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History of United States Currency – Obsolete Currency

Whether you call them Obsolete Currency or Broken Bank Notes, these notes are a type of currency that is very popular to collect and covers various styles and types. The earliest notes were issued around 1792, just a year before the fledgling United States began striking coins in Philadelphia in 1793. 

These banknotes were issued by thousands of banks, railroads, jurisdictions, canal-building operations, and other companies in 39 states. The designs ranged from artistically beautiful and ornately engraved allegorical representations of Roman and Greek Gods, or of Miss Liberty, to notes without any images, simply text. 

Many of the banks that issued this currency had notes printed by one of several printers that specialized in printing these types of notes, so you can often find duplication of many of the images between banks in different states. 

Many issued obsolete notes were hand cut from sheets, hand signed, and hand numbered. Many unissued notes are called “remainder” notes and are usually unsigned and sometimes uncut from the original sheets in which they were printed. 

Many collectors of obsolete notes go to great lengths to obtain as many different obsoletes as possible from a particular town or state. There is a solid base of collectors for these types of notes. Other collectors purchase obsoletes from as many banks, towns, or states as possible. Some collect notes with similar or matching vignettes. 

These notes are graded precisely as all other currencies. The two major currency grading services – Paper Money Guaranty (PMG) and PCGS Banknotes  – certify, grade, and encapsulate these notes and sheets. In addition to the typical numerical grading that grading companies use, both major grading services also comment on the condition and quality of the paper itself. PMG calls it Exceptional Paper Quality (EPQ), while PCGS calls it Premium Paper Quality (PPQ). 

A commonplace issue is the preponderance of Counterfeit, Spurious, and Altered notes. Counterfeit notes were contemporarily created to be passed as original notes, as counterfeit detection was challenging in the 1830s to 1860s. They were designed to look as genuine as possible. 

There are three types of additional notes that you will see once you start to collect obsolete notes. They are: 

  • Spurious notes bear the name of an actual bank, but the designs and denominations were never issued as notes by that bank. They use standard designs to make them seem more legitimate. 
  • Altered notes are genuine notes issued by a particular bank, but usually, the denomination is “raised” to a higher one. Like the altered ones, these notes were intended to be spent, so the success in “raising the denomination” would determine how quickly the notes were used. So, $1.00 notes become $10.00 denomination, and $2.00 notes become $20.00 bills. And so on. Those are some of the most difficult to detect as the underlying notes are genuine.   
  • Counterfeit Notes were generally made contemporary to the original notes. They made them look like the originals. In the 1800-1860 period, thousands of banks issued notes, and if a note from a faraway town came into your town, the means of detecting counterfeits were virtually nonexistent. A high percentage of these notes would be accepted – initially, especially from banks of nearby towns. But passing a note from a Florida Bank in California generally proved difficult. 

Paper was a scarce commodity, especially in the 1830-60 period, so it is common to find these notes printed on the backs of other notes, especially the ones still on their sheets. They would cut the notes so that the old and unused would not be complete, so there was no mistaking which side to use. 

The demise of obsolete currency is attributable to two distinct factors. The first one was the fact that many of the banks printed more currency than they had gold or silver to back it. As that happened, prices continued to rise. As prices rose, the local banks’ currency’s value greatly diminished. When that happened, the residents and merchants often tried unsuccessfully to exchange their bank paper dollars for what gold or silver the banks may have left. Many banks closed, leaving the paper money holders with worthless paper. 

But the Civil War was the most devastating factor in the demise of obsolete currency. When the war started, people on both sides began to hoard any gold or silver coins they encountered. After a few months, actual coinage was in very short supply. 

Both the United States government and the Confederate States of America government realized that war was a costly business, not only in the lives of their soldiers but also in arms, horses, food, uniforms, and equipment. They had armies to feed, clothe and pay, which meant that both sides had to create a fiat currency – paper money without enough gold or silver to back it, and printing presses worked overtime to print enough currency. 

Depending on which side was winning which battle would determine the value of that side’s currency – at least for a short time. Ultimately, after the Battle of Gettysburg in 1863, the Union victories began to mount, and everyone recognized that Union greenbacks had value. Towards the war’s end, Union currency was in demand by both sides, and Confederate currency was hugely valueless due to inflation caused by the war itself. 

Collecting obsolete notes has a strong collector following because so many are easily affordable and available to almost everyone. The history, designs, and meanings of these notes are appreciated by many. 

In the late 1970s, James Haxby created a set of 4 hardbound volumes detailing all the known obsolete notes at that time. In 2,702 pages, he depicted the many thousands of known obsolete notes. Although the prices displayed in the volumes are outdated, his references and catalog numbers are still used today. They are the industry standard doe dealers and collectors worldwide. Notes that are “unlisted in Haxby” are highly desirable and much wanted. 


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(18__ $1.00 Stonington Bank, Stonington, CT. Blank back.) 


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(1860s $1 Bank of America, Providence, RI, Note, graded by PMG as 67 EPQ.) 


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(1850s UNCUT SHEET of 4 notes from the Hagerstown Bank, Hagerstown, MD. (2) $5.00 and (2) $10.00 notes) 


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(18__s $2.00 State Bank of Michigan, of Detroit, Remainder Note) 

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