Collecting Paper Money

By Tom Becker © 2001 All rights reserved

Tom Becker has been a full-time professional numismatist since 1968 beginning his career with Paramount International Coin Corporation in Ohio.  During his 30+ years he has worked for a number of rare coin firms, most notably as the Senior Numismatist for Bowers and Merena and as a consultant for both Littleton Coin Company and Heritage Rare Coin Galleries.

For more articles by Tom Becker visit his web site at: www.tombeckeronline.com

JUST FANCY CHECKS

With no exceptions, those who issue paper money intend for the notes to have more monetary value than the cost of the ink, paper, and time it took to make them. There have been times when some governments, faced with run-away inflation, suspended the production of certain denominations of currency because the paper indeed represented more value than the monetary unit printed on it!

Any form of circulating paper money illustrates an extraordinary faith by those who use it in the people who issued it. In 1775 the Congress of the unified colonies, in what was to become the United States, began to issue Continental Currency to finance it’s various conflicts. By October of 1787 this paper money was exchangeable at the rate of $250 in “Continentals” for $1 in coin!

About three quarters of a century later those who had faithfully accepted the currency of the Confederacy found themselves holding bundles of monetarily worthless wallpaper.

There are certainly many other examples of governments, banks, and others who issued notes along with a promise to redeem them in "real" money but later had trouble doing so or reneged entirely. Often governments would try to convince the citizenry to accept and use paper money based on the promise that a like amount of real money, in the form of gold and silver had been set aside should anyone wish to "cash" the fancy checks. In the case of our current government confidence in this agency's ability to honour it's debts has reached an unprecedented level as our currency is redeemable in nothing except more currency. You are welcome to cash your fancy checks at any time, as long as another fancy check is acceptable as payment.

Our Federal government, in a concerted effort to monitor, if not control, all commerce now discourages the use of paper money and is doing all it can to create a cashless society. I suggest that within the next quarter century paper money will become insignificant in commerce and may only be accepted to complete small transactions, perhaps valued at $100 or less. The majority of stores, businesses, and banks will be linked together in a giant computer network. The customer will present what looks like a credit card as payment and at the end of the transaction funds will be quickly transferred from one account to the other. The government will save billions of dollars each year because there will no longer be a need to print and distribute tons of new paper money. I wouldn't be surprised if the government were to call in all previous issues of paper money and after a reasonable redemption period demonetise the notes. In doing so they will have finally established total control over private enterprise. No transaction will escape the government's watchful eye. Taxation will become much more efficient and the only paper money we will see will be those notes in collections, perhaps kept illegally.

PARDON ME FOR WANDERING OFF IN THE ECONOMIC WOODS.

The purpose of this report is to review methods of collecting paper money, not to provide a history of it's distribution and usage, but one can hardly participate in this fascinating hobby without learning something about government, history, banking, and commerce. The United States has not only issued an interesting variety of differently designed currency but many different types as well. The collector may encounter Demand Notes, Compound Interest Notes, Treasury Notes and numerous others. Each of these different forms of paper money has an interesting, sometimes extraordinary story to tell. Some examples of our currency feature the likenesses of personalities other than familiar presidents. Who are these folks and how is it that they were once important enough to appear on our money? Most of our currency was signed by government officials as an endorsement of authenticity and value. Learning something about these individuals, some of which ended up being quite notorious, is often an enjoyable project for the paper money collector.

THIS IS WONDERFUL STUFF!

As I write this report I have a reference book on my desk that contains photographs of large size United States currency. Even though I've owned many of these notes before I can't help but marvel at the designs. Most of this paper money looks to me like beautiful, miniature, works of art. Seeing the real thing is even more impressive. The intricate engraver's skill mixed with the colors, legends, and illustrations, makes this money like no other collectable.

A STACK OF BILLS TWO MILES TALL!

If you put one each of every different type of paper money that has ever been produced around the world in a neat pile it might not reach two miles into the air but it would certainly be very tall. I once bought a collection of world paper money that contained 10,000 different notes! As with coin collecting, deciding on what type of currency would make the best collection can be a difficult task filled with lots of experimentation. To list all the possible collecting options would easily fill the rest of this report and I’d probably over look many. No book or pamphlet can provide the meaningful information you will gain by examining a wide variety of paper money first hand. If you’re at all like me you’ll want to buy some interesting notes for your collection rather than just look at them. Go ahead, have fun, but please don’t make any firm commitment to a certain type of collection until you’ve at least seen a few examples of many different types. I know of one person who began by collecting error notes of small size modern currency and then switched to Colonial currency! While these two types of collections are very different they both can be great fun!

My first introduction to paper money occurred when a person who operated the local barber shop showed my father and me a National Bank Note that was issued by our local bank. I had no idea that the bank in our small town could actually issue paper money. I later learned that more than 14,000 banks throughout the country issued more than seventeen billion dollars worth of notes between 1863 and 1935. Large cities might have dozens of chartered banks. A small town like were I lived or perhaps a place like Black Lick Pennsylvania might have, and probably need, but one.

