Understanding the Face Printing of 1935 Silver Certificates?

I checked with Jim Hodgson before I stepped into this answer. As usual I am glad I did. 

By all appearances, from this scan, this is a typical third printing error with the sheet being subtley shifted up. This gives the appearance of the third printing being low when the sheet was not properly aligned for this printing process.

So to answer the first portion of this query, the printing processes are generally accepted as follows;

First Printing- regardless of the sheet layout of 12 subject (wet process), 18 subject (wet process) or 32 subject (dry process) sheets the back design is the first printing process of three.

Second Printing- the 'major' face design. May or may not include signatures and titles, Series date etc., depending on vintage of the issue and type.

Third Printing- the overprinting of the Treasury Seal and serial numbers. Yet there seems to be a fourth process of printing and Stephen Sullivan, in his 2nd edition, 2009 "Error Note Encylopedia, pg.45, states, " In the past, the overprint included the word 'HAWAII' printed twice on the face and once on the back, National Bank information, Treasurer and Registers signatures and Bank Official signatures and printings on the face and back of some fractional currency. Some of these processes required 4th and 5th printing."

Mr. Sullivan goes on to write, "$1 Series 1935D and 1935E used multiple overprinting process that printed the Blue Overprint (Seal and Serial Numbers) and the Black Overprint (Series and Signatures) separately."

I claim no great expertise on Error notes and only a passing interest as a numismatic generalist so my opinion, where this imaged note is concerned, is based on anecdotal evidence. It appears your note falls into the area where BEP has NOT made the full transition to the simpler process of printing the Blue and Black overprints together. My opinion is not definitive so I invite others to offer comment. I should also mention that as this block is near the beginning of the block runs for this 1935E Series which makes your note all the more interesting. Yet it appears that the signature titles were engraved into the face plate so remain well aligned. The signatures, seal and serial numbers appear to be part of the Third Printing or "Overprinting" process in this particular case.

Numismatic Regards,

Scott Lindquist

Cool note, and I love the BEP rejection tape!  Thank you for sharing.