NATIONAL BANK NOTES by Tony Swicer

NATIONAL BANK NOTES

1863-1935

By Tony Swicer

 

There are 4 eras of U.S. banknotes; Colonial 1690-1798, State banknotes 1782-1861,

 National banknotes 1863-1935, and Federal Reserve notes 1913-present.

 

In 1863 with the Civil War in its third year, the Federal government needed to generate more money to pay for the war. The National Currency Act was signed on February 25, 1863. The act would provide a National Currency, secure a pledge of United States Stocks, and provide for the circulation and redemption thereof.

 

To become a National bank a local bank would apply to the U.S. Comptroller of Currency. The bank must raise a minimum of $25,000 to purchase U.S. Treasury bonds that would be held in the US Treasury until redeemed. The bank would then receive $25,000 in notes with its charter # (beginning with 1875 series), name and state on the note. The bank could circulate up to 90% of the par value of the bonds it had purchased. Small banks might only receive $5 bills or $5’s and $10’s. Medium banks might use $5’s, $10’s and $20’s. Larger banks in big cities used all denominations allowed by the government. For the 1902 and earlier series notes, they would arrive at the bank in uncut sheets of 4 (4 $5 bills or 3 $10 & 1 $20 bill). All the sheets were then cut by hand. The 1929 series notes were in sheets of 6. The President or Vice President of the bank and the Cashier would sign every note. The Act of 1892 allowed notes to be redeemed without signatures or with forged signatures. Some notes were sent to the local printer where he would print the signatures of the bank officals on the note and cut the sheets for the bank. In the mid 1920’s the minimum amount required to be a chartered bank was reduced to $15,000. Charters were for twenty years and were renewable.

 

There are 11 types of National Bank Notes.

  1. The Original Series- printed from 1863 to 1875 in denominations of $1,$2,$5,$10,$20,$50,$100, $500, and $1000.
  2. Series 1875- printed from 1875 to 1882 in the same denominations as above.
  3. National Gold Bank Notes- printed from 1870 to 1880 in denominations $5 thru $1000.
  4. Series 1882 Brown Back Notes- printed from 1882 to 1908 in denominations $5 thru $100.
  5. Series 1882 Date Backs Notes- printed from 1908 to 1915 in denominations $5 thru $100.
  6. Series 1882 Value Back Notes- printed from 1915 to 1922 in denominations as above.
  7. Series 1902 Red Seal Notes- printed from 1902 to 1908 in denominations as above.
  8. Series 1902 Blue Seal Notes dated 1902-1908 -printed from 1908 to 1915 in denominations same as above. Issued $50’s and $100’s until 1926.
  9. Series 1902 Blue Seal, Plain Back -printed from 1915 to 1929 in denominations $5 thru $100.

 

  1. Small Size National, Series 1929 Type 1 -printed from 1929 to 1933 in denominations $5 thru $100. Charter number is black printed twice.
  2. Series 1929 Type 2 –printed from 1933 to 1935 in denominations as above.

Charter number is brown printed 4 times

 

From 1863 to 1875, all Nationals were printed in New York City by the American, Continental, or National Bank Note companies. By 1877 all notes were printed at the Bureau of Engraving and Printing in Washington D C. Large sheets were printed in combinations as follows; 1-1-1-2, 5-5-5-5, 10-10-10-10, 10-10-10-20, 20-20-20-20,     50-50-50-100, 50-100, 100. Other combinations exist, but these were the most common.

 

A total of 12,635 banks became National banks. The first series banks were chartered for a corporate life of 20 years. In 1875, the charter # was first printed on the notes. Series 1882 notes lasted until 1902 and were brown. Series 1902 notes were printed until 1929 and they were green. Large size notes had the Treasury serial number in the upper right, and the Bank serial number in the lower left.

 

Small size notes were first printed in 1929. They were off white with black and brown lettering. Notes were printed with a standard back and obverse face designs. The bank name, state and charter # were printed later. That way the B.E.P. could stockpile one-size fits all sheets.

 

About 600,000 notes have survived. That’s an average of 47 notes per bank. About 2000 uncut sheets have survived. (1500 -1929’s and 500 1875-1902).

 

The National Bank Note book (sixth edition) was printed in 2008. It cost $100.The author is Don C. Kelly of Oxford, Ohio. There were 307 contributors. The book lists every chartered bank (12,635). Major contributors were Jim Hickman who’s original census of 150,000 nationals is half of the book. Peter Huntoon wrote over 200 articles on national bank notes. Louis W. Van Belkum made it possible to systematically study nationals through his work at the National Archives. Melvin Owen Warns listed all small size nationals by denomination and identified each bank.

The book lists every denomination and how many of each note was printed. The CD in the back of the book has a census of 320,000 notes by bank and condition. The book lists how many notes are known today and there values in Fine condition. A $30 note in Fine, might be worth $300 in UNC. Every grade higher or lower than Fine, the note changes value 25%. An example would be a note with a book value of $100 in Fine is worth $150 in XF. The note in VG is worth $75.

 

Most people collect these notes by their hometown or by state. Collecting can be by regional area, by type or series of note, by condition, by the name of the bank, by denomination, by serial number, by Treasury signature, etc. The beginning of the modern era of collecting nationals was 1965 to 1975.

 

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I have been collecting Kentucky Nationals since 2003. I collect by city, denomination, date, and type of note. I have about 205 notes, with many more to go. I try to buy Fine or better. Sometimes they just don’t exist. I buy at coin shows and at auction. When you are at a coin show, sometimes the farther away you are from the state, the cheaper you can buy the note. A good example was a Goldberg auction in Beverly Hills, CA. I purchased 15 certified Kentucky notes in the auction. Who wants Kentucky notes in Beverly Hills?

I deal online with Heritage, Lyn Knight, Stacks, Spinksmythe, etc. I found in most cases if you do your homework on an auction, that is, know the book value of the note, condition, and survival rate, you can bid accurately.

 

Usually the auction company will put a book value on every note. It is usually a price range. I usually ignore this price and use the Kelly book and quantity known of the note.

If there are 1 or 2 known of a note, you will pay over book price. If there are 20 to 30 known, then you might get it under book in fine condition. Sometimes you can purchase VF notes under book price. Beware of large size notes with narrow side to side margins. They may have been trimmed. The side margins were always wide on large size notes. All 1929 series notes can have wide and well centered margins. Many were cut by hand so the margins can be narrow on the top and wide on the bottom, or visa versa. The auction company does not always tell you if a note has been trimmed. Usually if a note was cut into the design, it is worth less.

 

Hoards of Nationals can appear on the market from time to time. If there are 1 to 2 notes known and 5 notes pop up, that is a hoard. The value of that note will probably drop. I purchased 7 notes from a bank that had only 1 and 2 known listed in the Kelly book. Bankers and their families usually kept serial #1 notes as a souvenir. They also just kept notes because their relative was a signer of that bank. Early on, currency dealer offered to pay a 10% premium for serial #1 notes.

 

At an auction I like to sit in the back so that I can see what the other bidders are doing. See if they are developing a pattern of bidding, then I can bid accordingly. The people who bid most frequently are probably dealers. You may or may not be able to compete with them. I generally have a limit that I will bid on every note, and I don’t go over the limit. If I purchase a couple of notes a month, I’m happy. If I am bidding online, I usually bid the last night before the auction. Online live, you obviously bid during the auction.

 

See pictures of Tony's Notes in his interview with Collectors Weekly.

http://www.collectorsweekly.com/articles/an-interview-with-kentucky-bank-note-collector-tony-swicer/

 

If you are going to collect National Bank Notes you must have the Kelly Book.