Collecting "Nationals" is perhaps the most popular type of paper money collecting in this country and it's easy to see why. National bank notes were produced in a variety of types. Many people begin collections by obtaining a few notes from their home state. Others may attempt to collect one specific type of note from a bank in each state that issued them. Since far less than one percent of all the National bank notes ever issued are estimated to have escaped redemption many of the notes are scarce or rare and few are found in what would be considered choice condition. Since I'm not a condition fanatic anyway, I would rather have a presentable example of an interesting note than to go without. Many collectors of Nationals share my opinion out of necessity rather than choice.

Perhaps the second most popular way to collect United States currency is by type. Since the face value can influence the price, the most popular denomination to collect by type are the one-dollar bills. I would suggest that the collector who is new to the field consider obtaining a few type notes rather than beginning a more specialized collection. Every piece of currency issued by this country is attractive but some of the notes are simply beautiful. Perhaps the best way to begin a collection is to look through a reference catalog, pick a note that you find especially interesting, and one that won't destroy your budget, and then attempt to buy it.

Since I'm not obsessed with completing collections, I would suggest rather than set the goal of building a complete type set you acquire only those notes, which you find attractive and interesting. There are so many beautiful and interesting types of paper money available it seems foolish to buy something that doesn't really impress you only to complete a set, which has probably been completed previously by hundreds of other collectors. I know of one collector who decided that he would collect National bank notes from banks that had the word citizen in their name. When I asked him why he picked these notes he said, "Just to be different." 

Collecting paper money, perhaps more than any other field of numismatics allows the collector to spread their wings and fly in any direction they choose. Aside from using common sense and following prudent buying practices you can do as you please and have a great time while you're at it! It's often great fun to be unorthodox and to view collecting from a different and refreshing perspective.

THE MINIMALIST.

I've been collecting things for the better part of my life and yet I've never found a specific area that has captured my interest. The more I learned about paper money the more diverse my collection became. I decided I should build a type set that contained a representative and interesting example of each major type of paper money issued in this country. By reducing the scope of my collection I reasoned I could afford a better example of each type.

I included a super condition Colonial note. A high quality example of a scarcer than average Confederate issue found it’s way into my collection. I picked a couple of pretty pieces of the large size issues, a scarce example of Merchant's scrip, and a Territorial national bank note. After adding a few other eye-catching odds and ends I had an even dozen pieces of paper money that I thought would be appreciated by any of the specialists in any of the areas I had collected. I was almost right. Another collector who had as wide ranging interests looked at my accumulation and offered me nearly twice what I had paid for the group. Since I felt I could build an even better collection with all the money he was paying me I sold it. As it turned out he was smarter. I still miss owning some of the pieces. In twenty years of looking I haven't found many I think are superior.

THE I WORD.

Is the paper money market a good place for the investor to roost? I know of some collectors who have made exceptional profits when selling their collections of paper money. With some notable exceptions, the paper money market tends to be quite stable with a good history of upward price movement. As with other specialized areas of numismatics, the participants in the paper money field tend to be more sophisticated than the average coin collector, better informed about their specialization and more dedicated to it. During my years as a coin dealer I don't think I've ever met a person who began the hobby as a paper money enthusiast and then switched to coins but I can name many who did the opposite.

In some cases the paper money market is behind the times. Collectors often buy things because they like them not to make a buck. Liking is a simple reason to collect, but still a good one. If your interest in paper money is solely based on the premise that you can make money by getting involved then you should look elsewhere for there are many less complicated investment options.

There is no shortage of paper money collectors but since there are so many different collecting specialties demand for certain issues can be rather thin. In some areas demand can be highly selective. Some items when offered for sale may create extraordinary interest while others go begging. As expected the great rarities and scarce notes in exceptional condition are the stars of the marketplace. Deciding what to buy for investment purposes can be an arduous task for even the experienced currency collector, let alone the novice or beginner.

In very few segments of the paper money market will you find the standardized pricing that is familiar to the coin collector. Because many desirable items are seldom offered by two sellers at the same time it is difficult to draw comparisons. There are so many factors that influence the value of any particular note that the scarce and rare items tend to be priced on their own merit. A well-centered specimen with exceptionally bright colors might command a substantial premium over another note, which deserves the same technical grade. For a variety of good reasons the profit margins expected by paper money dealers tend to be somewhat higher than that of coin dealers. This is especially true with highly specialized areas or items that sell for rather low prices. I know of several collectors of world paper money who have assembled large and interesting collections and never spent more than $10 on any single note! Collecting paper money can be a very affordable and enjoyable hobby, however, I think the majority of paper money dealers would agree that such inexpensive material should never be acquired for investment purposes.

THEIR INGENUITY AND CREATIVITY IS INSPIRING.

I enjoy being associated with paper money collectors because, as a group, they are among the most resourceful of hobbyists. Many of them have the capacity to take an enormous category of collecting and reduce it down to a workable size. Many of them use their collections of currency as the foundation for building an interesting hobby that includes far more than just an album full of old folding money.

I know of one historian-collector who also enjoys autograph collecting. Since numerous bank notes were actually hand signed by bank officers and others he has been able to assemble a most interesting collection of autographs each of which is found on an important document. Certainly none of us consider money to be insignificant! Along with each of the notes in his collection he has included information about the people who signed them. In some cases months of enjoyable research was required to discover something about some of the now obscure people who were once important enough to personally autograph paper money. As I recall, his collection includes the autograph of at least one person who was hanged for cattle theft, an individual who was deported as an illegal alien, a banker who also financed a house of ill repute, and many other people with colorful pasts.

