NATIONAL BANK NOTES

Local bankers (lower right corner) signed national bank notes.

NATIONAL BANK NOTES. Currency. First printed during the CIVIL WAR, national currency or national bank notes (called “nationals” by collectors), served our country from 1863 to 1935. Banks in all 48 states and the territories of Alaska, Hawaii, and Puerto Rico issued this currency. They represent a kind of “hometown currency” no longer found in circulation.

The Federal government began by issuing “demand notes” which could be exchanged for gold. The next type of currency were the “legal tender notes;” the first could be exchanged into United States bonds redeemable in gold coins. Later issues lost the conversion to bonds. This led to a loss in the value of the currency. The situation confused by thousands of commercial banks issuing their own currency (with questionable value) created a need for a new, stable currency.

The National Currency Act of February 25, 1863 solved the problems by providing a system of national banks. Each bank operated under a charter issued by the comptroller of the currency. The banks purchased U.S. government bonds and deposited them with the comptroller who then had circulating banks notes prepared and provided to the banks up to 90% of the value of their bonds. This provided the federal government with a market for its bonds and a stable currency. The banks collected interest on the bonds while having most of their money back to make loans. Each bank was required to keep in the United States Treasury a redemption fund equal to five percent of its outstanding banknotes. If a national bank failed, the government guaranteed its circulating currency.

Local banks decided how many of each type of bill they wished to issue. Plates were prepared and the notes printed. Charter numbers, serial numbers, seals, and series designators were then added. The sheets of uncut bills were sent to the comptroller for distribution to the banks. It was the duty of the local bank to see that their officers signed the notes and then cut the bills apart. (See the signature in the lower right hand corner of the bill.) Large banks with large amounts of currency often assigned the signing duties to vice presidents and assistant cashiers. Rubber stamps were later used to add signatures while some banks had their local print shops add the signatures. When small denomination bills were introduced, the officers’ signatures were included on the plate at the Bureau of Engraving and Printing. Small denomination bills were usually printed with six to a sheet for the local bank to cut and issue. (Photo Courtesy: Dubuque Coin and Antique)