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.
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