US Code: Federal Reserve Notes Shall Be Redeemed in Lawful Money on DemandSubmitted by GCN3030 on Sun, 04/28/2013 - 17:16
USC › Title 12 › Chapter 3 › Subchapter XII › § 411
12 USC § 411 - Issuance to reserve banks; nature of obligation; redemption
Federal reserve notes, to be issued at the discretion of the Board of Governors of the Federal Reserve System for the purpose of making advances to Federal reserve banks through the Federal reserve agents as hereinafter set forth and for no other purpose, are authorized. The said notes shall be obligations of the United States and shall be receivable by all national and member banks and Federal reserve banks and for all taxes, customs, and other public dues. They shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank.
Gold and silver coin must be lawful money since the United States Constitution declares, in Article I, Section 10, "No State shall... make any Thing but gold and silver Coin a Tender in Payment of Debts".
Furthermore we have evidence about the original intent of the framers at the constitutional convention:
The eighth clause of the seventh article, in the first draft of the constitution, was as follows: "The legislature of the United States shall have the power to borrow money and emit bills on the credit of the United States." The journal of the convention for August 16th makes this record: "It was moved and seconded to strike out the words 'and emit bills,' "and the motion to strike out these words "passed in the affirmative. Yeas: New Hampshire, Massachusetts, Connecticut, Pennsylvania, Delaware, Virginia, North Carolina, South Carolina, Georgia — 9. Nays: New Jersey, Maryland — 2." So the convention, by a vote of more than four to one, refused to grant to the legislature of the United States the power "to emit bills on the credit of the United States."
For the interpretation of this record, Madison, the best possible witness, has left this note: "Striking out the words cut off the pretext for a paper currency, and particularly for making the bills a tender either for public or private debts."
A PLEA FOR THE CONSTITUTION OF THE UNITED STATES
Wounded in the House of Its Guardians
by George Bancroft
For further historical reference and perspective I recommend reading all of Bancroft's plea as well as the following:
NOTES ON THE ESTABLISHMENT OF A MONEY UNIT, AND OF A COINAGE FOR THE UNITED STATES - Thomas Jefferson, The Works, vol. 4 (Notes on Virginia II, Correspondence 1782-1786)  Source: http://oll.libertyfund.org/?option=com_staticxt&staticfile=s...
What Is A "Dollar"? An Historical Analysis Of The Fundamental Question In Monetary Policy by Edwin Vieira, Jr.