Another collector who is interested in people and the part they played in history has paper money from around the world divided into categories which include famous heads of state, military personalities, kings and queens, and the like. You may find it amusing, but I also know of a pediatrician who collects currency on which children appear and a barber who collects notes which feature beardless male personalities. Can you think of any other good reason to exclude an Abe Lincoln note from a currency collection?

I know another collector who collects world currency only if the denomination is two, be it in pesos, dollars, krona, or whatever. Obvious topical collections that include notes which feature animals, plants, buildings, trains, and hundreds of other specific devices are always interesting and fun to collect.

GETTING IN ON ALL THE FUN.

To decide what you'd like most to collect you need to know what is available. I don't know of any single reference book that deals with all types of paper money. If there was such a book most of us would need a helper to carry it around! I really can't suggest to the undecided beginner that they should spend a hundred dollars or more to acquire the basic paper money references. There is the chance that your local library may have a volume or two on the subject that you can borrow or perhaps a member of your coin club can loan you some works on the subject. If you are like me you will find something of interest in most any catalog you examine. Before settling on a theme for your collection try to review many possibilities. Colonial paper money is fascinating. The notes and scrip issued privately by banks and merchants can be acquired to form a great collection. Paper money issued by the Confederacy is very popular as are the regular United States issues. Since I've already mentioned how resourceful paper money collectors can be, I'm sure you'll find a way to check on every possibility before making any serious financial commitments. I almost forgot, collecting checks is a hobby that is also growing in popularity. Credit card collecting is finding some enthusiasts. If you can think of it someone probably collects it and that someone could be you!

DEALING WITH DEALERS.

Reviewing the displays of paper money dealers that have tables at coin shows is a great way to discover what's available and possibly appealing to you. Don't hesitate to ask the dealers questions. I have found the majority of paper money dealers to be very willing to offer instruction to new collectors. It will be most productive if you make a list of some of the questions you may have prior to attending the show. Rather than quiz the dealers when the show opens wait until the activity has slowed down a bit so the dealer can be attentive to your requests and spend some time talking with you.

Many paper money dealers issue regular price lists. Consult the classified sections of the various numismatic publications to find those dealers who may specialize in certain areas. If you are just beginning a collection of paper money it might be wise to at least get one issue of as many different price lists as possible. I would suggest you tell the dealers that you are new to the hobby and it certainly wouldn't hurt to include a few stamps to help defray their postage costs.

 Much of the fun of collecting is doing it yourself, however, it makes lots of sense to inform dealers of your collecting interests. The last three "Becker" items I've obtained came from dealers in South Carolina, Ohio, and Maine. There is no question that these neat pieces would have never found their way into my collection were it not for these dealers. I have found most paper money dealers are anxious to work with collectors and most do a good job of servicing want lists even if what you collect is not their speciality. Several years ago a dealer called me from a paper money convention to let me know that a piece of currency I had been looking for was available in another dealer's stock. When I was told the price I thanked the dealer for thinking of me but passed the opportunity to buy. A few hours later another dealer called from the same show and mentioned the same piece. That evening yet a third dealer called to let me know what I'd been seeking was found! Now that’s what I call service!

Most of the paper money dealers I know are very well informed about availability and pricing and perhaps more importantly, are willing to admit when they're not. I once stopped by the bourse table of a dealer who had just purchased a nice old time collection that included several issues of what are known as Broken Bank Notes. I expressed an interest in one item and the dealer confessed that while he had bought the piece he really didn't know what it was worth. I admitted that I hadn't seen the note before, but based on a gut feeling I was willing to pay $100 for it. After some thought the dealer accepted my offer. The next day I was walking past his table and he hailed me over. He reached into his wallet, extracted a $50 bill and handed it to me. " We both overestimated the value of that note, " he said. "I checked with Frank and Ed and both of them had sold some before for about $35. Since the one you bought was extra nice I think it should be worth an easy $50. " Guess who I’ve done a ton of business with since!

Do you find such a story to be unbelievable? Actually among paper money collectors and dealers similar occurrences are not all that rare. Even the most experienced specialists seem to be presented with puzzles and opportunities to learn more about the hobby. Most of the people involved with collecting paper money are quick to share their knowledge and experience with others. The kind dealer who generously offered me a liberal refund could well have done so because the same thing had happened to him in the past.

BEFORE WE GET TOO FAR ALONG.

Somewhere in this report 1'd need to include information about how paper money is graded and this is as good a place as any. Certainly paper money is far more fragile than coins. Most of us seldom feel the need to fold a coin. Even the durable paper that is used for currency is subject to staining, tears, fading, and scuffing. A note, which has seen considerable circulation, may still be quite usable as money but it's value as a collectable is greatly diminished. Just as the non-collector often considers what is really a quite worn coin to be in "really nice" condition, the person who is not familiar with the grading standards used to evaluate paper money may have the tendency to overgrade it.

