1863 was a tumultuous year as the Union had roughly 30 days-worth of funds left to run the country, all while fighting a civil war with the Confederates. Legislation was finally passed that allowed the printing of redeemable notes to alleviate the effects of the gold/silver shortage. Paper currency, or notes, have a very interesting history, of which, this article hopefully serves as a doorway to.
Currently, the U.S. (and most of the world) operates under a fiat system: our money is worth something because our government says so. Originally, we were on a Commodity system: directly using precious metals. Now, for a number of years in between, the U.S. incorporated a Commodity-Based system: notes were backed by precious metals without the necessity to physically handle them. This transition of monetary systems led to the wide array of currency types.
The most common four types are the Silver certificate, Legal Tender, Gold certificate and Federal Reserve notes. Silver certificates are easily identifiable by the blue seal and serial numbers while Legal Tender notes sport the same in red. Gold certificates had yellow ink, redeemable in gold coin. Federal Reserve notes became the adopted style we use today.
Fractional Currency were notes worth fractions of a dollar. They produced 3, 5, 10, 15, 25 and 50 cent notes and were of the first ever printed. For perspective, ask your grandpa how a nickel bought a trolley ride, piece of pie, pack of gum and still had four cents left over. A dollar was a lot of money then and these saw regular circulation.
Lesser-seen notes of $500 and $1000 denominations also exist and trade regularly in auction circles. $5000 and $10,000 notes were also produced at a time and are quite difficult, even for the affluent collector, to afford.
Breezing over “National Currency” wouldn’t do justice but that’s exactly what I’m going to do. For now, know that individual banks were granted “charter numbers” and specific notes were printed for them. This guaranteed the authenticity of currency in smaller communities where there was concern.
Other, more specific notes such as Demand, Interest Bearing and Treasury notes exist but are quite obscure to the general market. The artistic qualities of antiquated large-size notes such as the Educational Series or Rainbow notes bear mentioning as well.
The journey towards digital exchanges deserves a longer look. Currency was artistic and real. I encourage all to experience our monetary history more in-depth.