19th century obsolete U.S. banknotes

  After the Revolutionary War, paper money issued by the Colonies and the Continental Congress depreciated rapidly in value. Americans lost faith in government currency and for the next eighty years everyday commerce relied heavily on notes issued by a variety of chartered and private banks. Few of these institutions survived into the latter part of the 19th century, but their currencies are actively sought today by an avid collector community. That supports prices year after year and investors are discovering that high grade specimens can be reliable additions to their portfolios.

  Consider a pair of notes printed for the New Orleans Canal and Banking Company (ca. 1831-60s). As the scans show, both are in ideal uncirculated condition. The $10 bill features a rendering of a bald eagle. The $1000 note carries a vignette of Prosperity and Liberty seated. Twenty years ago, they sold for $10 and $40, respectively. Two years ago, I bought the specimens pictured for $48 and $160. Earlier this week, I sold them for $70 and $240. The difference in price between the two is a function of rarity. Two to four high grade examples of the $10 note are offered for auction each week. One sees the $1000 note perhaps ten times a year.

  Consider also the $10 bill put into circulation around 1860 by Canal Bank rival, the Citizens Bank of Louisiana (1833-1911). At least one of these appears for auction every couple of weeks, but there is an interesting story associated with the note and it commands high prices. Citizens Bank catered to culturally diverse New Orleans with bilingual currency. In this case, the front of the note was in English and the back featured French. People referred to the bill by its French denomination (DIX) and soon the term "Dixie" pertained not only to the note, but to the South itself. Some historians dispute this interpretation, but it's a cute story and the DIX note has become something of a numismatic celebrity.

  As with any collectible, investment in obsolete bank notes requires a degree of sophistication. The comprehensive grade and population figures available to certified coin collectors just don't exist for the obsolete notes. The two major third-party coin graders are among a small number of outfits now grading notes, but the services have only been offered for a few years. Descriptions of most of the specimens on sale come from the persons selling them, or from their auction house representatives. Photos and scans are often made available though and important features are normally visible. It's worth taking a look. Trends in high grade note prices are positive, rendering many types solid investment opportunities.