As with coins, slight, sometimes hardly noticeable, differences in the condition of paper money can result in great differences in value. I could list all the common grades that are given to paper money and offer some explanation of what to look for, but experience has taught me that it is much more productive to view actual pieces of currency and notice the difference between each grade. Unless you are already familiar with the grading standards used for paper money I would strongly suggest you do not pay large premiums for notes that are supposedly in superb condition. I have found that many collectors can have a great time collecting paper money while purchasing examples in the EF and AU grades. As with coins, an AU example of many types of paper money is an excellent looking collectable. If you decide to build a comprehensive collection of United States currency you will find that many of the issues are unknown in Uncirculated condition. Settling for medium grade examples for your collection is a practical choice. If you do happen to make a mistake in grading the error should prove to be far less costly.

Since this report is filled with cautions and warnings it should also include some information about how paper money of all kinds can be treated to deceive the buyer into thinking the piece is of higher grade. Even the most durable types of paper is pretty fragile stuff. While a note might survive in a condition that will allow it to circulate for months or even years, an uncirculated note can become technically used and worth far less with very little handling. To learn more about the look and feel of truly uncirculated notes all you need to do is take a trip to your bank. Chances are good they can provide you with some new dollar bills taken from a fresh bundle of currency. If possible try to obtain at least a half dozen pieces of fresh currency so you can do some experimenting back home.

Study one of the fresh notes by holding it up to a desk lamp. Notice how uniform and smooth the surfaces are. The note will seem to have a glossy look when turned in the light. Now examine the newest looking bill you have in your wallet, pocket, or purse. Do you see any differences? While I would never suggest doing this with a piece of collectable currency, rub your fingers over the surfaces of one of the new notes. Even slight friction will result in some ink corning off on your fingers. The thin layer of ink that wasn't absorbed by the paper will soon be worn away during handling and counting at the bank or even minor circulation. Perhaps most important is the feel and texture of the paper itself. Twist the note slightly. Do you notice the resilience that this fresh note has that is lacking in the currency from your wallet? Slightly crease one of the fresh notes. Now try your best to remove any sign of the fold. Even if the crease seems to be gone it will be evident when you hold the note up to a light.

Since paper money has been printed on a wide variety of paper using different inks and printing procedures not all examples of Crisp Uncirculated currency will have the same look and feel as the notes obtained from the bank but you should now have a better idea of what a truly Crisp Uncirculated note is like.

In order to give a new appearance to slightly circulated notes it is possible to treat them with a variety of chemicals which will seem to restore the original stiffness and texture to the paper. Notes have been literally washed in soap and water to remove dirt and some stains and then hung out to dry. Notes can be treated with still other materials and then gone over with a warm iron to remove folds and creases. As with coins, it often takes an expert eye to detect when a doctor has performed an operation on paper money. Some of this trickery can be detected by the use of ultra-violet light and there are other methods the dealers may use to test the true quality of paper money. I have found that simply studying and handling fresh examples of common currency will help you to determine if something has been done to other notes to enhance their appearance.

STILL MORE BAD NEWS.

For many years many dealers and collectors stored paper money in plastic sleeves and pages. Such protection was obviously necessary as even careful handling of loose notes might result in damage. Since the paper is at least somewhat absorbent even touching notes with your bare hands may leave slight residue on them. Even a trace of oil from your fingers may attract dirt and what was undetectable improper handling may show up years later as a major flaw. What the dealers and collectors didn't know was that some types of plastic protectors they used would decompose over time and this process was accelerated when the plastic was exposed to heat and pressure. Valuable collections have been virtually ruined by these holders some of which had disintegrated to an oily mess. The same type of damage has occurred with coins as well, however, many times a coin can be saved by carefully removing the PVC residue. Since the paper in currency naturally absorbs the oil it is much more difficult, if not impossible, to remove the oil without ruining the note. Today all conscientious dealers and collectors use inert containers, which will not harm the surfaces of the notes. The containers are expensive but worth it.

WALKING THE PATH THAT MOST WILL FOLLOW.

Many different general types of paper money have been issued by the United States. A few examples include Legal Tender Notes, Interest Bearing Notes, Silver Certificates, and Treasury or Coin Notes. The major difference between these issues can often be found in the "small print" which appears on the notes. For example, Legal Tender Notes were, at the time of issue, backed by nothing more than the good credit of the Government. In the case of Silver Certificates it was pledged that an amount of silver dollars, equal to the value of the notes that were issued, was on deposit and would be paid to those who might wish to redeem the currency. It has been my experience that most collectors, especially new ones, are more interested in the designs of the various notes rather than the circumstances under which they were issued. Also certain general types of notes may have been issued in very small quantities or the majority of them have been redeemed thus making a comprehensive collection of some issued types either extremely difficult or impossible.

Perhaps the most popular category of large size currency are the Silver Certificates. This series offers the collector a nice variety of beautiful designs and includes few great rarities if collected only by major design type and denominations of $50 or less.

