US Notes were issued directly by Congress, bypassing the Fed.
Imagine what would have happened to us if Congress could still issue its own money!
Officials of the Bank of England asked [Benjamin] Franklin how he would account for the newfound prosperity of the colonies. Without hesitation he replied:“That is simple. In the colonies, we issue our own money. It is called Colonial Scrip. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers... In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay to no one.”
The primary difference between the United States Note and the Federal Reserve Note is that a United States Note is created by the government directly as a bill of credit, and thus there is no interest for the Government to pay for the creation of that dollar.A Federal Reserve Note, on the other hand, is bank currency, and the U.S. has to pay interest on the treasury bonds that it gives the Federal Reserve System in exchange for the right to produce a like quantity of Federal Reserve Notes. This, in turn, increases the tax burden on the people. Abraham Lincoln advocated the use of United States Notes because they avoid the usury and debt multiplication aspects of debt-based currencies, and thus save the Government immense sums of interest. Thomas Jefferson also believed that the issuing power of money should rest with the US Treasury, and not the private banks.
http://en.wikipedia.org/wiki/United_States_Note