official journal of The Society of Paper Money Collectors The End of National Bank Notes America’s Oldest and Most Accomplished Rare Coin Auctioneer 1550 Scenic Avenue, Suite 150, Costa Mesa, CA 92626 • 949.253.0916 470 Park Avenue, New York, NY 10022 • 212.582.2580 • NYC@stacksbowers.com 84 State Street, Boston, MA 02109 • 617.843.8343 • Boston@StacksBowers.com 1735 Market Street, Philadelphia, PA 19103 • 267.609.1804 • Philly@StacksBowers.com Info@StacksBowers.com • StacksBowers.com California • New York • Boston • Philadelphia • New Hampshire • Oklahoma • Virginia Hong Kong • Paris • Vancouver SBG PM Spring2023 PR Consign 230501 LEGENDARY COLLECTIONS | LEGENDARY RESULTS | A LEGENDARY AUCTION FIRM Spring 2023 Prices Realized from Stack’s Bowers Galleries Include Your U.S. Currency in Our August 2023 Global Showcase Auction – Consign Today! Auction: August 14-19, 2023 • Consignment Deadline: June 19, 2023 CC-34. Continental Currency. May 9, 1776. $4. PCGS Banknote Superb Gem Uncirculated 68 PPQ. Realized: $18,000 T-45. Confederate Currency. 1862 $1. PMG Gem Uncirculated 65 EPQ. Realized: $14,400 Fr. 1700. 1933 $10 Silver Certificate. PCGS Banknote Superb Gem Uncirculated 67 PPQ. Low Serial Number. Realized: $99,000 Fr. 2210-Hlgs. 1928 Light Green Seal $1000 Federal Reserve Note. St. Louis. PMG Gem Uncirculated 65 EPQ. Realized: $43,200 Fr. 2402H. 1928 $20 Gold Certificate Star Note. PMG Gem Uncirculated 65 EPQ. Realized: $38,400 Fr. 2405. 1928 $100 Gold Certificate. PMG Gem Uncirculated 66 EPQ. Realized: $192,000 Fr. 2407. 1928 $500 Gold Certificate. PMG Gem Uncirculated 65 EPQ. Realized: $216,000 Fr. 2221-K. 1934 $5000 Federal Reserve Note. Dallas. PCGS Banknote Choice Very Fine 35. Realized: $174,000 Fr. 2301mH. 1934 $5 Hawaii Emergency Star Mule Note. San Francisco. PMG Gem Uncirculated 66 EPQ. Realized: $52,800 Fr. 2200-Jdgs. 1928 Dark Green Seal $500 Federal Reserve Note. Kansas City. PMG Gem Uncirculated 65 EPQ. Realized: $43,200 Fr. 2201-A. 1934 Dark Green Seal $500 Federal Reserve Note. Boston. PCGS Banknote Superb Gem Uncirculated 68 PPQ. Realized: $48,000 Fr. 2. 1861 $5 Demand Note. PMG Gem Uncirculated 65 EPQ. Realized: $408,000 Contact Us for More Information Today! West Coast: 800.458.4646 • East Coast: 800.566.2580 • Consign@StacksBowers.com 170 The End of National Bank Notes--Lee Lofthus 194 Digital Archives of the Walton Collection--Matt Hansen 200 Back Plate 470 Discovery--Peter Huntoon 203 Laws Governing the Circulation & Denominations of NBNs--Peter Huntoon 212 William Morris Meredith--Rick Melamed 216 Challis Idaho Territory Postal Note--Bob Laub 218 Fairbanks, AK Bankers--Frank Clark 219 SPMC On-Line Showcase of NBN Collections--Matt Hansen 221 UNESCO World Heritage Sites--Albania--Roland Rollins 222 The Exchange Note (Billete deCanje) of Puerto Rico--Angel Zayas 241 Notes of the Farmers & Mechanics Bank--Gerald Dzara SPMC.org * Paper Money * May/June 2023 * Whole No. 345 163 Columns Advertisers SPMC Hall of Fame The SPMC Hall of Fame recognizes and honors those individuals who have made a lasting contribution to the society over the span of many years.  Charles Affleck Walter Allan Doug Ball Hank Bieciuk Joseph Boling F.C.C. Boyd Michael Crabb Forrest Daniel Martin Delger William Donlon Roger Durand C. John Ferreri Milt Friedberg Robert Friedberg Len Glazer Nathan Gold Nathan Goldstein James Haxby John Herzog Gene Hessler John Hickman William Higgins Ruth Hill Peter Huntoon Glenn Jackson Don Kelly Lyn Knight Chet Krause Allen Mincho Clifford Mishler Barbara Mueller Judith Murphy Dean Oakes Chuck O’Donnell Roy Pennell Albert Pick Fred Reed Matt Rothert John Rowe III Herb & Martha Schingoethe Hugh Shull Glenn Smedley Raphael Thian Daniel Valentine Louis Van Belkum George Wait D.C. Wismer From Your President Editor Sez New Members Uncoupled Chump Change Obsolete Corner Quartermaster Small Notes Cherry Picker Corner Robert Vandevender 165 Benny Bolin 166 Frank Clark 167 Joe Boling & Fred Schwan 228 Loren Gatch 233 Robert Gill 234 Michael McNeil 236 Jamie Yakes 242 Robert Calderman 244 Stacks Bowers Galleries IFC Pierre Fricke 163 Greysheet 169 Tom Denly 193 Lyn Knight 199 Higgins Museum 202 Bob Laub 217 PCGS-C 220 Fred Bart 226 DBR Currency 226 MPC Book 227 Benny Bolin 243 Tony Chibbaro 243 FCCB 243 ANA 246 PCDA 247 Heritage Auctions OBC Fred Schwan Neil Shafer SPMC.org * Paper Money * May/June 2023 * Whole No. 345 164 Officers & Appointees ELECTED OFFICERS PRESIDENT Robert Vandevender II rvpaperman@aol.com VICE-PRES/SEC'Y Robert Calderman gacoins@earthlink.net TREASURER Robert Moon robertmoon@aol.com BOARD OF GOVERNORS APPOINTEES PUBLISHER-EDITOR Benny Bolin smcbb@sbcglobal.net ADVERTISING MANAGER Wendell Wolka purduenut@aol.com Megan Reginnitter mreginnitter@iowafirm.com LIBRARIAN Jeff Brueggema MEMBERSHIP DIRECTOR Frank Clark frank_clark@yahoo.com IMMEDIATE PAST PRESIDENT Shawn Hewitt WISMER BOOk PROJECT COORDINATOR Pierre Fricke From Your President Robert Vandevender IIFrom Your President Shawn Hewitt Paper Money * July/August 2020 6 jeff@actioncurrency.com LEGAL COUNSEL n Mark Anderson mbamba @aol.com Robert Calderman gacoins@earthlink.com Matt Drais stockpicker12@aol.com Mark Drengson markd@step1software.com Jerry Fochtman jerry@fochtman.us Pierre Fricke pierrefricke@buyvintagemoney.com Loren Gatch lgatch@uco.edu William Litt billlitt@aol.com J. Fred Maples maples@comcast.net Cody Regenitter cody.reginitter@gmail.com Andy Timmerman andrew.timmerman@aol.com Wendell Wolka urduenut@aol.com One of our SPMC Life Members, James Dawson, was kind enough to send me a very large article from the New York Times Business Section dated March 11, 2023, regarding Secretary of the Treasury Janet Yellen’s visit to the Fort Worth branch of the Bureau of Engraving and Printing. Secretary Yellen signed, what the times called, “commemorative notes at the unveiling of a batch of dollar bills.” Secretary Yellen’s signature appears on the new 2021 Series notes. The Times incorrectly states “It’s the first time that United States bank notes had been signed by a woman.” Of course, the Treasurer signatures have featured signatures by women for decades. The multi-page article features several color photos of the work in progress at the Ft. Worth facility and I was happy to see that glimpse into their operation. If you have the opportunity, you might enjoy checking out the article. Last month, I received my latest shipment of graded notes back from third party grading. It is always like opening a Christmas present when they arrive looking for the surprises. On occasion, a note will come back graded lower than expected and sometimes higher. But overall, I will have to say that the old-school grading we used for years was pretty accurate by current standards and most of the notes match very closely the anticipated grade. The SPMC continues to encourage and provide support to many of our members who do research and publish new information about paper money. One of our members, Peter Huntoon, was scheduled to make another trip to the National Archives in Washington DC this Spring continuing that research. I am looking forward to hearing about his latest trip and seeing the results of new data he may have uncovered. Thanks to the efforts of our Vice President, Robert Calderman, those of you who receive The Currency Dealer Newsletter (CDN) Green Sheet should start seeing advertisement for the SPMC encouraging new membership. You will also start to see CDN advertisements in our Paper Money Magazine. By the time you read this, the Central States Numismatic Society’s 84th Convention will have come and gone and I’m sure many of you enjoyed the event. In June, we are planning to staff an SPMC table at the Long Beach Expo and the SPMC will also have a table at the upcoming American Numismatic Association’s World Fair of Money to be held in Pittsburgh in August. Please stop by our table and say hello! SPMC.org * Paper Money * May/June 2023 * Whole No. 345 165 Terms and Conditions  The Society  of  Paper Money  Collectors  (SPMC)  P.O.   Box 7055,  Gainesville, GA    30504, publishes    PAPER    MONEY (USPS   00‐ 3162)  every  other  month  beginning  in  January.  Periodical  postage  is  paid  at  Hanover,  PA.  Postmaster  send  address  changes  to  Secretary  Robert  Calderman,  Box  7055, Gainesville,  GA  30504. ©Society  of  Paper Money  Collectors, Inc.  2020.  All  rights  reserved.  Reproduction  of  any  article  in whole  or  part  without written approval  is prohibited.  Individual copies of  this  issue of PAPER MONEY are available  from the secretary  for $8  postpaid. Send changes of address, inquiries concerning    non    ‐    delivery    and    requests    for    additional copies of this issue to  the secretary.  MANUSCRIPTS  Manuscripts     not     under      consideration      elsewhere and  publications  for  review should be sent  to  the editor. Accepted  manuscripts  will  be  published  as  soon  as  possible,  however  publication  in  a  specific  issue  cannot  be guaranteed. Opinions  expressed  by  authors  do  not necessarily  reflect those  of  the  SPMC.   Manuscripts should be  submitted  in WORD  format  via  email (smcbb@sbcglobal.net)  or  by  sending memory stick/disk  to  the  editor.  Scans  should  be  grayscale  or  color  JPEGs  at  300 dpi. Color  illustrations may be changed to grayscale at  the  discretion  of  the  editor.  Do  not  send  items  of  value.  Manuscripts are  submitted with copyright release of the author  to  the  editor  for  duplication  and  printing as needed.  ADVERTISING  All advertising on space available basis. Copy/correspondence  should be sent to editor.  All advertising is pay in advance.  Ads are on a “good faith”  basis.  Terms are “Until Forbid.”  Ads  are  Run  of  Press  (ROP)  unless  accepted  on  a  premium  contract basis. Limited premium space/rates available.  To keep rates to a minimum, all advertising must be prepaid  according to the schedule below.  In exceptional cases where  special  artwork  or  additional  production  is  required,  the  advertiser  will be notified  and  billed accordingly.  Rates  are  not commissionable; proofs are not  supplied.  SPMC  does not  endorse any company, dealer,  or  auction  house.  Advertising  Deadline: Subject to space availability, copy must be received  by  the  editor  no  later  than  the  first  day  of  the  month  preceding  the  cover date  of  the  issue  (i.e.  Feb.  1  for  the  March/April  issue). Camera‐ready art or electronic ads  in pdf  format are required.  ADVERTISING RATES  Editor Sez Benny Bolin Required file    submission format    is    composite    PDF v1.3  (Acrobat 4.0   compatible).   If   possible, submitted files should  conform to ISO 15930‐1: 2001 PDF/X‐1a file format standard.  Non‐  standard,  application,  or  native  file  formats  are  not  acceptable. Page  size: must  conform to specified publication  trim  size.  Page  bleed:  must  extend minimum  1/8”  beyond  trim for page head, foot, and front.  Safety margin:  type  and  other  non‐bleed  content must  clear  trim by minimum 1/2”.   Advertising c o p y   shall be restricted to paper currency, allied  numismatic material, publications,   and   related   accessories.    The SPMC  does  not  guarantee advertisements,  but  accepts  copy  in good faith,  reserving  the right  to  reject objectionable  or  inappropriate  material  or  edit      copy.  The          SPMC   assumes      no      financial       responsibility for  typographical  errors  in  ads  but  agrees  to  reprint  that portion of an ad  in  which a typographical error occurs.  