OBSOLETE CURRENCY. Currency was issued in Iowa for many reasons. When territorial status was gained in 1839, there was a strong sentiment against banks and bankers based upon incidents in other regions. In these areas, "bankers" would establish a "bank" and then gradually put their currency in circulation. They would then close the "bank" before they could be be presented for payment.
Chapter 22, Statutes of Iowa stated:
Be it enacted by the Council and House of Representatives of the Territory of Iowa, That no person, unauthorized by law, in expressed words, shall subscribe to, or become a member of, any association, institution, or company, for the purpose of issuing notes or bank bills, which incorporated banks may or do by virtue of their respective acts of incorporation. And if any person, unauthorized by law as aforesaid, shall hereafter subscribe to, or become a member as aforesaid, he shall forfeit and pay, for every such offense, the sum of one thousand dollars, to be recovered by any person who shall sue for the same, in an action of debt, one half thereof to his own use, and the other half to the use of the county in which such suit may be prosecuted. Approved, January 24, 1839
Currency was issued to help a merchant maintain business. It acted as a means of advertising and brought customers to his store to redeem the notes. Communities involved in a construction project, accepted currency of the new venture to help it succeed. Caught in the Panic of 1857, many communities found it difficult to get currency and issued notes to be redeemed against taxes and municipal income. During the CIVIL WAR, coins were so scarce that small business men were forced to issue small cards to have change.
Almost all private and state issue of notes was ended by 1866 when a ten percent federal tax was placed on private issue of bank notes.