This is perhaps a good time to mention that since the paper money we are discussing is still redeemable at face value collecting high denomination notes can present some problems for the budget minded collector. Don't expect to buy any $100 bills for $99! As is the case today, smaller denominations of currency were made in greater quantities. This was especially true when the large size notes were issued. I think we would all agree that five dollars bought more back in 1880 than it does today! Since the smaller denominations are the most popular with collectors the value of these notes may be inflated when compared to the rarity of the higher denominations. Many collectors seem to prefer owning higher condition examples of commoner notes than well-worn specimens of currency, which may be much scarcer. I would suggest that these preferences are well established and not likely to change. I could wager, with the odds greatly in my favor, that the new collector of large size United States currency would choose the famous Onepapa five dollar note and the "Bison" ten over the 1862 $5 United States note or $10 issue of 1875 even though the last two are, in my opinion, far scarcer in comparable condition.

My personal favourites among all the issues of large size United States currency are the Gold Certificates. Printed on the reverse with bright gold-looking orange ink these beautiful pieces of currency remind me, and many other collectors, of the time when our paper money was, in fact, as good as gold. Large size Gold Certificates were issued in a variety of series from 1865 through 1922 however many of the early notes were produced in high denominations not intended for circulation. Other examples, while still in existence are extremely rare. Some of the later, high denomination notes are available but priced beyond the means of most collectors. It's a collection filled with large gaps and major holes but I still like these notes! Examples of some of the more common notes can be obtained in uncirculated condition at quite reasonable prices. Collecting these gold certificates should illustrate my suggestion that it is often better to obtain the notes you find desirable and those that are affordable even if the majority of issues which are needed to make a complete collection are not practical selections.

LET'S TAKE SOME INTERESTING SIDE PATHS.

Many reference books on paper money mention ways to collect the standard United States series. I see no reason to attempt to duplicate the many fine efforts that have already been made. Perhaps it would be best to review some of the other interesting but less well-known areas? Actually I like these better anyway.

MERCHANT'S AND BUSINESS SCRIP.

Early on the Government established rules as to who had the right to produce and distribute paper money. The rules have been relaxed, tightened, and changed over the years but never has there been a time when this right was granted to every citizen. There are many examples in our history of when the scarcity of coins severely hampered normal commerce. Let's suppose that we ran a grocery store but had no coins available to make change for our customers. While we could keep a list that showed that we owed regular customer Jones eight cents and Dr. Smith four cents such bookkeeping would be cumbersome. Wouldn't it be more practical to give customers a slip of paper that was " good for" the amount we owed them and could be redeemed the next time they came shopping? If we were well established in the community then it might well be that Jones and Smith could use the slip of paper that we had given them as money when they went shopping elsewhere.

There are many different types of scrip ranging from handwritten notes to elaborately engraved pieces printed on high quality paper. While there were incidents of merchants and others skipping town before redeeming all of their scrip and others trying to pass worthless "good fors". It appears the system, often used honestly to facilitate trade when no official money was available, worked quite well. I find it interesting that scrip issued by some of the most famous and honest merchants is quite rare. Merchants might number their scrip to keep track of their outstanding obligations. If there was no longer a reason to use the scrip the merchant might make an effort to redeem all their "markers" and destroy the no longer needed scraps of paper. If a merchant suddenly went bankrupt or left town under the cover of darkness their scrip might be widely scattered and ultimately end up in the hands of collectors a hundred years later. In the region of New Hampshire where I live I found a couple denominations of scrip issued by a previous local merchant. When I showed these notes to dealers who specialize in this material none of them had remembered seeing the little notes. I was very proud of my rare find. Several years after my discovery a part-time coin dealer called and offered me a few sets of the same scrip I thought was rare. He had several types and denominations that I didn't have. His price was quite fair and I bought three sets of four different notes. When I asked him how many more pieces he had he evasively answered by saying that he had a "few" but he wanted to keep them for himself. Suddenly the scrip started turning up everywhere! Nearly every dealer I talked with had a few sets. The stuff was offered for sale in most every antique group shop from Berlin New Hampshire to Salem in the same state! I later learned that this part-time dealer had bought several shoeboxes full of the scrip from the family of the merchant who issued it. What had once been rare was suddenly very common. 

As with many merchants’ tokens much of the scrip that was issued, especially in early times, may not identify the exact location of the merchant who issued it. The scrip was intended for use in the local community so there really wasn't much need to mention the state. Sometimes even the town name was omitted. Collectors of scrip and related material have had a great time trying to positively identify the location of the business that issued it. In many cases the scrip remains a "maverick" and the location of the business remains a mystery for another interested collector to solve.

CHECKING OUT CHECKS.

Have you ever taken a second or third party check? If you did then this very popular form of money acted much like the scrip that we have just reviewed. When we consider that less than 200 years ago most people in this country considered money to be nothing less than coins it's astounding how much faith we have developed in many forms of paper money.

In my opinion a check represents the most personal kind of financial instrument and acts exactly like many of the types of currency that has been issued by our country. When I offer a check and you accept it as payment you are trusting that I have deposited a like amount of good funds in my account. Our current government does business in the same way, except with an interesting twist. Their checks are called Federal Reserve Notes. The Federal government has granted itself the right to write far more checks than they can back with real money. In fact the National account is grossly overdrawn, but our elected officials continue to print more checks.

The Federal government need not worry. Their checks are backed by nothing except the hope that not everyone will attempt to cash them at once. The Feds made sure they are only required to redeem any presented checks with more checks. Under the law you have no option but to accept them.