Benny Space  Full color covers  1 Time  $1500  3 Times  $2600  6 Times $4900 B&W covers  500  1400  2500 Full page color  500  1500  3000 Full page B&W  360  1000  1800 Half‐page B&W  180  500  900 Quarter‐page B&W  90  250  450 Eighth‐page B&W  45  125  225 Spring has sprung. My wife and I went to Oklahoma to the Choctaw Casino and the Indian paintbrush and bluebonnets were in full bloom and beautiful. It is funny how flowers seem to know geographical boundaries as the bluebonnets (state flower of Texas) were present from the house to near OK and then stopped and the Indian paintbrush started where they left off and continued North! I love spring--beautiful time of year. Just when I thought I could get back into the swing of things, well the old age thing crept up on me. Seems my front upper smile was degrading and how do you fix that? Six (yes 6) crowns at once! I just cry thinking of the notes I could have bought with that $10K! Then, planting a small decorative tree, I fell on the sidewalk and not just a stumble, but a full face plant fall! Nothing broke, but sore all around! Well, enough of my whining. As you read this we will be readying for a fun filled summer of numismatic activities. ANA summer seminar, ANA show, summer FUN and a lot of regional and local shows. I encourage you to get out there and do hobby things. Have fun. Unfortunately, I have to report on the loss of three of our stalwarts in the hobby. John Rowe III, Howard Cohen and Howard Daniel III. I remember going to John's shop in Dallas talking and buying fractional. He was a regular fixture at shows, especially in Texas and at the IPMS. He knew I was a fractional person so he gave me Amon Carter's personal copy of the Rothbert fractional book and offered me the nicest fractional shield I have ever seen for $1500! At that time making just $6.99 and hour, that was way too much--oh for hindsight. Howard Cohen was a true fractional collector that many outside of the fractional community did not know. His style of collecting was simple--only the best! If and when his collection comes up for sale, it was be a landmark sale. At one IPMS in Memphis, he gave my son a big dragon hand puppet make out of some type of rubber substance. I love dragons and even though it was Brandon's, I still have it today. Since Mr. Daniel and my collecting interest were so far apart, I did not know him well, but know he was of immense importance in the hobby. All will be greatly missed! If you are not a national bank note collector, I apologize that this issue of PM is so national heavy. The long article by Lee Lofthus is truly a magnificent article and one that has a lot of great info in it. I have tried to also include some other articles that all will like. So, enjoy and bask in the spring and summer weather before we have to go back to parkas and wooly gloves! SPMC.org * Paper Money * May/June 2023 * Whole No. 345 166 The Society of Paper Money Collectors was organized in 1961 and incorporated in 1964 as a non-profit organization under the laws of the District of Columbia. It is affiliated with the ANA. The Annual Meeting of the SPMC is held in June at the International Paper Money Show. Information about the SPMC, including the by-laws and activities can be found at our website-- www.spmc.org. The SPMC does not does not endorse any dealer, company or auction house. MEMBERSHIP—REGULAR and LIFE. Applicants must be at least 18 years of age and of good moral character. Members of the ANA or other recognized numismatic societies are eligible for membership. Other applicants should be sponsored by an SPMC member or provide suitable references. MEMBERSHIP—JUNIOR. Applicants for Junior membership must be from 12 to 17 years of age and of good moral character. A parent or guardian must sign their application. Junior membership numbers will be preceded by the letter “j” which will be removed upon notification to the secretary that the member has reached 18 years of age. Junior members are not eligible to hold office or vote. DUES—Annual dues are $39. Dues for members in Canada and Mexico are $45. Dues for members in all other countries are $60. Life membership—payable in installments within one year is $800 for U.S.; $900 for Canada and Mexico and $1000 for all other countries. The Society no longer issues annual membership cards but paid up members may request one from the membership director with an SASE. Memberships for all members who joined the Society prior to January 2010 are on a calendar year basis with renewals due each December. Memberships for those who joined since January 2010 are on an annual basis beginning and ending the month joined. All renewals are due before the expiration date, which can be found on the label of Paper Money. Renewals may be done via the Society website www.spmc.org or by check/money order sent to the secretary. WELCOME TO OUR NEW MEMBERS! BY FRANK CLARK SPMC MEMBERSHIP DIRECTOR NEW MEMBERS 03/05/2023 15540 Dennis Boggs, Website 15541 Jorden Cupples, Website 15542 Steve Carroll 15543 Bill Kline, Website 15544 Victor Long, Website 15545 David Grand, Frank Clark 15546 Bob Missel, Matt Hansen 15547 Huiqing Wei, 15548 Gerald Terrell, Website REINSTATEMENTS None LIFE MEMBERSHIPS None NEW MEMBERS 04/05/2023 15549 John Rado, Website 15550 VOID 15551 Michael Gasvoda, Website 15552 David French, Website 15553 John Callen, Website 15554 Louis Cassens, Robert Moon 15555 Larry Poirier, Website REINSTATEMENTS None LIFE MEMBERSHIPS LM465 Mike W. Thompson, Website Dues Remittal Process Send dues directly to Robert Moon SPMC Treasurer 104 Chipping Ct Greenwood, SC 29649 Refer to your mailing label for when your dues are due. You may also pay your dues online at www.spmc.org. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 167 In Memoriam John Nelson Rowe III The last surviving charter member of the SPMC John Rowe III , the last surviving charter member of the SPMC with member number 306 passed away on March 4, 2023, in Dallas. A lifetime Dallas native, he started collecting coins at age 10, taking the bus to downtown Dallas to Dallas Coin company and as a teenage to Ft. Worth to see Amon Carter, Sr., and Jr. His close association with these two allowed him to amass two of the greatest coin collections of all time, including the finest known 1794 dollar which recently sold for $10 million. Also, working with John Merrill, he put together one of the best collections of rare gold and territorials ever amassed. However, his passion was for Texas currency of which he amassed probably the greatest collection ever built. In 2003, he and his brother-in-law donated this collection to the DeGolyer Library at SMU in Dallas. He was awarded the PNG Lifetime Achievement Award and in 2022 was inducted into the SPMC Hall of Fame. Howard Allen Cohen Howard Cohen was member number 6973 of the SPMC and number ??? of the Fractional Currency Collectors Board. He passed away on March 29, 2023 in Boston, MA. He was described as having a genius I.Q. with a child- like joy in life. He was liked by all who knew him, and his infectious personality made him a joy to be around. His collecting style was for the best available not one of quantity. His fractional collection, while not quite complete is certainly one of the best if not the best in terms of condition and will rival all others ever put up for auction. Howard was also an avid collector of pens. Howard was a graduate M.I.T. and Goshen Business School. Howard was president of Leco Electric, his family Christmas lighting business. Howard A. Daniel III Howard Daniel III, passed away on April 5, 2023 in Florida. He held member #3192 in the SPMC. Howard enlisted in the U.S. Army in 1957 until he retired as a Master Sergeant in 1981 but was recalled to duty to support Operation Desert Storm in 1991. He was a very successful and knowledgeable collector, researcher and writer having published six books on the currencies of Cambodia, Lao, Vietnam and the whole of French Indochina. His books are part of the standard references for Southeast Asia. In the 90s he also wrote a popular regular column for World Coin News, and later authored many articles for which he earned a number of awards. Howard was a frequent speaker at the annual International Paper Money Show in Memphis, TN on topics related to the various currencies of Southeast Asia and China. Howard was a 50 yr member of the ANA and life member of both the ANA and IBNS and. He was a recipient of an ANA President’s award in 2002 and the Glenn Smedly award in 2008. He was named a Numismatic Ambassador in 2004 and inducted into the IBNS Hall-of-fame in 2017. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 168 SPMC Board of Governors Election Per the by-laws, an election will be held every year for one-third of the seats of the board of governors (4 seats). This year the following seats are up for election; Mark Anderson Loren Gatch William Litt J. Fred Maples Governor Anderson has stated he will not be running for re-election. Anyone interested in running for a board seat (3-year term) must be a member in good standing in the Society. They must submit a biography and a written petition signed by 10 members in good standing, and accompanied by a letter of acceptance by the nominee by June 15, 2023 to the SPMC secretary. . SPMC.org * Paper Money * May/June 2023 * Whole No. 345 169 The End of National Bank Notes T. J. Coolidge III and the Call of the Last Circulation Bonds By Lee Lofthus hristmas Eve, 1934. Thomas Jefferson Coolidge III, Undersecretary of the Treasury, the No. 2 official at the Department, was working. He drafted a memorandum for the Secretary titled “Currency.” In that memorandum, Coolidge proposed a strategy for ending the circulation of national bank notes. Just 75 days later, on March 9, 1935, Secretary of the Treasury Henry Morgenthau Jr. issued a press release saying the circulation bonds that backed national bank notes would be called for redemption. This was the end for nationals. By August 1st it was all over except scavenging the outstanding notes from circulation and destroying them. Numismatists have long understood that nationals ended when the circulation bonds backing the notes were called, but there was no requirement that national bank issuances end when they did. They could have been issued for years, even decades longer. But Coolidge, the scion of one of the American Revolution’s founding fathers, had a mandate from Morgenthau to revamp Treasury financing operations, and Coolidge soon turned his sights on the bonds backing national bank notes. This article will examine the men and motivation behind the end of national bank notes. January 1934 The events that led to the March 1935 call for the redemption of the circulation bonds began 15 months earlier. These were heady times at Treasury. After a tulmultuous economic year in 1933, a year that witnessed wholesale runs on the nations banks, endured Roosevelt’s bank holiday, passage of the Emergency Banking Act to salvage the emplosion of the banking system, C SPMC.org * Paper Money * May/June 2023 * Whole No. 345 170 and removal of the country from the gold standard, New Year’s Day 1934 began another momentus year. On January 1st, Henry Morgenthau Jr. was sworn-in as Secretary of the Treasury,1 replacing William H. Woodin. Woodin, diagnosed with terminal cancer, resigned on December 31. Morgenthau had initially joined Treasury on November 17, 1933, as Undersecretary, the department’s No. 2 official, and was immediately named Acting Secretary while Woodin took a leave of absence. Roosevelt quickly nominated Morgenthau to be permanent secretary. Morgethau’s first month was consumed with pressing Congress to pass what became the Gold Reserve Act of 1934. Morgenthau and Treasury General Counsel Herman Oliphant joined Roosevelt and other dignitaries in the Oval Office on January 30 as Roosevelt signed that monumental legislation into law.2 The full title of the bill was “An Act to protect the currency of the United States, to provide for the better use of the monetary gold stock of the United States, and for other purposes.”3 Among many provisions, the bill transferred owership of all monetary gold in the United States to the Treasury, made Federal Reserve notes redeemable in lawful money instead of gold, and established a stabiliziation fund of $2 billion, made possible by the profit to the Treasury from increasing the price of gold.4 The stablilization fund would be used to stimulate the economy and combat the drain of Treasury gold caused by disadvantageous foreign exchange rates. And, as events would later Figures 1 and 2. Roosevelt’s potent one-two punch at Treasury: Secretary of the Treasury Henry Morgenthau Jr, left, and Undersecretary of the Treasury Thomas Jefferson Coolidge III, right. Morgenthau was Roosevelt’s Hyde Park neighbor, friend and confidante. Coolidge was a Boston banker who was given broad authority to manage Treasury financing and investment programs by Morgenthau. Library of Congress photo, right, International News Photo, left. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 171 unfold, T. J. Coolidge would propose that a portion of the fund be used to retire national bank notes.5 Morgenthau and Roosevelt Morgenthau’s advantage as Treasury Secretary was his close friendship and access to Roosevelt, often seeing him as many as four times a week.6 He was a longtime neighbor of Roosevelt in Hyde Park, and held critical positions in Roosevelt’s campaigns for governor of New York and then president. Before Morgenthau went to Treasury, Roosevelt had originally appointed him head of the Farm Credit Administration. Monetarily conservative, Morgenthau favored a balanced budget7 and keeping interest rates low to stimulate the economy. But like Roosevelt, he recognized that innovation, not bankrupt dogma, was necessary to break the stranglehold of the Depression. Morgenthau filled a crucial void. The Federal Reserve was stuck in a Hoover-era mindset of worrying about inflation. Economist Allan Meltzer observed “The Federal Reserve did next to nothing to foster the nation’s economic recovery,” adding “Congress and Treasury made the most important decisions about gold, silver, and banking legislation.8 The [stabilization] fund gave Treasury a strong hand * * * and it used its power. The Treasury remained the dominant partner for the next fifteen years.”9 While Morgenthau played an exceptionally large role in New Deal programs, he ensured he had Roosevelt’s buy-in prior to implementation,10 either informally or, as in the case of the Gold Reserve Act11 and much of the silver legislation, formal approval.12 Morgenthau Assembles his Treasury Team A farmer by profession, Morgenthau was not a banker or economist. Upon Morgenthau becoming Secretary, one of his sisters told her son “I can’t understand why the President appointed your uncle Henry * * * He knows that Henry knows nothing about finance.”13 But Morgenthau’s son, Henry III, described why Roosevelt so highly valued his father: “absolute loyalty with an uncanny ability to get things done, sometimes in extremely unorthodox ways, using aides who were themselves idiosyncratic in their approach to problems.”14 According to his biographer Herbert Levy, “Morgenthau had an astonishing ability to choose extremely competent assistants.”15 Morgenthau brought on renowned economist Jacob Viner of the University of Chicago as a special assistant in the Office of the Secretary. Born in Canada, Viner moved to the U.S., earned a Ph.D. from Harvard, taught at the University of Chicago from 1925 to 1946, and later at Princeton. He was a proponent of deficit spending and inflating the currency as a means to combat the Depression.16 Onboard for a brief stay before heading to the Federal Reserve Board was Marriner S. Eccles, an Ogden, Utah banker.17 Eccles was a fervent supporter of New Deal policies, but clashed Figure 3. Renowned University of Chicago economist Jacob Viner joined Morgenthau’s Treasury team as an advisor during 1934. Viner endorsed Coolidge’s proposals to simplify the currency system and end the nationals. Acme News Pictures, Chicago. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 172 with Morgenthau. According to a later interview with economist Viner, “The two men grated on each other.”18 Herman Oliphant, Treasury’s General Counsel, came from the University of Chicago law school and was seen as an “economic experimenter.”19 The economic and monetary machinations of the New Deal Treasury required significant legal analyses and drafting of new regulations, putting Oliphant in a more visible and influential role than typical agency counsels. The newcomers relied heavily on William S. Broughton, Commissioner of the Public Debt Service. Broughton was a seasoned Treasury stalwart, deeply versed in bond issues and currency operations, including national bank notes. 20 Morgenthau and his senior aides became so omnipresent in setting New Deal policies that in the diaries of Federal Reserve Board member Charles Sumner Hamlin, they were collectively referred to as “the Treasury boys,” 21 a label also used by Eccles, Comptroller of the Currency J.F.T. O’Connor, and even the press.22 T. J. Coolidge III In April 1934, Morgenthau appointed Thomas Jefferson Coolidge III as special assistant in the Office of the Secretary.23 This was an expedited method of bringing Coolidge onboard. Morgenthau’s actual intention was to have Coolidge appointed to fill the No. 2 post of Undersecretary, vacated when Dean Acheson resigned after clashing with Roosevelt over the gold confiscation policies.24 Once Roosevelt was comfortable with the appointment, he formally sent the nomination to the Senate and Coolidge was quickly confirmed. On May 2, 1934, Coolidge was sworn in as the Department’s No. 2 official.25 Time Magazine’s May 7, 1934 issue reported that Coolidge was the type of man Roosevelt was looking for, “a fiscal advisor who satisfied him and who had no financial connections that were politically objectionable.”26 Coolidge went to Harvard and then Harvard Law School, and from there went into banking.27 One of his undergraduate professors called Coolidge one of the best mathematics scholars he ever taught.28 Coolidge’s father had founded the Old Colony Trust Co. in Boston, and Coolidge III followed in his banking footsteps, becoming vice president of the First National Bank of Boston.29 Coolidge’s fancy name was authentic. His great-great-great grandfather was Thomas Jefferson, the country’s third president.30 Figure 4. Herman Oliphant, Treasury General Counsel. Oliphant was a close advisor to both Morgenthau and Coolidge, and often accompanied Morgenthau on visits to Capitol Hill to discuss banking legislation. Wide World Photos. Figure 5. William S. Broughton, Commissioner of the Public Debt, began his Treasury career in 1910 in the Division of Loans and Currency. Department of the Treasury photo. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 173 Coolidge’s appointment raised eyebrows at the Federal Reserve. Board member Eugene Black described Coolidge as an “extreme conservative” and said that “sooner or later Morgenthau Figure 6. T. J. Coolidge III is sworn in as Undersecretary of the Treasury, May 2, 1934, as Secretary Henry Morgenthau Jr., at left, looks on. In addition to developing sweeping refinancing plans for Treasury’s bond portfolio, Coolidge had early exposure to Treasury’s currency programs, working with Public Debt Commissioner Broughton to implement the new and expanded Series of 1934 silver certificate program. Coolidge would soon turn his attention to national bank notes. International News Photo. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 174 would sour on [him].”31 Marriner Eccles characterized Coolidge as a “hard boiled banker whose only wish was to do what the bankers wanted.”32 Hamlin noted in his diary that a senator told him Coolidge was “put in the Treasury by First National Bank of Boston to act as its watch dog and dominate Treasury policies.”33 Morgenthau formally defined Coolidge’s authority as his Special Assistant in an internal Treasury Department order dated April 3, 1934, as follows.34 ORDER OF THE SECRETARY OF THE TREASURY Treasury financing, investment of Government funds, and other matters relating directly or indirectly to financing operations are hereby assigned to the supervision of T. J. Coolidge, Special Assistant to the Secretary. Coolidge became a major player in Treasury monetary policy, and he worked directly with the Federal Reserve Board and the Open Market Committee, frequently attending the Federal Reserve board meetings where he discussed public debt refinancing plans. Notably absent, however, from the Federal Reserve meeting minutes in 1934 and 1935 are discussions about calling the circulation bonds that backed national bank notes.35 Throughout 1934, Coolidge crafted plans to lower government borrowing costs by calling the higher interest bonds. The interest savings would help fund other New Deal recovery programs. Coolidge was successful. By June 30, 1935, Treasury saved over $93 million in annual interest costs despite an increase of over $1 billion in new debt.36 As Coolidge pursued public debt restructuring, his attention was drawn to legal tender currency, which was circulating debt, and national currency, which was founded on it. Of particular interest were the circulation bonds that backed national currency. Figure 7. Excerpt from a 1908 Treasury Department circular offering 2 per cent Panama Canal Bonds. Although the face of the bonds did not say they carried the circulation privilege, their interest terms made them eligible. The third to the last sentence in the circular states the bonds “will be available to national banks as security for circulating notes upon the same terms as the 2 per cent consols of 1930.” Herbstman Memorial Collection of American Finance photo. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 175 The Circulation Privilege In order to receive national bank notes, bankers were required to purchase government bonds and deposit them with the Treasurer. Not just any government bonds, only bonds that had been accorded the “circulation privilege” by Congress.37 See Figure 7. Bankers bought the Treasury bonds and received national bank notes equal to the par value of the bonds. In early 1911, to prevent what it feared would be an uncontrolled expansion of inflationary national currency as bond issues grew, Congress began statutorily denying new bond programs from enjoying the circulation privilege.38 See Figure 8. Coolidge saw opportunity to go further. December 24, 1934 On Christmas Eve, Coolidge drafted this memorandum for Morgenthau’s consideration: 39 December 24, 1934 Memorandum re: Currency. I am of the opinion that a great step forward in our banking system would be achieved if we could do away with the forms of paper currency now outstanding. These consist of two: United States Notes amounting to …………… $346,000,000 National Bank notes amounting to …………… $674,000,000 Total ………………………………………….. $1,020,000,000 * * * Should this currency be retired it would automatically be replaced by Federal Reserve Notes and it would be appropriate to give the Federal Reserve banks gold certificates to the amount of the retired Notes as their earning assets would by this method be unchanged. I am, therefore, suggesting * * * that the circulation bonds be called and retired by the Treasury, the Treasury obtaining its funds by the sale to the Stabilization Fund of an appropriate note. I recognize that the profit in the gold devaluation should only be used for a very special purpose. It seems that the retirement of this paper should be such a purpose, all of which represents retirement of national debt. There can, I believe, be no good argument put up as to the need under present conditions of this paper currency, although such was advisable when our gold reserves were insufficient for our needs and when we had no Federal Reserve Bank system to give elasticity to our currency. Figure 8. This 3 percent Panama Canal Bond of 1911 is an issue that was ineligible to back national bank notes. Congress, fearing over-expansion of national bank notes, began to prohibit new bond issues from carrying the circulation privilege. The last line of the terms on the face states “This bond shall not be receivable by the Treasury of the United States as security for the issue of circulating notes to national banks.” Herbstman Memorial Collection of American Finance photo. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 176 Earlier Efforts to Eliminate Nationals The desire to get rid of nationals did not originate with Coolidge. Politicians, economists and others had advocated for an end of national bank notes for years. Periodic suggestions to eliminate them appeared in the financial press.40 Inside Treasury, the dislike of national currency was so pervasive, the wonder is not that national bank notes were killed off in 1935, it was why did it take so long? The Panics of 1893 and 1907 laid bare the inherent weaknesses of national bank currency. It was inelastic; that is, it was unresponsive to the needs and cycles of business and commerce. When the economy needed an infusion of cash, the moribund nationals, rigidly fixed in volume by the capitalization of the national banks, could not respond. Attempts to add elasticity to national currency took the form of the 1907 Aldrich-Vreeland Act that provided for the temporary deposit of securities other than circulation bonds and 1932 Federal Home Loan Bank legislation that granted a 3-year circulation privilege to higher interest Treasury bonds in order to encourage bankers to subscribe for more national bank notes. Both were temporary fixes targeting specific transient economic ills, and both required specific Congressional intervention. Neither were the nimble fare of a true elastic currency. In 1912, Congress considered House bill H.R. 26115, a move to issue a generic or “uniform” national currency design without bank names.41 The bill would free the Bureau of Engraving and Printing from the burden of preparing thousands of individual bank plates and save banks the cost of the plates, but it went nowhere as attention turned to what would become the Federal Reserve Act. A similar idea surfaced again in 1921 in Senate bill S. 1833.42 Asked for his position on the Senate bill, then-Treasury Secretary Andrew W. Mellon recommended against it.43 Mellon had no interest in substituting one form of national currency with another. He told George F. McLean (R-CT), Chairman of the Senate Committee on Banking and Currency, that Federal Reserve notes were preferable, adding that Congress had repeatedly expressed its agreement that national currency should be eliminated. Mellon cited the Congressional withholding of the circulation privilege from new bonds since 1911; the Federal Reserve Act provisions to replace nationals with Federal Reserve notes; and the repeal of the requirement for national banks to issue circulation.44 Mellon went so far as telling McLean, that “I think it may be said that this [eliminating national currency] has become a definite policy of the government, and so far as I am aware, it has not been brought in question by any responsible person.”45 When Treasury’s James H. Moyle, Assistant to the Secretary, asked in 1938 for background on the demise of nationals, Commissioner of the Public Debt William Broughton provided this retrospective.46 The inadequacy of the currency system of the United States had been under discussion and investigation for many years. A great and much needed reform was brought about with the enactment of the Federal Reserve Act, approved December 23, 1913, when provision was made for an elastic currency – Federal Reserve notes. That Act also provided a means for the gradual retirement of the rigid bond-secured circulation of National banks. A start in the retirement of the circulation was made, but it was interrupted by the war [World War I] and was never resumed under the Federal Reserve Act. Actually, in late 1924 Mellon made a concerted effort to begin the retirement of national bank notes when he announced that the Loan of 1925 bonds would be called on February 1, 1925. This action removed $76 million in nationals from circulation, representing approximately 8 percent of the total.47 No replacement bonds were granted the circulation privilege so Mellon’s action simply took a big bite out of the national bank note circulation. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 177 Mellon presented his Program for Retiring National Bank Note Circulation in his 1924 Treasury annual report, explaining that his call of the Loan of 1925 bonds was the first step in what ultimately would be the retirement of all bonds with the circulation privilege.48 He pointed out that national currency had failed to serve the growing needs of the country and their lack of elasticity had become a source of real danger.49 He added that nationals were “unscientific and of a more sentimental than material value to the issuing banks.”50 But complications ensued. In December 1924, the Federal Reserve Board endorsed the gradual retirement of nationals, and commended Treasury’s call of the $76 million Loan of 1925 bonds. However, the Board went on to say that before any additional steps were taken towards further retirement of national currency, changes to the National Bank Act should be made to make national banks more competitive with state banks.51 Mellon’s plans stagnated. He didn’t doubt that he had the legal authority to call the circulation bonds as demonstrated by his call of the Loan of 1925, and he felt Congress had already expressed its views years before. Nonetheless, caution set in and he decided the complete elimination of national bank notes was a question of government policy.52 Accordingly, in Mellon’s annual report for 1928, he indicated he would submit the question to Congress.53 Mellon’s intentions were derailed. Two significant analyses written in the winter of 1928- 1929, one by the Federal Reserve and one by Treasury, came to the same stark conclusion: the government simply did not have the money to retire the nationals. At the Federal Reserve, on December 20, 1928, Dr. Emanuel A. Goldenweiser, Director of the Division of Research and Statistics, sent a memorandum to Roy A. Young, chair of the Board of Governors, titled “Effect on gold reserves of retirement of national bank notes.”54 Goldenweiser’s expertise was bank reserves and the international flow of gold.55 Figure 9. The Aldrich-Vreeland Act of 1908 attempted to introduce some elasticity to national currency by allowing for the temporary deposit of certain non-Federal bonds and commercial paper that could be used to secure additional bank circulation. National bank note plates made during the 1908-1915 life of the act were distinguished by addition of “or other securities” to the securities clause on the face and prominent dates on the back. Heritage Auctions Archive photo. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 178 Retiring nationals would require the Federal Reserve banks to hold additional collateral, either gold or eligible paper, against the new Federal Reserve notes issued in replacement. Goldenweiser said that this would cause “a useless reduction of our available gold by the full amount of the retired notes, that is, about $675,000,000,” or, as his staff explained in an accompanying memorandum, require increased borrowing by member banks to obtain the needed collateral.56 The staff researchers concluded “an obvious alternative is to retain the national bank note circulation, which neither ties up gold nor necessitates as cover so-called eligible paper.” Goldenweiser suggested the problem could be obviated by amending the Federal Reserve Act to allow Treasury securities to be held as collateral for Federal Reserve notes up to the amount of the nationals retired.57 Young distributed Goldenweiser’s memo to the Board, including Mellon.58 The suggestion to amend the Federal Reserve Act collateral requirement was not pursued. The next month, then-Undersecretary of the Treasury Ogden L. Mills wrote Mellon on January 17, 1929, to say Treasury needed to delay plans to eliminate the nationals.59 Mills agreed that the longstanding concern over the lack of elasticity was justified, but the need to eliminate the nationals was less urgent than before. He explained that when the Federal Reserve Act was passed, national bank notes were one-fifth of the currency in circulation but now they were only one-eighth. He noted “the inelasticity of the National Bank note is to-day relatively unimportant, since other forms of currency provide all the elasticity necessary.”60 Mills also explained that when Mellon submitted his 1924 plan to eliminate nationals, the U.S. had significant gold reserves, but now major exports of gold to other countries had “brought us nearer to the time when our gold reserves will be so close to the minima that they will be a determining factor in bank policy.” Like Goldenweiser, Mills said that retiring nationals would draw down the gold reserves by $675 million.61 The alternative would be increased borrowing by Federal Reserve member banks to obtain the necessary collateral for new Federal Reserve notes, a move Mills felt imprudent. Mills concluded “it would seem unwise for the Treasury Department to definitely commit itself to a program looking to the retirement of the National Bank notes in the immediate future.”62 Figure 10. Treasury Secretary Andrew Mellon’s 1924 program to gradually replace national bank notes stalled in 1929. Library of Congress photo. Figure 11. In January 1929, Ogden L. Mills, Undersecretary of the Treasury to Andrew Mellon, warned Mellon that eliminating nationals would threaten Treasury’s gold reserves. Library of Congress photo. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 179 Treasury and the Federal Reserve, for the same essential reasons, each decided it was a poor time to retire the nationals. Four days later, Mellon sent a letter to the Speaker of the House and President of the Senate saying “I have concluded that it would be inadvisable to submit to Congress at this time a program looking to early retirement of our national-bank note circulation”63 Instead, he advised that small- sized national bank notes would be forthcoming.64 Mellon’s letter to Congress did not go into detail on what changed his mind. Coolidge’s Proposal Six years after Mellon’s efforts fizzled, T.J. Coolidge was ready to try again. Coolidge was thinking big with his Currency memorandum suggesting the end to not only national bank notes, but also legal tenders. Coolidge gave the memo to Treasury General Counsel Herman Oliphant for his views over the holidays. Oliphant shared the memo with economist Viner.65 Viner had recently returned to the University of Chicago, but remained closely tethered to his Treasury friends. Viner replied on January 2, “I, of course, approve in principle of clearing up the paper currency situation and reducing the types of currency to as small a number as possible.”66 Viner cautioned that attempting any legislation at the time may not be politically expedient, and said the desirability of withdrawing the national bank notes may be questioned since they guaranteed an outlet for the circulation bonds.67 Viner did not specify what part of Coolidge’s plan he thought would need legislation, but we can infer it was the elimination of legal tender notes. Oliphant wrote Coolidge on January 4, saying he had taken the liberty to share Coolidge’s December 24 memo with Viner. Oliphant added his own caution that “I have the general feeling that the pressure for monetary experiments will be so great during the present session [of Congress] that we should not do anything to open the issue on the floor of either house, except to meet a really substantial need.”68 Coolidge spent the rest of January ruminating on his plans, both for the currency and his broad refinancing plans. He wrote Morgenthau again on February 8, 1935. In a memorandum entitled “March Financing” Coolidge wrote the following. 69 I have given some more thought to the March financing and want to revise my previous memorandum. The scheme I contemplate I feel is rather ingenious for our orderly refinancing of the five billion Liberties into 3 percent Treasurys. * * * The question of redemption of the consols would be taken up either at the time of this financing or taken up on April 1st, which I think would be preferable. This memorandum is as the last, intended to be merely as thoughts–not a recommendation–but the idea pleases me. Coolidge forwarded the memo on to Broughton with a cover note saying “Please read this and then come and comment to me. TJC.”70 We know Broughton replied because he penned a handwritten note in the margin of Coolidge’s memo reminding him that the “Temporary circulation privilege expires in July,” a reference to the Federal Home Loan Bank bonds whose 3-year circulation privilege period would end on July 22.71 The progression in Coolidge’s thinking is evident. He abandoned his idea to eliminate United States notes, because that definitely would have required Congressional action and stirred up controversy as Viner and Oliphant predicted. But he held fast to his idea to eliminate the nationals, and, unlike Mellon in 1928, took the position that Treasury should proceed without seeking further Congressional approval. The basic legal issue over involving Congress turned on the protocol that when Congress passes legislation, the ordinary interpretation is that what SPMC.org * Paper Money * May/June 2023 * Whole No. 345 180 Congress grants, only Congress can take away unless it provides someone else with the authority to do so. When they were issued, the terms of the 2 percent Consols stated they were “redeemable at the pleasure of the United States after the first day of April, 1930.” The Panama Canal bonds of 1916-36 had been callable since August 1, 1916, and the Panamas of 1918-38 had been callable since November 1, 1918.72 Unquestionably, the circulation bonds were subject to call, the only ambiguity being who had the authority “of the United States” to actually call them? Those with a congressional-centric perspective would argue Congress would need to enact new legislation to explicitly allow Treasury to call the bonds because the bond call would entirely eliminate a congressionally authorized program. But Coolidge believed Congress already had made its intentions clear through the Federal Reserve Act73, plus he was well aware of the arguments Mellon initially cited years before. Coolidge was satisfied Congress had spoken and that the decision to call the bonds and eliminate national currency was now in the hands of the executive branch. Plus, he and Morgenthau knew when Mellon called the Loan of 1925 as a prelude to retiring all national currency, no major Congressional objection had materialized. Coolidge thus provided Morgenthau with both a legal framework for calling the bonds and the rational for not raising the matter to Congress. Internal Treasury memoranda reveal that some staff attorneys expressed doubt in 1937 regarding successfully defending Morgenthau’s action without explicit authority from Congress if the call was challenged in the courts.74 However, if doubts were raised in early 1935, Coolidge’s views prevailed. The January 29, 1935 Senate Hearing Morgenthau and Coolidge were closed-mouthed about their plans. On January 29, 1935, the Treasury boys testified before the Senate Committee on Finance regarding the Second Liberty Figure 12. It took six years after the Panic of 1907 for Congress to pass the Federal Reserve Act, providing for a central banking function and fully elastic currency. The first Federal Reserve notes were the Series of 1914. The notes were intended to replace national bank notes, but most national bankers at the time were reluctant to give up their circulations. Heritage Auctions Archive photo. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 181 Bonds and related bond refinancing plans. Appearing for Treasury were the big guns: Morgenthau, Coolidge, Daniel Bell (acting budget director), and Broughton. Morgenthau and Coolidge explained how Treasury required additional statutory authority to enable it to remedy a quirk in the original Liberty Loan law. Under then-current rules, Treasury could call the 4-¼ percent Liberty loans for redemption but were limited in issuing replacements, thus defeating the effort to refinance the debt into lower interest bonds.75 Congress remedied the problem by providing $25 billion in revolving issue authority in new legislation passed six days later.76 The hearing was remarkable for two reasons. First, Senator David Walsh (D-MA) asked Morgenthau if he needed any new authority to assist with refinancing Treasury notes and certificates [as distinguished from the new bond authority being sought]. Morgenthau replied “Mr. Coolidge says we have that authority now in notes and certificates.”77 Walsh did not press the point, but the exchange is revealing. Clearly Morgenthau and Coolidge didn’t want to invite discussion into areas where they believed they already had authority. Next, the subject of bonds bearing the circulation privilege came up. Senator James Couzens (R-MI) asked Coolidge “What is the amount of outstanding Government securities that are eligible for securing [national] currency?” Coolidge replied “There are about $800,000,000 of the old 2-perecent consols and Panama bonds,” adding that there was another group of [Federal Home Loan Bank] bonds with a temporary circulation privilege that would expire in July. Figure 13. Excerpt from a one page circular from the Federal Reserve Bank of New York dated March 11, 1935, announcing Treasury Secretary Morgenthau’s call of the 2 percent Consols and the Panama Canal Bonds of 1916-36 and 1918-38. No direct mention was made about national bank notes, merely the bland statement “These bonds bear the circulation privilege.” fraser.stlouisfed.org SPMC.org * Paper Money * May/June 2023 * Whole No. 345 182 Morgenthau clarified that the July expiration pertained to the temporary circulation privilege bonds, not the consols. Couzens asked Morgenthau if he was asking to extend the life of the temporary Federal Home Loan Bank circulation authority, and Morgenthau replied “no.” Couzens asked “Do you intend to let it expire? Morgenthau: “Yes, sir.”78 Neither Morgenthau nor Coolidge volunteered that they had been discussing for more than a month a plan to call all the circulation bonds and completely end national currency. Established executive branch protocol dictated that Morgenthau not discuss Treasury plans with Congress before conferring with President Roosevelt, so this could possibly explain Morgenthau’s silence. But it is more likely he had already secured Roosevelt’s tacit approval and that the silence at the hearing was additional indication that Morgenthau and Coolidge saw the bond call as a Treasury decision. Similarly, when Coolidge attended the Federal Reserve Board meeting on March 4th, the minutes show he made no mention that Treasury was days away from calling the Consols and Panama Canal bonds. Ten days after the Senate hearing, Coolidge proposed they move ahead and call the circulation bonds.79 Morgenthau agreed, and he didn’t wait until April. The Final Call The end of national bank notes was publicly set in motion on Saturday, March 9, 1935, one month after Coolidge’s March Financing memo to Morgenthau. Treasury officials briefed the press corps that Morgenthau would formally announce on March 11 that holders of 2 percent Consols were to surrender their bonds by July 1, 1935. On that date all interest would cease on the bonds, and with the cessation of interest, the circulation privilege would end. Similarly, holders of Panama Canal bonds were notified to surrender their bonds by August 1, 1935. The press materials were timed so that the story would be widely reported in Monday morning’s newspapers.80 National Bank notes were supported by a three-legged stool of circulation bonds: 2 percent Consols, 2 percent Panama Canal Bonds, and higher interest Federal Home Loan Bank bonds with the temporary three-year circulation privilege. The Consols and Panama Canal bonds could have lasted for years longer but Morgenthau’s March 11 call knocked out those two legs. The Federal Home Loan Bank bonds were statutorily losing their circulation privilege on July 22, 1935, knocking out the third leg. National bank notes were finished on August 1. Figure 14. A First-Mechanics National Bank of Trenton note with signature of bank president Edward C. Stokes. After Treasury announced its bond call, banker Stokes wrote Comptroller the Currency J.F.T. O’Connor lamenting Treasury’s decision. Heritage Auctions Archive photo. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 183 The Bureau of Engraving and Printing didn’t wait. A journal kept by a press room official has this entry: “March 11, 1935. The printing of National Bank Currency Ser. 1929 was suddenly stopped about 11 A.M. Orders on presses were not finished.” The last of the finished sheets were numbered and sealed, and delivered to the Comptroller of the Currency on May 20, 1935.81 Morgenthau Reassures the Public In Treasury’s press release on March 9, Morgenthau explained the why and how of retiring the circulation bonds. 82 [Redemption would] accomplish a simplification of the currency system through the elimination of national bank notes, an action contemplated at the time of the Federal Reserve Act. * * * National bank notes will be retired as rapidly as they are presented to the Treasury. It is expected that the great majority will be cancelled within a year. This will leave as permanent circulation Federal Reserve notes, silver certificates, and United States notes. Additional Federal Reserve notes will be issued to replace the national bank notes as they are retired, and as demand arises. * * * In retiring these bonds, Treasury will make use of the free gold resulting from the reduction in the weight of the gold dollar. Figure 15. Roughly a month after the bond call, Treasury Secretary Morgenthau went on the radio to talk about the Treasury’s bond refinancing plans. In his address, he reassured the public that the withdrawal of national bank notes was part of an orderly plan to gradually replace national bank notes with Federal Reserve notes. Morgenthau, like FDR, made use of the radio to communicate directly with the public about New Deal programs. Library of Congress photo. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 184 On April 14th Morgenthau went on national radio to talk about Treasury’s efforts to combat the Depression. While his main topic was refinancing the fourth Liberty Loan bonds, he also told listeners that “In July and August we know that we are going to retire $674,000,000 of interest- bearing Government securities. These are the Panama Canal bonds and United States consols that have already been called for redemption. The cash for that transaction is now in the Treasury.”83 The kicker of Morgenthau’s message about calling the Liberty bonds was this: “We did not have to call them; they were not due; it was good business sense that prompted our action.”84 The same rationale motivated his action on the circulation bonds. Public and Press Reaction The call of the bonds and ending of national bank circulation caused no great Congressional outcry. Banker and public comments were generally restrained. Treasury had initial reason to be wary. Back in January 1929, The United States Banker magazine reported that in a survey of 4,287 national banks, conducted by A.S. Pratt & Sons, the longtime publisher of Pratt’s Digest of National Banking Laws, 3,813 banks (89 percent) urged continuation of national bank notes, 138 banks (3 percent) replied that they were opposed to nationals, and 336 banks (8 percent) replied they were indifferent.85 But times had changed by 1935. The Great Depression and the banking crisis had taken their toll. More than 3,000 national banks had failed and national bank notes, despite their advertising benefits, were not a hill for most banks to die on any longer. One banker with concerns was Edward C. Stokes, President, First-Mechanics National Bank, Trenton, New Jersey. Stokes gently wrote to Comptroller of the Currency J.F.T. “Jefty” O’Connor the day after Morgenthau’s bond call and said “I was very surprised yesterday to learn of the action of the government to take from national banks the circulation privilege which has been for so long a part of their function. I presume that nothing can be done to change this determination and it has probably been irrevocably decided upon. I do feel, however, that this is a hardship upon the national banks and might well be postponed.”86 O’Connor’s short reply to Figure 16. This is the bond record in the final Comptroller of the Currency National Currency and Bond Ledgers for Mount Olive National Bank, Mount Olive, IL, charter 14285. The late-chartering bank deposited its modest $25,000 in 2% Consols on February 23, 1935 (see ledger top left). The bank was sent its total circulation between February 23 and March 6, consisting entirely of $100 Type 2 notes. A bare 5 days after its last shipment, Treasury called the bonds. This is an example of a bank that didn’t wait for the final July 1 call date and surrendered its bonds early. The bonds were withdrawn April 6 (see top right), and Treasury deposited lawful money (labeled “LMN” for “lawful money new series”) to liquidate the bank’s liability for its Series 1929 notes. The $50,000 entries at bottom are closeout reconciling entries by the Comptroller’s clerks. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 185 Stokes said his sentiments had been noted, and “Inasmuch as this action was taken by the Secretary of the Treasury, I am this day forwarding him a copy of your letter for his information and consideration.”87 This was Treasury’s bond call, and O’Connor, who was insulated from the decision by Morgenthau, did not want to be caught in the crossfire. The New York Times ran a lengthy article on March 12, 1935 on the bond call, explaining how the move to Federal Reserve notes would expand Treasury’s currency base vs. the national bank notes being withdrawn.88 Tellingly, the story also said that “Although Congress granted to national banks the right to issue notes and the action of the Treasury will lead to the elimination of such notes, Mr. Coolidge held that Treasury had the right to call in the consols and the canal bonds.”89 Coolidge was not hiding from his position on the matter. The same article also stated “Note Retirement Long Planned,” and that the current administration’s monetary trend was for “limiting the classes of currency to Federal Reserve notes, silver certificates, and United States notes.90 Five days after the bond call, New York’s Financial Chronicle opined on March 16, 1935, that “The actions of the Treasury for the retirement of pre-war obligations, now pledged to secure national bank notes, and the concomitant retirement of these [notes] have attracted rather wide attention, probably wider than they deserve.”91 The conservative Chronicle writers were more concerned with “government excesses” than saving national currency. A New York Times headline for March 17, 1935, said “End of Bank Notes Meets No Dissent, Sound Money Advocates as Well as Inflationists Hail Administration Move” and “Economists Urged Plan.”92 The opening paragraph was the following. 93 Elimination of national bank notes from the currency system through the retirement of bonds on which circulation may be based, which was announced last week by the Treasury, will involve, as between Treasury and the national banks issuing the notes, little more than a bookkeeping operation. As concerns the public, the change will involve merely the imperceptible disappearance from circulation of national bank notes over a long period of time and the equally gradual substitution of Federal Reserve notes. The article concluded “A striking feature of the plan to retire national bank notes was that it apparently pleased all shades of monetary opinion–something, it is believed, that has been accomplished by no other monetary measure taken up by the administration.”94 The national banks got onboard, and the July 1935 issue of the Federal Reserve Bulletin reported that between the March 11 bond call and June 29, national banks had deposited approximately $410 million into the Treasury for their outstanding circulations ahead of the deadlines, thus transferring liability for the notes to the Treasury Department.95 The Bulletin also noted that over $90 million in unfit nationals had already been culled from circulation and returned to the Treasury.96 The Bulletin took pains to note that “Elimination of national-bank notes from the circulating medium of the country is being carried out by a method which will result in a minimum of disturbance to the money market.”97 Elimination of national bank notes was not entirely free of discord. Dozens of protests from banks were filed with Treasury and in the courts, but the protests, except one, didn’t challenge the right of the Secretary to call the bonds or end nationals. Rather, the national banks were challenging the fact they were not being paid in gold per the terms in force when they purchased the bonds.98 Treasury would come out on top on the gold protests at the Supreme Court. The officers of one national bank, the Lincoln National Bank of Newark, New Jersey, Charter 12570, did challenge Morgenthau’s authority to call the bonds rather than Congress. The SPMC.org * Paper Money * May/June 2023 * Whole No. 345 186 bankers refused to surrender their 2 percent Consol bonds totaling $600,000.99 They fought for two and a half years but Treasury finally redeemed their bonds on December 31, 1937.100 For the average Joe suffering through the Great Depression, ending nationals was not a controversy. It was more important to have a $5 bill in his pocket, any $5 bill, than worrying about the legal basis behind its issue. Closeout Logistics As the final bond redemption dates neared, Coolidge wrote the Federal Reserve banks on May 17, 1935, advising that no new national bank notes would be issued after June 1 except in special circumstances. The banks were to continue to cancel and send unfit (worn-out) nationals to the Treasurer for sorting to the bank of issue for proper redemption.101 Regarding fit nationals, the banks were given discretion to place them back into circulation or hold them in their vault cash until August 1 when further instructions would be forthcoming.102 Broughton advised Coolidge that the Federal Reserve banks were holding more than adequate supplies of other classes of currency, so holding national bank notes back from circulation would not be an imposition on most banks.103 On July 24, Coolidge provided the further instructions, saying that as of August 1 all national bank notes held or thereafter received by Federal Reserve banks were to be canceled and sent to Treasury for redemption.104 Treasury would assume all liability for the outstanding notes except for the disputed $600,000 circulation of the Lincoln National Bank of Newark,105 and therefore the Treasurer’s office would discontinue sorting nationals by bank. The redeemed notes would be charged to a single merged retirement account at Treasury.106 Coolidge carefully included the Federal Reserve Board, the Treasurer, and the Comptroller of the Currency on the instructions.107 Banks that had already deposited lawful money to clear the liability for their nationals in circulation were paid in full for their redeemed bonds. See Figure 16. The Treasurer’s office advised other banks that they could offset their outstanding national currency against their redeemed bonds, meaning a bank with $100,000 in Consols and $60,000 in outstanding nationals would receive a bond closeout check from the Treasurer for $40,000.108 There were $769 million in national bank notes in circulation on June 30, 1935. Five years later, 78.3% of them had been redeemed and destroyed.109 Figure 17. An amazing survivor – the last national bank note sent to a bank. Regular shipments of nationals from the Comptroller of the Currency’s Issue Division ceased May 31, 1935. However, a clerical error in the Comptroller’s office caused this bank’s circulation to be shorted $50,000. When the error was discovered, the Comptroller sent $50,000 to the bank on July 13, 1935, with this note bearing the highest serial number in the shipment. Jesse Lipka photo. