Last week I illustrated a rather raggy $2 note from the Winnipissiogee Bank of Meredith, New Hampshire. Issued in the 1820s it has seen much circulation and was literally falling apart. The offered price was $110, and I was glad to acquire it. Today, a decade after I bought it, it stands as the only known example of this particular denomination. One can’t be choosy in such matters.

Similarly, if you look on page 46 in the current (2012) edition of the A Guide Book of United States Coins for the Gloucester token you will see that this great rarity, of which two known only exists in a condition with part of the inscriptions worn away.

The preceding said, it is a curious aspect in paper money collecting that Uncirculated notes can be worth less than ones that have been in circulation for years. This is just the opposite of rare coins! In the era of state-chartered banks 1792 to 1866, over 3,000 institutions issued their own paper money. Typically, such notes were acquired from engraving and printing companies in sheets of four subjects, say with bills of the denominations $1-$1-$2-$3 or some other combination. At the bank these sheets were signed by the cashier and president, then cut apart and put into circulation. Often a bank would order more notes than it had need for, with the thought of using them in the future to exchange for notes that had become damaged.

As of July 1, 1866, the government placed a tax of 10 percent on the use of state-chartered bank notes. This was to encourage citizens to use federal notes instead. For all practical purposes the issuing of notes by the state banks stopped in 1864 and 1865. Many institutions still had sheets and undistributed notes on hand. Later some of these found their way into numismatic hands. For example, thousands of sheets of the Canal Bank of New Orleans were preserved. I recall in the 1950s being offered a group of 7,200 uncut sheets! Other examples could be mentioned, but in smaller quantities.

Notes from such sheets, unsigned, unused, and in Uncirculated grade are called “remainders.” For certain banks these are quite common and, indeed, are usually easier to find than are identical notes signed by the cashier and president and put into circulation. The circulated notes are therefore more desired and often significantly more valuable.

Although there are instances in which circulated notes are only available in very low grade, such as the Winnipissiogee Bank note discussed, for many other bills nice examples can be found in grades from Very Good to Very Fine, nicely signed in ink and dated. These are a pleasure to collect, are generally fairly scarce (with some exceptions) and are inexpensive. If such notes appeal to you I suggest that you acquire a copy of my Whitman book, Obsolete Paper Money 1782 - 1866. It will furnish you with a couple of evenings of interesting and informative reading, after which I think you will be well on your way to being an expert in this fascinating. Upon reading it, one of America’s leading collectors of coins started acquiring such notes, leading to a fantastic holding now numbering over 10,000 pieces!

I don’t expect you or anyone else to collect that many, but a few dozen from your home state or with designs that appeal to you are well worth having.

PS: Can you keep a secret? If so, here goes: In the past 20 years the market value of most such notes has doubled or tripled—one of the best investments in numismatics!

Another secret: Even so, many specialists believe that collecting obsolete paper money will expand considerably in coming years.

Top Left: The $3 denomination, unusual in retrospect, was actually one of the most common values in the early 19th century. This signed and issued note is from Manhattan, Ohio.