The Gold and Silver Mine – Week of Dec. 21, 2012

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A weekly column dedicated to “digging out” current information about precious metals, coins and other numismatics.

National Bank notes were backed by U.S. bonds

A category of currency that is popular with collectors is National Currency Bank Notes. These are notes that actually have the names of the banks that issued them printed on the notes.

With the passage of the National Banking Act of Feb. 25, 1863, a bank could apply for a charter to do business as a National Bank, resulting in the establishment of national banks in most of the states and territories in existence at that time. These banks were allowed to issue notes with their names on them, provided they deposited U.S. bonds in a value up to 90 percent of the face value of the currency issued, with the Treasurer of the United States. This eliminated the possibility of the notes from those banks to become worthless, as the bonds were the actual backing.

Each note issued from 1863 to 1908 had the legend “Secured by United States bonds deposited with the Treasurer of the United States” printed on them. After 1908 the legend was changed to read “Secured by United States bonds or other securities.”

As I mentioned in my last article, the notes issued from the 1860s through the early 1900s were works of art. The National Currency series is no different, as many of the designs are works of engraving art. All notes issued from 1860 until 1928 were larger than the size we are familiar with now. In 1928 our currency was redesigned and issued in its current size. Unfortunately the designs from that point on were fairly basic, without the artistic flourish of their predecessors.

The last issue of National Currency was of the reduced size and bears the date 1929. These notes have a brown seal and serial numbers instead of the red, green or blue of other types of currency.

Unfortunately, banks did fail in this period, especially during the Depression, resulting in either the bank merging with another stronger bank or else just closing. However, all notes issued by the bank were still redeemable because of their backing.

Collecting National Currency offers many options, the most popular being collecting notes from one’s state or locale. I know of collectors who specialize in all New Jersey notes as well as just those from southern New Jersey. Atlantic City actually had four different banks that issued National Currency. Other local cities issuing notes include Pleasantville (two different banks), Absecon, Ventnor, Somers Point and Mays Landing.

Another way that I know collectors pursue notes is by charter number. When a bank received its charter, it was assigned a number that was one to five digits in length. I know of a collector who only collects notes from banks with two digits in length. Another way to collect is by collecting banks with strange names. The one that comes to mind is the popularity of notes issued by the bank of Intercourse, Pennsylvania.

As a rule of thumb, the smaller banks issued fewer notes and hence these are more valuable, especially from the mid to late 1800s. The more plentiful notes are the small 1929 series, but even in that series scarce notes exist. The most plentiful one are the Federal Reserve Bank Notes (ones with the name of the Federal Reserve Bank on it). Those usually have a premium value of about 10 percent associated with them.

Douglas Keefe is the president of Beachcomber Coins, Inc. He and his wife Linda operate Beachcomber Coins and Collectibles in the Shore Mall as well as satellite offices in both Brigantine and Absecon. Between them they have over 70 years experience in the coin and precious metals business. They are members of The American Numismatic Association, The Industry Council of Tangible Assets, The Numismatic Guarantee Corporation and the Professional Coin Grading Service.


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