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 187 Why Treasury Succeeded in 1935 When Earlier Efforts Failed While this article reveals the role T. J. Coolidge III played in developing the legal rationale and seizing the moment to end national currency, the lasting question is not who ended national bank notes, but what made it possible for Morgenthau and Coolidge to succeed in 1935 when prior efforts failed? The Great Depression and the 1933 banking crisis enabled Roosevelt and Morgenthau to make monetary reforms that would have been a bridge too far for Herbert Hoover and Andrew Mellon. In this case, Roosevelt, Morgenthau, and Coolidge followed the old adage “never let a good crisis go to waste.” With the benefit of a desperate and therefore largely compliant Congress, even if many members lacked New Deal enthusiasm, Roosevelt broke down policy and legislative barriers starting with the bank holiday in March 1933. Instead of biding time and hoping the Depression would heal itself as had Hoover, Roosevelt launched Treasury into action with monetary measures of a scale and tenor never seen before. If Andrew Mellon had unilaterally eliminated nationals in the late 1920’s, it would have been the center of attention, helping explain his decision in 1928 to seek Congress’s view as a matter of policy. But for Morgenthau in 1935, in the whirlwind of other New Deal programs, eliminating national currency was just another piece of a bigger plan. What finally tipped the scales in favor of eliminating national bank notes was the addition to the Treasury boys team of “hard boiled banker” T.J. Coolidge. He was driven, without the innate caution of the Washington bureaucracy. Coolidge’s central role in ending national currency had three major dimensions. First, his Christmas Eve 1934 memo to Morgenthau revived the long-dormant idea to call the circulation bonds. Second, he made the case that eliminating national currency was an operational decision for Treasury to make, not a policy decision for Congress. Third, he was the one who proposed using the stabilization fund to pay for the plan. The fundamental reason Treasury succeeded in retiring the nationals in 1935 after backing off in 1929 was that revaluing gold in 1934 gave Treasury a $2 billion windfall. This profit went into the stabilization fund created by the Gold Reserve Act, and allowed Treasury to pay-off the $675 million liability for the retired nationals without draining its gold reserves or stirring up a hornet’s nest of banker and Congressional opposition. Coolidge had solved the problem that had vexed Mellon, Mills and Goldenweiser in 1929. Coolidge announced on January 17, 1936 that he was resigning from Treasury to return to banking. Morgenthau issued a press release publicly thanking “Jeff” for his two years as Undersecretary and for his “conscientious and loyal help in the many difficult problems” they faced together.110 Roosevelt also sent Coolidge a kind farewell letter thanking him for his loyal and able service.111 Coolidge’s last day at Treasury was February 15, 1936.112 Figure 18. Charles Sumner Hamlin was the first Governor (now called Chair) of the Federal Reserve Board, and remained on the Board until February 1936. Hamlin’s extensive diaries, available from the Library of Congress, provided candid insight to the actions of Morgenthau, Coolidge, and other “Treasury boys.” Library of Congress photo. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 188 Perspectives This article explains how Morgenthau and Coolidge went about ending national bank currency, and why they were able to succeed. But there is one final question to answer–why did they want to? No one else was clamoring to end national bank notes at the moment. It wasn’t a campaign promise of Roosevelt’s. Morgenthau didn’t have them in his sights when he took over as Secretary. Neither Congress nor the banks were complaining about nationals at the time. Coolidge’s main focus was replacing Treasury’s high interest bond programs, but he also went after the 2 percent Consols and 2 percent Panama Canal circulation bonds, bonds already at low interest rates. The answer to this seeming inconsistency is that Coolidge went after them not because they were an interest rate problem, but because they were the foundation for national currency. Coolidge had a conservative’s fundamental dislike for national currency because it was circulating public debt, just like the legal tender greenbacks. That is why Coolidge originally proposed to Morgenthau to kill off both the legal tenders and the national bank notes together. Ending nationals would lower the national debt. Coolidge was already refinancing Treasury’s other bond programs through massive redemption calls, so folding the Consols and the Panama Canal circulation bonds into the calls made sense. Career Treasury officials would not buck the plan because nationals had been an operational headache since their inception. The great paradox of the Treasury Department in the years 1933 through 1936 is that in the throes of the Great Depression, some of the most radical monetary changes in the nation’s history were accomplished by two avowed financial conservatives. It was not until 1938 that Roosevelt, seeing early New Deal recovery efforts dissipate and a new recession underway, more aggressively moved his administration to deficit spending to keep the economy from stalling again, a move that caused Morgenthau discomfort.113 By that time Coolidge had returned to private sector banking. Morgenthau did not sour on him, despite the prediction of Federal Reserve member Eugene Black, and despite Time Magazine saying Morgenthau went through “enough former Under Secretaries of the Treasury to start a lodge.”114 Roosevelt did not sour on Morgenthau, but it is likely Roosevelt later cooled on Coolidge. In September 1940, when Roosevelt was running for his third term, Coolidge testified before the Senate Judiciary Committee, criticizing the accumulation of executive power in one man for so long and urging adoption of a Constitutional amendment that would limit presidents to one six- year term.115 Coolidge was a conservative to the end. References and Sources Cited Board of Governors of the Federal Reserve System. “Memorandum re Matter of Issuing Plates by the Bureau of Printing and Engraving to National Banks Availing Themselves of the Circulation Privilege.” Memorandum re burden on Bureau of Engraving and Printing of individual national bank plates and discussion of uniform national bank notes. Mimeograph Letters and Statements of the Board, December 8, 1917, No. X-560, Volume 6, page 3041. https://fraser.stlouisfed.org Board of Governors of the Federal Reserve System. Fifteenth and Twenty-Second Annual Reports of the Board of Governors of the Federal Reserve System 1928 and 1935. Washington, DC: Government Printing Office 1928 & 1935. https://fraser.stlouisfed.org Board of Governors of the Federal Reserve System. Minutes of the Board of Governors, 1934 and 1935. Federal Reserve Board, Washington, D.C. https://fraser.stlouisfed.org Broughton, William S., Commissioner of the Public Debt, to Alvin B. Hall, Director, Bureau of Engraving and Printing, April 28, 1931. Memorandum on improving national bank notes. Records of the Bureau of the Public Debt, Series K Currency, Record Group (RG) 53. U.S. National Archives, College Park, MD. Broughton, William S. Commissioner of the Public Debt, to Daniel W. Bell, Assistant to the Secretary, July 18, 1939. “Statement concerning the circulation privilege of United States bonds, to which is appended a short account concerning the retirement of the national bank circulation.” Records of the Bureau of the Public Debt, Series K Currency, RG 53, U.S National Archives, College Park, MD. Broughton, William S, Commissioner of the Public Debt, to T.J. Coolidge III, Undersecretary of the Treasury, October 22, 1935. Memorandum indicating all national bank circulation accounts had been closed with the exception of the Lincoln National Bank, Newark, New Jersey. Records of the Bureau of the Public Debt, Series K Currency, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement National Bank Notes, Nov. 16, 1928-” U.S. National Archives, College Park, MD. Broughton, William S, Commissioner of the Public Debt, to T.J. Coolidge III, Undersecretary of the Treasury, May 11, 1935. Memorandum indicating Federal Reserve banks had sufficient supplies of U.S. notes and Federal Reserve notes on hand as national bank notes were withdrawn from circulation. Records of the Bureau SPMC.org * Paper Money * May/June 2023 * Whole No. 345 189 of the Public Debt, Series K Currency, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement National Bank Notes, Nov. 16, 1928-” U.S. National Archives, College Park, MD. Broughton, William S., Commissioner of the Public Debt, to James H. Moyle, Assistant to the Secretary, U.S. Treasury, December 18, 1938. Memorandum on background history of national bank note retirement efforts. Records of the Bureau of the Public Debt, Series K Currency, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement National Bank Notes, Nov. 16, 1928-” U.S. National Archives, College Park, MD. Cantor, Jeffery A., and Donald R. Stabile. A History of the Bureau of the Public Debt 1940-1990, with historical highlights from 1789-1939. Danbury, CT: CH Associates 1990. Committee on the History of the Federal Reserve System, American Currency and Banking History – “Currency Problems: National Bank Notes.” File of various news articles on retirement of national bank notes 1915-1935. Entry 176, Box 10, Folder 4, Item 4. https://fraser.stlouisfed.org Committee on the History of the Federal Reserve System. “Interview with Professor Jacob Viner, Professor of Economics at Princeton University.” Entry 167, Box 2, Folder 2, Item 21, March 17, 1954. Congressional Record, Senate, 72nd Congress, First Session, p. 15005. Washington, D.C. July 11, 1932. Congressional Record, Senate, 74th Congress, First Session, pp. 5624-5625. Washington, D.C. April 15, 1935. Coolidge III, T. J., Undersecretary of the Treasury, to Marriner S. Eccles, Federal Reserve Board, July 30, 1935. Memoranda transmitting final instructions regarding national bank notes and coordination with the U.S. Treasurer and the Comptroller of the Currency. Records of the Federal Reserve System, Board of Governors, Central Subject File 1913-1954. RG 82/450/64/35/6 Box 2600 file 605 National Bank Notes Currency 1921-1928. U.S. National Archives, College Park, MD. Coolidge III, T. J., Undersecretary of the Treasury, to Governors of the Federal Reserve Banks, May 17, 1935 and July 24, 1935. Memoranda discussing final sorting and redemption procedures for national bank notes. Records of the Bureau of the Public Debt, Series K Currency, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement, National Bank Notes Nov. 16, 1928-” U.S. National Archives, College Park, MD. Coolidge III, T. J., Undersecretary of the Treasury, to Henry Morgenthau Jr., Secretary of Treasury, December 24, 1934. “Currency” memorandum proposing elimination of national bank notes. Records of the Bureau of the Public Debt, Series K Currency, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement, National Bank Notes Nov. 16, 1928-” U.S. National Archives, College Park, MD. Coolidge III, T. J., Undersecretary of the Treasury, to Henry Morgenthau, Jr., Secretary of the Treasury, February 8, 1935. “March Financing” Memorandum on timing of bond refunding plans and call of the circulation bonds. Records of the Bureau of the Public Debt, Series K Currency, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement National Bank Notes, Nov. 16, 1928-” U.S. National Archives, College Park, MD. Dana, William Buck, editor. Financial Chronicle. March 16, 1935; January 18, 1936. New York. Eddy, Walter, Secretary, Federal Reserve Board, to Federal Reserve Board members, December 1 and December 5, 1924. Memoranda to the Board summarizing Board motion regarding national currency retirement. Records of the Federal Reserve System, Board of Governors, Central Subject File 1913-1954. RG 82/450/64/35/6 Box 2600 file 605 National Bank Notes Currency 1921-1928. U.S. National Archives, College Park, MD. Federal Reserve Board. “Federal Reserve History.” 