I find check collecting a fascinating hobby. Previously I mentioned a friend who collects hand signed examples of United States currency. While not an autograph hound, I like the personal touch that hand signing adds to any type of money, checks included.

Certainly the most desirable checks to collect are early ones as it wasn't that long ago that accepting a check was a risky novelty. Many of the early business checks I've seen were printed so as to impress the recipient. I have one check in my collection that was issued by a firm run by a family named Becker. In the center of this large size check is a bird's eye view of a sprawling industrial complex. In reality the firm that issued the check did business in a building about the size of my garage. The vignette that was used on the check was an impressive stock design offered to customers by a check printing firm.

There are three types of checks you can collect and I advise investigating all of them. There are checks that have never been cashed and those that have, as well as those which were never issued. This is not the case with regular money. With a few impressive exceptions United States currency that has been redeemed is destroyed, rather than finding it's way back into the hands of collectors.

I know of one check collector who only collects bounced checks. That is checks written which were apparently never redeemable. He often points out that fortunately none of the checks in his collection were ever written payable to him! Another fellow has a fascinating collection of checks that were written by the founders of small firms that are now major companies. How much would you pay for an early check issued by Henry Ford or Thomas Edison? 

Like scrip, the checks close relative, it is far more likely to encounter cancelled checks than uncashed ones. I have one very plain looking check in my collection that was made payable to X and endorsed by another X. This would indicate to me that both parties involved were illiterate to the point of not being able to write their own name. No matter, a bank cashed it. Based on the current state of our educational system I would expect this particular check to decline in value because there will be many more like them in the future.

How many cancelled checks do you have stored in records boxes or filing cabinets? Most of us keep these pieces of paper for many years. Likewise so do banks and businesses. As the popularity of check collecting grows it is likely that more people will be looking for hoards of this type of money substitute. Cartons of checks that a business might have tossed in the dumpster may end up in dealers or collectors hands. I would caution you about buying any fairly modern checks for substantial sums unless the seller can assure you that a large hoard of this material is not available. It should also be understood that the seller might be dealing in good faith and not know of a large supply.

I know of one person who collects only blank checks. His reasoning is that even rather large businesses would not order huge supplies of checks and that unused ones may actually be much scarcer than ones issued and negotiated. On most checks we will also find the name of the bank where the account was held. Collecting checks by banks is a growing segment of the hobby.

LOOKING FOR ODD AND REALLY NEAT STUFF.

During the first years of the Civil War money in the form of coin was rapidly disappearing from circulation. As an alternative to issuing scrip, some merchants used a somewhat more official substitute in the form of envelopes that advertised their business and were filled with postage stamps. Later postage stamps were encased in metal shells with a mica window to allow viewing of the stamp. Oddly enough these highly collectable items are referred to as Encased Postage Stamps.

There is a great variety of collectable paper that may have served as money or a means of exchange. A ticket granting passage on a toll road or bridge might be accepted as payment by someone who knew that sooner or later they would need one of these passes themselves. I have in my collection a document that lists in detail a barter agreement between a carpenter and a farmer who exchanged several pigs and sacks of grain for the lumber and labor it took to make repairs on his house. While such a document was not intended as an exchangeable form of money, I find it interesting and quite unusual, as I doubt that few people who barter things then or now go to the trouble to write out the agreement.

The collecting of stock certificates is a very popular hobby. These certificates aren't normally used as money but they have considerable value. Some credit cards, especially early ones, are desirable collectibles. Collectors eagerly seek bank stationary and a great assortment of financially related documents. While perhaps not strictly currency this type of material can be great fun to collect and always seems to be a positive addition to any collection. Also many of these items may be obtained at quite reasonable prices and are apt to turn up in very unlikely places. While on a trip out West a friend and I were driving through a small town in Arizona. As we passed by an old bank building we noticed a sign in the window that said, "Pardon our Mess. We are remodelling to serve you better. " My friend and I instantly had the same thought. Often when a business is renovating their offices or moving they do some serious house cleaning as well. We boldly asked the head teller if this was the case with this bank. She explained that yes indeed, boxes and boxes of old documents had been removed from the basement. As it turned out what might have been a treasure trove of interesting paper items had been hauled away by a paper-recycling firm just ten days before!

During the last two decades there has been a great number of bank mergers and hundreds of small to medium size banks have been bought out by huge holding companies. One can only guess how much interesting material has been pitched away or shredded during these transitions.

What I have found as a collector of the odd and unusual is that there is lots of it out there and it doesn't take long to accumulate huge piles of "stuff". While it may be possible to collect lots of interesting things at a slight cost each, it didn't take me long to spend what amounted to a substantial sum on odds and ends. I would encourage you to sample all the different types of material that is available with the firm intention of discovering a single area or two that interests you most. I think you will find that by putting some practical limits on the size and content of your collection you will actually enjoy it more.

THE WORLD OF PAPER MONEY.

Does anyone know how many different types of paper money have been issued throughout the world? Whatever the number it must be huge! Often this immense diversity creates a major obstacle for the collector. Sometimes it's fun to jump hurdles.

