958, for instance, the government has allowed for the conversion of paper money into silver coins, thus permitting another form of legal tender known as Silver Certificates.

Though lawful money is backed by the U.S. Treasury and has been accepted since the establishment of the Federal Reserve Act, it is not the only form of legal tender available. For example, checks, debit cards, credit cards and even digital forms of payment such as Bitcoin or cryptocurrency may be considered legal tender depending on the issuing country or locality.

Despite the broadened acceptance of other forms of payment, lawful money continues to be the legal tender of choice in the U.S. today. It helps to ensure the integrity of the U.S. dollar, while also protecting consumers against fraud and counterfeiting. As such, it is important to have an understanding of what constitutes lawful money, as well as the different forms of legal tender available in order to make informed payments.

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