2022 https://www.federalreservehistory.org Federal Reserve Board. Federal Reserve Bulletin. Washington: December 1924. Federal Reserve Board. Federal Reserve Bulletin. Washington: July 1935. Freidman, (no first name given), staff attorney, Office of the General Counsel, Treasury Department, to Bernard Bernstein, Assistant General Counsel, December 28, 1937. Legal memorandum regarding failure of a national bank to surrender its circulation bonds. Records of the Bureau of the Public Debt, Entry UD-UP, Loans, RG 53/450/82/05/05 Box 1 Panama Canal file (unnumbered). U.S. National Archives, College Park, MD. Forer, J., Treasury staff attorney, to Mr. Fuller (no first name given), Treasury attorney, November 2, 1937. Internal deliberative memorandum regarding whether the 2 percent Panama Canal bonds were properly called. Records of the Bureau of the Public Debt, Entry UD-UP, Loans, RG 53/450/82/05/05 Box 1 Panama Canal file (unnumbered). U.S. National Archives, College Park, MD. Goldenweiser, Emanuel, Director, Division of Research and Statistics, Federal Reserve Board, to Roy A. Young, Chairman, Federal Reserve Board, December 20, 1928. Memorandum “Effect on gold reserves of retirement of national bank notes.” Federal Reserve Board document X-6208, Volume 29, pp. 403-41. https://fraser.stlouisfed.org Hamlin, Charles Sumner. Diaries of Charles S. Hamlin. Index-Digest Volumes 25 & 26. Part of Charles S. Hamlin Papers, Library of Congress, Manuscript Division, Washington, D.C: accessed 2022, via https://fraser.stlouisfed.org Herbstman (Joe I.) Memorial Collection of American Finance. https://www.theherbstmancollection.com Huntoon, Peter W., and Andrew Shiva. Encyclopedia of U.S. National Bank Notes, SPMC.org 2022. Levy, Herbert L. Henry Morgenthau Jr., The Remarkable Life of FDR’s Secretary of the Treasury. New York, NY: Skyhorse Publishing, 2010. Library of Congress, Prints and Photographs Division. Source photographs: Figure 1, Henry Morgenthau Jr., Library of Congress Control Number (LCN) 2016875184; Figure 10, Andrew Mellon, LCN 2016885715; Figure 12, Ogden Mills, LCN 2016861236; Figure 15, Henry Morgenthau Jr. radio address, LCN 2016883173; Figure 18, Charles Sumner Hamlin, LCN 206864808. McClung, Lee. Annual Report of the Secretary of the Treasury on the State of the Finances for the Fiscal Year ended June 30, 1911. U.S. Government Printing Office, Washington, D.C., 1911. Mellon, Andrew W. Annual Report of the Secretary of the Treasury on the State of the Finances for the Fiscal Year ended June 30, 1924; 1928; 1929. U.S. Government Printing Office, Washington, D.C., 1924, 1928, 1929. Mellon, Andrew W., to George F. McLean (R-CT), Chairman, Committee on Banking and Currency, U.S. Senate, September 30, 1921. Memorandum providing views on S. 1833, a bill proposing uniform national currency. Records of the Federal Reserve System, Board of Governors, Central Subject File 1913-1954. RG 82/450/64/35/6 Box 2600 file 605 National Bank Notes Currency 1921-1928. U.S. National Archives, College Park, MD. Mellon, Andrew W., to Nicholas Longworth (R-OH), Speaker, House of Representatives, and Charles Curtis, (R-KS), President of the Senate, January 21, 1929. Letter indicating postponement of national bank note retirement. Records of the Bureau of the Public Debt, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement, National Bank Notes Nov. 16, 1928-” U.S. National Archives, College Park, MD. Meltzer, Allan H. A History of the Federal Reserve, Vol. I, 1913-1951, Chicago: University of Chicago Press, 2003. Mills, Ogden L., Undersecretary of the Treasury, to Andrew W. Mellon, Secretary of the Treasury, January 17, 1929. Memorandum re: delaying retirement of national bank notes. Bureau of the Public Debt, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement, National Bank Notes Nov. 16, 1928-” U.S. National Archives, College Park, MD. Morgenthau, Henry Jr. Annual Report of the Secretary of the Treasury on the State of the Finances for the Fiscal Years ending June 30, 1934-37. U.S. Government Printing Office, Washington, D.C., 1934-37. New World Encyclopedia. 2022. https://www.newworldencyclopedia.org New York Times. “Consols Called for Redemption.” New York: New York Times, March 12, 1935. New York Times. “End of Bank Notes Meets No Dissent.” New York: New York Times, March 17, 1935. O’Connor, J. F. T., Comptroller of the Currency, to Edward C. Stokes, President, The First-Mechanics National Bank, Trenton, N.J, March 18, 1935. Response to concerns over circulation privilege bond call. Records of the Bureau of the Public Debt, Series K Currency, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement National Bank Notes, Nov. 16, 1928-” U.S. National Archives, College Park, MD. Oliphant, Herman, Treasury Department General Counsel, to T. J. Coolidge III, Undersecretary of the Treasury, January 4, 1935. Memorandum re: sharing Coolidge bond call memo with Jacob Viner. Records of the Bureau of the Public Debt, Series K Currency, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement National Bank Notes, Nov. 16, 1928-” U.S. National Archives, College Park, MD. Piser, L. M., Federal Reserve board, to Mr. Thomas (no first name given), Federal Reserve board, June 21, 1935. Memorandum “Retirement of national bank notes,” advising on U.S. Treasurer’s procedures for paying banks for redeemed circulation bonds. Records of the Federal Reserve System, Board of Governors, Central Subject File 1913-1954. RG 82/450/64/35/6 Box 2600 file 605 National Bank Notes Currency 1921-1928. U.S. National Archives, College Park, MD. Richardson Gary, Alejandro Komai, and Michael Gou. “Essay: Banking Act of 1935.” Federal Reserve Board, Federal Reserve History, 2022 https://www.federalreservehistory.org SPMC.org * Paper Money * May/June 2023 * Whole No. 345 190 Richardson Gary, Alejandro Komai, and Michael Gou. “Essay: Gold Reserve Act of 1934.” Federal Reserve Board, Federal Reserve History, 2022 https://www.federalreservehistory.org Stokes, Edward C., President, The First-Mechanics National Bank, Trenton, N.J., to J. F. T. O’Connor, Comptroller of the Currency, March 12, 1935. Letter expressing disappointment with withdrawal of circulation privilege bonds, Records of the Bureau of the Public Debt, Series K Currency, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement National Bank Notes, Nov. 16, 1928-” U.S. National Archives, College Park, MD. Time Magazine. New York: Time Inc., May 7, 1934 and July 25, 1943. U.S. Department of the Treasury. History. https://home.treasury.gov/about/history U.S. Department of the Treasury. “Press Releases.” Vols. 14A Jan. 1, 1934 – December 31, 1934; Vol. 14 December 29, 1934 – May 20, 1935; and Vol. 16, October 9, 1935 – March 9, 1936. https://fraser.stlouisfed.org U.S. Department of the Treasury, Official Record, Records Administration Division, Office of Administrative Services. Personnel file, T.J. Coolidge. RG 56, Records of the Department of the Treasury, Office of the Secretary. U.S. National Archives, College Park, MD. U.S. Senate, Committee on Finance, hearing transcript, “To Amend the Second Liberty Bond Act.” Hearing before the Committee on Finance, U.S. Senate, 74th Congress, 1st Session, re H.R. 4304, An Act to Amend the Second Liberty Bond Act, as amended, and for other purposes. January 29, 1935. https://www.finance.senate.gov/imo/media/doc/74Hrg2ndLiberty.pdf Viner, Jacob, Professor, University of Chicago, to Herman Oliphant, Treasury Department General Counsel, January 2, 1935. Letter re views on Coolidge bond call memo. Records of the Bureau of the Public Debt, Series K Currency, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement National Bank Notes, Nov. 16, 1928-” U.S. National Archives, College Park, MD. Wall Street Journal. “Treasury to Redeem Circulation Bonds.” New York: Wall Street Journal, January 25, 1927. Wikipedia.org. Various pages. 2022. https://en.wikipedia.org Williams, John Skelton, Comptroller of the Currency, to Assistant Secretary of the Treasury R. C. Leffingwell, June 26, 1920. Memorandum re redemption backlogs. Records of the Bureau of the Public Debt, Series K Currency, RG 53. U.S. National Archives, College Park, MD. Woods, Walter O., Treasury auditor, to Henry Herrick Bond, Assistant Secretary of the Treasury, September 28, 1928. Memorandum re discontinuing national bank notes. Records of the Bureau of the Public Debt, Series K Currency, RG 53. U.S. National Archives, College Park, MD. Woods, Walter O., Treasury auditor, to William S. Broughton, Commissioner of the Public Debt, April 3, 1928. Memorandum re national bank note redemption and printing national bank notes without bank names. Records of the Bureau of the Public Debt, Series K Currency, RG 53. National Archives, College Park, MD. Endnotes 1 https://home.treasury.gov/about/history/prior-secretaries/henry-morgenthau-jr-1934-1945 2 https://www.federalreservehistory.org/essays/gold-reserve-act 3 Public Law 73-87, 73rd Congress, H.R. 6976, January 30, 1934. 4 Gary Richardson, A. Komai, and M. Gou, Essay “Gold Reserve Act of 1934,” 2022 via https://www.federalreservehistory.org/essays/gold-reserve-act 5 T.J. Coolidge III, Undersecretary of the Treasury, memorandum to Treasury Secretary Henry Morgenthau titled “Currency,” December 24, 1934. Records of the Bureau of the Public Debt, RG 53, U.S National Archives, College Park, MD. 6 Levy, p. 246. 7 https://www.federalreservehistory.org/people/henry-morgenthau-jr 8 Meltzer, p. 415. 9 Ibid, p.459. 10 Levy, pp. 274-275. 11 Public Law 73-87, 73rd Congress, H.R. 6976, January 30, 1934. https://fraser.stlouisfed.org 12 Annual Report of the Secretary of the Treasury on the State of the Finances for the Fiscal Year Ending June 30, 1935, pp. 256-264. Hereafter, Treasury Department Annual Report. 13 Time Magazine, July 25, 1943, p. 19. 14 Levy, pp. 265-6. 15 Ibid, p. 266. 16 https://www.newworldencyclopedia.org/entry/Jacob_Viner 17 https://www.federalreservehistory.org/people/marriner-s-eccles 18 Committee on the History of the Federal Reserve System, Interview with Professor Jacob Viner, Professor of Economics at Princeton University, Entry 167, Box 2, Folder 2, Item 21, March 17, 1954. https://fraser.stlouisfed.org 19 https://en.wikipedia.org/wiki/Herman_Oliphant 20 Jeffery A. Cantor and Donald R. Stabile, A History of the Bureau of the Public Debt, January 1990, pp. 213-15. 21 Hamlin was the first Chair (called “Governor” at the time) of the Federal Reserve Board. He served in that role from August 10, 1914 to August 9, 1916, then remained on the board until February 3, 1936. He died in 1938. His extensive papers and diaries are held by the Library of Congress, Washington, D.C. Charles S. Hamlin papers via https://fraser.stlouisfed.org 22 Hamlin diaries, Index-Digest, Box 40, Vol. 26, January-October 1, 1935, various attributions throughout. 23 U.S. Treasury Department, Official Record, Records Administration Section, Office of Administrative Services. Personnel file T. J. Coolidge, Special Assistant to the Secretary. General Records of the Department of the Treasury, RG 56, U.S National Archives, College Park, MD. 24 Time Magazine, May 7, 1934. 25 Treasury Department Annual Report, June 30, 1934, p. XIII. 26 Time Magazine, May 7, 1934. 27 Ibid. 28 Massachusetts Historical Society, Frederick J. Bradlee, Third Series, Vol. 72 (October 1957-December 1960) pp.373-378, courtesy of JSTOR https://www.jstor.org/stable 25080531. 29 Time Magazine, May 7, 1934. 30 Ibid. 31 Hamlin Diaries, Index-Digest, Box 39, Vol. 25, May 1-December 31, 1934, attributed to Federal Reserve governor Eugene R. Black, entry of June 24, 1934, p. 7. https://fraser.stlouisfed.org 32 Hamlin Diaries, Index-Digest, Box 40, Vol. 26, January-October 1, 1935, attributed to Federal Reserve governor Marriner Eccles, May 1, 1935, p. 19. 33 Hamlin Diaries, Index-Digest, Box 39, Vol. 25, May 1-December 31, 1934, attributed to Senator Marcus A. Coolidge (D-MA) (no relation to T. J. Coolidge), entry of August 18, 1934, p. 45. 