The trap that catches most people who begin a collection of world paper money without a specific goal in mind is they often make insignificant and impulsive purchases that do little to really satisfy their needs as a true collector. I have made many of these types of mistakes myself and the only good reason I can give for them is I was anxious to get involved.

As with world coins, some collectors are naturally attracted to paper money issued by a certain country. A person of Scandinavian heritage may collect Swedish or Danish bank notes. A person whose ancestors came from Africa may find notes from that place most interesting. It seems often the beauty of the notes and that some were produced for supposed use in exotic or far away lands is what catches the fancy of the new collector.

Perhaps one of the first things the novice learns is there is an abundance of Crisp Uncirculated paper money available at very attractive prices. It should be remembered that there have been numerous occasions when entire issues of paper money were printed but never issued for circulation and then later sold to paper money dealers or others at nominal prices. Devaluations of the monetary system and demonetisations of entire issues have created gigantic supplies of paper money.

I know of one sorry person who, thanks to ignorance, and a great sales pitch on the part of the seller, bought a 1000 Mark bank note from Germany for the bargain price of just $20. The buyer, knowing something about foreign exchange, correctly calculated that the German mark was worth about twenty-three cents in United States funds the note had a face value of $230. Even if there were some stiff service charges involved with making the exchange to U.S. funds he was bound to come out way ahead. What he didn’t know was the notes in this series had been demonetised years ago and were worthless as money. The note he had paid $20 for could otherwise be obtained from dealers for less than $1!

Before buying any paper money where the price is somewhat related to the face value of the note be certain the note is still redeemable and you are aware of the current exchange rate. Sometimes this information is not readily available or the whole matter of what is still legal tender and what is not can be confusing and quickly change. Reputable paper money dealers would never cheat a customer in this way, however, there are others who may have a few bank notes for sale and are not so well informed or are not above taking advantage of a customer's lack of knowledge.

Since there are so many different types of world paper money and the condition is an important fact in evaluating them all, the collector may often find it difficult to determine what these notes really should be worth. It would be quite common to find a note in one dealer's bargain box priced at $2 that could be had from another source for half that price. Making a mistake at this level can be chalked up to a lack of experience but paying $200 for a note others have for just $50 stings much more. I may be criticized for saying so, but it has been my experience that many of the pricing guides for all types of paper money tend to list inflated valuations. In other cases certain notes may trade so infrequently the pricing information is seriously outdated. Since the guide was published hoards of certain notes may have been discovered or collector demand may have changed. These are just a few more good reasons for the collector of world paper money to find a specialty within the hobby and to research the notes that are of interest prior to making any major purchases.

Regardless of the field, I have found that the hobbyists who are well informed have the most fun doing it.

Perhaps the best way to enjoy the diversity world paper money has to offer, while keeping the size of your collection under control, is to settle on a single topic or theme. I know of one collector who collects bank notes from former and current members of the British Commonwealth. Such a collection would be huge in scope except he only includes notes featuring the effigy of George V. Another person collects only European currency issued, or at least printed, prior to 1850. A young collector I know has assembled an interesting collection of notes that have birds as part of the design. Still another collector who is a railroad buff has a great collection of notes with trains on them. The possibilities for a topical collection are limited only by your ingenuity, creativity, and interest.

BUILDING THE BEST OF COLLECTIONS.

Those of you who have read other reports in this series know that I have very diverse interests and have never been able to settle on any specific type of collection. For this reason I limit the size of my collection to a certain number of pieces and once this limit is reached I force myself to sell something from the collection before adding another piece. The limit I have placed on the number of pieces of paper money and related items is 100. You may find my system will also work well for you using a very different limit. 

Even a wealthy collector who was only interested in large size United States issues might find their budget is severely strained before they have obtained 100 significant notes of high quality. There are many notes in this series easily worth $1000 or more, some many times that price.

Any limit you set on the size of your collection should also take into account three factors, significance, rarity, and condition. The paper money collector can build a highly personalized collection. Significance and rarity are very different considerations. After some years of searching I finally located an example of a National Bank note issued by the bank in my hometown. As National Bank notes go this one is not especially rare and the condition of the one I own is below average, but it has special significance. I also collect a variety of items related to merchant's whose name is Becker. I doubt someone named Smith or Jones would be as interested in my collection.

Gauging the rarity of a particular note is often harder than determining its significance. Many, if not most, examples of paper money are technically unique because most have a specific serial number that is given to only a single note in each series. As with coins, there are numerous examples of different issues of paper money that may be quite common in well used condition but rare in a Crisp Uncirculated state. While I'm bucking the current trend in nearly every hobby, my preference is to obtain items that are considered scarce or rare in most grades and where the bulk of the value given to the note is not solely related to its condition. I am also more attracted to issues considered scarce or rare in general rather than to items which are quite common save for a minor difference in the design or a certain signature combination.

Because there are so many different types of paper money and related material it is easy to confuse a lack of availability with rarity. I once passed up the opportunity to buy a privately issued bank note because I thought the asking price of $25 was too high. At least five years passed before I located another one. I was pleased with myself for waiting. This example was in somewhat nicer condition and it cost only $10! I'm constantly searching for neat pieces of paper money to add to my collection. Whenever I have the chance I snoop around flea markets, antique shops, and I attend a variety of shows and conventions were at least a few of the dealers may have something of interest. More often than not, after hours of searching, I find nothing of interest, but for me much of the fun is in the hunt. As they say, you'll never catch a fish unless you have a line in the water.

