Compound interest treasury note

While they were legal tender at face value, they were redeemable after three years with six percent annual interest compounded semi-annually.

[1] In the absence of efficient investment banks, the hybrid nature of these instruments allowed the government to directly distribute debt by paying the notes out to creditors as legal tender, and then relying on interest-seeking parties to eventually remove them from circulation in order to redeem them with interest at maturity.

Thus, in theory, the notes did not contribute to monetary inflation as did the greenbacks.

[2] At the time of their issue, investors were accustomed to receiving interest via semi-annual coupons.

Each note presents an ornate table on the reverse containing details of the interest calculation.