Federal Reserve Notes are a prime example of paper currency designed and produced by the Bureau of Engraving and Printing (BEP). The BEP is a government agency within the United States Department of the Treasury that designs and produces a variety of security products for the United States government. In addition to paper currency, the BEP produces Treasury securities; military commissions and award certificates; invitations and admission cards; different types of identification cards, forms, and other special security documents for a variety of government agencies. The BEP does not produce coins; all coinage is produced by the United States Mint.
In July 1861, Congress authorized the Secretary of the Treasury to issue paper currency in lieu of coins due to the lack of funds needed to support the Civil War. The paper notes were essentially intended to be government IOUs called Demand Notes. Demand Notes were payable “on demand” in coin at certain Treasury facilities. At this time the government had no facility for the production of paper money so a private firm produced the Demand Notes in sheets of four. These sheets were then sent to the Treasury Department where dozens of clerks signed the notes and scores of workers cut the sheets and trimmed the notes by hand. In 1862, the Second Legal Tender Act authorized the Treasury Secretary to engrave and print notes at the Treasury Department.
In the beginning, the currency processing operations in the Treasury were not formally organized. In 1863, congress developed the Office of Comptroller of the Currency and National Currency Bureau. For years, the currency operations were known by various semi-official labels, such as the “Printing Bureau,” “Small Note Bureau,” “Currency Department,” and “Small Note Room.” It was not until 1874 that the “Bureau of Engraving and Printing” was officially recognized in congressional legislation with a specific allocation of operating funds for the fiscal year of 1875.
From almost the very beginning of its operations, the Bureau of Engraving and Printing designed and printed a variety of products in addition to currency. As early as 1864, the offices which would later become the BEP made passports for the State Department and money orders for the Post Office Department. Other early items produced by the BEP included various government debt instruments, such as interest-bearing notes, refunding certificates, compound interest Treasury notes, and bonds.
In July of 1894, the BEP officially took over production of postage stamps for the United States government. The first of the works printed by the BEP was placed on sale on July 18, 1894, and by the end of the first year of stamp production, the BEP had printed and delivered more than 2.1 billion stamps. The United States Postal Service switched purely to private postage stamp printers in 2005, ending 111 years of production by the Bureau. Starting in 2011 the United States Postal Service in-housed all postage stamp printing services.
In 1918 the invention of the power press increased plate capacity from four to eight notes per sheet, this was done to expand the production requirements related to World War I. With the redesign of currency in 1929, we saw the first major change since paper currency was first issued in 186. Note design was not only standardized but note size was also significantly reduced. Due to this reduction in size, the Bureau was able to convert from eight-note printing plates to twelve-note plates. The redesign effort came about for several reasons, chief among them a reduction in paper costs and improved counterfeit deterrence through better public recognition of currency features.
A further increase in the number of notes per sheet was realized in 1952 when the BEP experimented with new inks that dried faster. The Bureau was able to convert from 12-note printing plates to plates capable of printing 18 notes in 1952. Five years later in 1957, the Bureau began printing currency via the dry intaglio method that utilizes special paper and non-offset inks, enabling a further increase from 18 to 32 notes per sheet. Since 1968, all currency has been printed by means of the dry intaglio process, whereby wetting of the paper prior to printing is unnecessary. In this process, fine-line engravings are transferred to steel plates from which an impression is made on sheets of distinctive paper. Ink is applied to a plate containing 32 note impressions, which is then wiped clean, leaving ink in the engraved lines. The plate is pressed against the sheet of paper with such pressure as to actually press the paper into the lines of the plate to pick up the ink. Both faces and backs are printed in this manner – backs first. After the faces are printed, the sheets are then typographically overprinted with Treasury Seals and serial numbers.
With production facilities in Washington, DC, and Fort Worth, Texas, the Bureau of Engraving and Printing has been the largest producer of government security documents in the United States since 1861!