The paper money collector who has become even somewhat specialized soon learns it is very important to know about the average encountered condition of what they are collecting. The collector of Broken Bank Notes discovers that some issues are almost always found in uncirculated condition while the finest known examples of others may be heavily worn. A person who collects early English paper money soon understands that uncirculated notes are seldom seen. The collector of German Notgeld currency would seldom accept notes that were less than Crisp Uncirculated. As with other fields of numismatics, I strongly suggest you attempt to collect paper money that exceeds the average encountered condition for the issue. This advice is tempered by economic considerations. In the case of rare notes you may choose to accept a rather average condition piece because it is the best you can afford. If you are interested in building a really enjoyable collection then it would be best to consider the significance, rarity, and condition of every purchase and not ignore any of these elements when deciding what to buy.

ALL THOSE WONDERFUL VIGNETTES!

Many types of currency include as part of the design interesting and intricately engraved miniature pictures which are commonly referred to as vignettes. The purpose of a vignette is to add ornamentation and deter counterfeiting. This has been accomplished to a high degree on many types of currency. The range of subject matter included in vignettes is tremendous. We find flag carrying eagles, allegorical figures, battleships, farm scenes and much more. I think we can reasonably assume that when possible, and financially practical, any entity issuing something that might be considered money wanted the notes to look important and valuable. Adding finely engraved and interesting vignettes was certainly a good way to accomplish this. Companies which were in the business of producing bank notes and other types of valuable paper often had supplies of stock vignettes that could be selected by the business or government wishing to have notes made. In the case of some currency, which is commonly referred to as broken bank notes, some customers went to extremes and plastered their notes with pictorial vignettes, elaborate border designs and intricately made legends and numerals. Unfortunately, some of these producers, while creating impressive looking notes, might have better spent their time trying to acquire the assets necessary to adequately back their fancy money. Far too often an important looking piece of paper money proved to be worthless as money. Collecting paper money, basis the subject matter of the vignettes, is quite popular. You will find many collectors who wish to own notes having vignettes of coins on them. Some collectors specialize in collecting certain vignettes that were used, on a variety of different notes. The most fertile fields for the vignette collector is in the area of Broken Bank Notes and world currency. 

WHAT DO OTHERS HAVE TO SAY ABOUT COLLECTING PAPER MONEY?

In preparing this report I spoke with five paper money enthusiasts who are either long-term collectors or experienced dealers. I asked each how they had become interested in paper money. None of them said it had been their first collecting preference. Several mentioned an experience, that could be termed accidental, got them interested in paper. One said that they had become bored with coins and had tried several other branches of the hobby before settling on bank notes. When I asked them if they had recently given any thought to quitting paper money and collecting something else I received five, quick, negative answers. When I asked them why they preferred paper money over other possibilities the three dealers in my poll all agreed that aside from liking the content of their inventories they also liked doing business with paper money collectors. Two of the dealers said they found paper money people to be more enthusiastic than coin collectors and seemed to stay with the hobby longer. One dealer, who used to sell only coins, said he found it more fun to do business with people who really liked and appreciated what they were buying rather than just hoping to invest in something and make a profit. Another said it was nice to be involved in a business that wasn't dominated by pinpoint grading standards or "slabs".

Both of the collectors I spoke with surprised me somewhat by saying that collecting paper money offered them lots of challenges without lots of competition. They both appreciated being involved in a hobby dominated by collectors and one, which had experienced reasonable steady growth rather than unpredictable ups and downs.

When I asked each of these collectors and dealers to predict which segment of the paper money market would gain the most in popularity they all mentioned their specialty! Two of them said they hoped they were wrong. They still had lots of interesting notes they wanted to buy and could do without a batch of newcomers messing up things. Each of the dealers at least mildly complained about the lack of quality material that was available to buy and that there were few "fresh" deals available. "I used to always have at least a hundred pieces of nice Confederate paper in stock, " said one dealer. "Now I'm lucky if I have a dozen notes I'd be proud to sell!" 

CARROTS AND CURRENCY.

Remember when your mother made you at least try a new food? While I don't want to force you to try anything, I would strongly encourage investigating the hobby of paper money collecting. No, I don't like creamed spinach either, but at least we can both say we reached the same conclusion based on a fair trial rather than judging from ignorance.

Those who are looking for an affordable and yet rewarding and enjoyable hobby will find it by collecting paper money. Adding a few examples of paper money to a coin collection can be like icing on a cake. Making paper money your second collecting specialty will give you more to do and look for at coin shows. Even a casual interest in paper money is bound to put you into contact with a new group of enthusiastic and knowledgeable collectors along with dealers who are glad to make your acquaintance. I will admit that not everyone I've introduced to the hobby of paper money collecting has liked it. The ratio is about seven in ten. I wish I could say the same for my honey-rum fruitcake. This year I think I'll leave out the nuts.

For more articles by Tom Becker visit him at: www.tombeckeronline.com