34 U.S. Treasury Department, Records Administration Section, Office of Administrative Services, personnel file T. J. Coolidge, Treasury Department Orders, Assignment of Bureaus and Offices. April 3, 1934. General Records of the Department of the Treasury, RG 56. U.S National Archives, College Park, MD. 35 For example, there is no mention of the coming Treasury call to redeem the circulation bonds in the Federal Reserve Board Meeting Minutes, Washington D.C., of March 4, 1935, despite attendance by Coolidge; also, the Index to Minutes of the Board of Governors of the Federal Reserve System, for 1935, Vol.22, is silent to the bond call. The 1934 Board minutes are similarly silent. https://fraser.stlouisfed.org 36 Treasury Department Annual Report, June 30, 1935, p. 14. 37 The term “circulation privilege” does not appear in the National Bank Act, and Treasury bonds did not stipulate on their face that they carried the circulation privilege. Rather, the National Bank Act stipulated that Treasury bonds carrying interest were eligible as security for circulating notes, and when Treasury announced such bond issues, the announcing Circular indicated that national banks could use the bonds as security for circulating notes. Later, out of concern that new bond SPMC.org * Paper Money * May/June 2023 * Whole No. 345 191 issues would be used to expand the perceived inflationary national currency, in 1911 Congress began to add statutory language in its authorizations of new bond issues that expressly forbid the bonds from being used to secure national currency, and the prohibition was stipulated on the face of those bonds. Only where bond authorizations were silent was the circulation privilege conferred on the bonds. From William S. Broughton, Commissioner of the Public Debt, memorandum to Daniel W. Bell, Assistant to the Secretary, July 18, 1939, “statement concerning the circulation privilege of United States bonds, to which is appended a short account concerning the retirement of the national bank circulation.” Records of the Bureau of the Public Debt, Series K Currency, RG 53, U.S National Archives, College Park, MD. 38 Ibid, pp. 2-6. 39 T.J. Coolidge III, Currency” Memorandum to Henry Morgenthau, December 24, 1934. 40Such articles included “Retirement of national bank circulation” (Bankers Magazine, 1915); “The retirement of national bank notes” (Journal of Political Economy, October 1925); “Will the national bank note go? (American Bankers Association Journal, July 1927). See Committee on the History of the Federal Reserve System, American Currency and Banking History - Currency Problems: National Bank Notes, Entry 176, Box 10, Folder 4, Item 4, by Committee on the History of the Federal Reserve System, 1956. File of various news articles on retirement of national bank notes 1915-1935. https://fraser.stlouisfed.org 41U.S. House of Representatives, 62nd Congress, 2nd Session, H.R. 26115, August 3, 1912. 42 Andrew W. Mellon, to George F. McLean (R-CT), Chairman, Committee on Banking and Currency, U.S. Senate, memorandum of September 30, 1921, providing views on S. 1833, a bill proposing uniform national currency. 43 Ibid. 44 Ibid. 45 Ibid. 46 William S. Broughton, Commissioner of the Public Debt, to James H. Moyle, Assistant to the Secretary, U.S. Treasury, memorandum dated December 18, 1938, providing background history of national bank note retirement efforts. 47 Federal Reserve Board, Washington, Federal Reserve Bulletin, December 1924, pp. 944-947. Also, Peter Huntoon and Lee Lofthus, “Loan of 1925,” in press. 48 Treasury Annual Report 1924, pp. 31-38. 49 Ibid, p. 33. 50 Ibid, p. 35. 51 Walter Eddy, Secretary, Federal Reserve Board, memoranda to the Board summarizing Board motion regarding national currency retirement, December 1, 1924, and December 5, 1924. 52 Freidman (no first name given), staff attorney, Office of the General Counsel, Treasury Department, to Bernard Bernstein, Assistant General Counsel, deliberative legal memorandum regarding failure of a national bank to surrender its circulation bonds and background on Secretary’s authority to call the circulation bonds,, December 28, 1937. Records of the Bureau of the Public Debt, Entry UD-UP, Loans, RG 53/450/82/05/05 Box 1 Panama Canal file (unnumbered). U.S. National Archives, College Park, MD. 53 Treasury Department Annual report 1928, p. 57. 54 Goldenweiser, Emanuel, Director of research and statistics, Federal Reserve Board, memorandum “Effect on gold reserves of retirement of national bank notes,” to Roy A. Young, Chairman, December 20, 1928. Federal Reserve Board document X-6208, Volume 29, pp. 403-410. https://fraser.stlouisfed.org 55 Wikipedia, https://en.wikipedia.org/wiki/Emanuel_Goldenweiser 56 Goldenweiser to Young, December 20, 1928. 57 Ibid. 58 Board of Governors of the Federal Reserve System, Meeting Minutes December 28, 1928, p. 5, Volume 15, Part 2. 59 Ogden L. Mills, Undersecretary of the Treasury, to Secretary of the Treasury Andrew W. Mellon, January 17, 1929, memorandum on delaying elimination of national bank notes. Bureau of the Public Debt, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement, National Bank Notes Nov. 16, 1928-” U.S National Archives, College Park, MD. 60 Ibid. 61 Ibid. 62 Ibid. 63 Treasury Annual Report, 1929, p. 324, Exhibit 28, “Small-size currency.” 64 Ibid. 65 Herman Oliphant, Treasury Department General Counsel, to T. J. Coolidge III, Undersecretary of the Treasury, January 4, 1935, re sharing Coolidge bond call memo with Jacob Viner. Records of the Bureau of the Public Debt, Series K Currency, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement National Bank Notes, Nov. 16, 1928-” U.S. National Archives, College Park, MD. 66 Jacob Viner, professor, University of Chicago, letter to Herman Oliphant, Treasury General Counsel, January 2, 1935, re views on Coolidge bond call memo. Records of the Bureau of the Public Debt, Series K Currency, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement National Bank Notes, Nov. 16, 1928- ” U.S. National Archives, College Park, MD. 67 Ibid. 68 Oliphant to Coolidge, January 4, 1935. 69 Coolidge to Morgenthau, February 8, 1935, memorandum “March Financing.” Records of the Bureau of the Public Debt, Series K Currency, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement National Bank Notes, Nov. 16, 1928-” U.S. National Archives, College Park, MD. 70 Coolidge to Broughton, undated annotated routing slip transmitting February 8, 1935 memorandum “March Financing.” Records of the Bureau of the Public Debt, Series K Currency, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement National Bank Notes, Nov. 16, 1928-” U.S. National Archives, College Park, MD. 71 Coolidge to Morgenthau, February 8, 1935, Broughton annotation. 72 Mellon letter to the Speaker of the House of Representatives, January 1929. 73 Friedman to Bernstein, December 28, 1937. 74 J. Forer, Treasury staff attorney, to Mr. Fuller (no first name given), Treasury attorney, internal deliberative memorandum regarding whether the 2 percent Panama Canal bonds were properly called, November 2, 1937. 75 Senate Committee on Finance, hearing transcript, Committee on Finance, U.S. Senate, 74th Congress, 1st Session, re H.R. 4304, An Act to Amend the Second Liberty Bond Act, as amended, and for other purposes. January 29, 1935, pp. 3-7. 76 Treasury Annual Report, 1935, p. 18. 77 Senate hearing transcript, January 29, 1935, p. 6. 78 Ibid, p. 10. 79 Coolidge to Morgenthau, February 8, 1935, memorandum “March Financing.” 80 Press Releases, Treasury Department, Vol. 14, Press Release on call for redemption of the 2 Percent Consols and Panama Canal Bonds, No. 4-47, March 9, 1935. 81 Peter Huntoon and Andrew Shiva, Encyclopedia of U.S. National Bank Notes (2022), Chapter G1, p. 14, June 4, 2022. 82 Press Releases, Treasury Department, Vol. 14, No. 4-47, March 9, 1935. 83 New York Times, “Morgenthau’s Radio Talk on Liberty Bond Call,” April 15, 1935. 84 Ibid. 85 Committee on the History of the Federal Reserve System, American Currency and Banking History - Currency Problems: National Bank Notes, Entry 176, Box 10, Folder 4, Item 4 by Committee on the History of the Federal Reserve System (U.S.), 1956. File of various news articles on retirement of national bank notes 1915- 1935, citing the United States Banker, January 1929, page 3. https://fraser.stlouisfed.org 86 Edward C. Stokes, President, The First-Mechanics National Bank, Trenton, N.J., to J. F. T. O’Connor, Comptroller of the Currency, letter expressing disappointment in withdrawal of circulation privilege bonds, March 12, 1935. Records of the Bureau of the Public Debt, Series K Currency, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement National Bank Notes, Nov. 16, 1928-” U.S. National Archives, College Park, MD. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 192 87 O’Connor response to Stokes, March 18, 1935. Records of the Bureau of the Public Debt, Series K Currency, RG 53/450/54/01/07 Box 15, Subject File “Currency – Retirement National Bank Notes, Nov. 16, 1928-” U.S. National Archives, College Park, MD. 88 New York Times, “Consols Called for Redemption,” March 12, 1935. 89 Ibid. 90 Ibid. 91 Financial Chronicle, March 16, 1935, page 1706. 92 New York Times, “End of Bank Notes Meets No Dissent,” March 17, 1935. 93 Ibid. 94 Ibid. 95 Federal Reserve Board, Washington, Federal Reserve Bulletin, July 1935, “Retirement of national-bank notes,” pp., 415-6. 96 Ibid. 97 Ibid. 98 Based on author’s sampled review of Bureau of Public Debt files “Protests,” and “Redemption in Gold (Protests),” Records of the Bureau of the Public Debt, Entry UD, Series B-BG, 2% Consols of 1930 and Panama Canal Loans etc.,” RG 53/450/82/05/05 Box 2 file “Protests” 380.1. U.S. National Archives, College Park, MD. 99 Broughton to Coolidge, October 22, 1935. 100 Comptroller of the Currency, National Currency and Bond Ledgers for Charter 12570, Lincoln National Bank, Newark, New Jersey. RG 101/550/901/B19/4 Box 15. U.S. National Archives, College Park, MD. 101 Coolidge to Federal Reserve Bank governors, May 17, 1935. 102 Ibid. 103 Broughton to Coolidge, May 11, 1935. 104 Coolidge to Federal Reserve Bank governors, July 24, 1935. 105 Treasury Annual Report, 1936, p. 46. 106 Coolidge to Federal Reserve Bank governors, July 24, 1935. 107 Coolidge to Marriner Eccles, July 30, 1935. 108 L. M. Piser, Federal Reserve Board, to Mr. Thomas (no first name given), June 21, 1935. Memorandum “Retirement of national bank notes,” advising on U.S. Treasurer’s procedures for paying banks for the redeemed bonds. 109 Treasury Annual Report, 1940, p. 809. 110 Press Releases, Treasury Department, Treasury, Vol. 16, letter from Morgenthau Jr. to Coolidge, Release No. 6-72, January 17, 1936. 111 Financial Chronicle, January 18, 1936, pp. 401-2 112 Treasury Department Annual Report, 1937, p. xv. 113 Meltzer, p. 531; and Levy, pp. 309-11. 114 Time Magazine, January 25, 1943, p. 19. 115 International News Organization, Washington D.C., photo with caption, September 5, 1940. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 193 Digital Archive of the Walton Collection of Nebraska National Bank Notes The greatest threat to recording every note in a great collection or great hoard is that as soon as it leaves its owner’s safe deposit box or its site of discovery, the notes simply start to leak away. It is truly rare for a complete inventory to have been made and virtually unheard of if photos or digital scans were secured of every piece. This is the story of an exception to this reality. The purpose of this article is to document how the entire Walton Collection of Nebraska national bank notes was scanned and is now available for viewing on the Society of Paper Money Collectors website. Gerome Walton Gerome Walton was born in Geneva, Nebraska, on June 26, 1934. He purchased his first Nebraska national bank note in September 1965. Nebraska had 349 issuing banks of which 59 currently are unreported, leaving 290 that are collectable. Walton actively accumulated notes from 269 of the collectable banks right up until his death on August 7, 2021. During his 56-year collecting spree, his collection of Nebraska notes dwarfed the competition. Walton was a true son of Nebraska, a fact that he wore on his shirt sleeve his entire life despite having a career path that took him around the country with his last stop being Colorado Springs where he lived continuously from 1972 forward. by Matt Hansen Robert Kelley ANA photo SPMC.org * Paper Money * May/June 2023 * Whole No. 345 194 The following is from Gerome’s obituary by Peter Huntoon on pages 108 and 109 in the Heritage October 5-7, 2022, Long Beach U.S. Currency Auction catalog. “Gerome was born into a modest home in Geneva, Nebraska, a small rural town in southeastern Nebraska some 60 miles west-southwest of the capital Lincoln. His father was a barber and mother worked at a diner there. He had two brothers. He graduated from Geneva High School in 1952. Although he had to leave to find opportunity, he had deep roots in Geneva and a fierce loyalty to Nebraska that lasted his lifetime. “Gerome was a big fellow, about 6’ 3” with a sharp technical mind. He joined the Air Force in August 1953 and served a four-year stint. Upon his discharge, he earned an associate’s degree in electronics from Central Tech Institute in Kansas City in 1959. “By 1961 he was working as an electronics technician for Philco, a firm that pioneered in radios, household appliances, early computers, TV, etc. In short order after he arrived, Philco was purchased by Ford Motor Company and became the Philco-Ford division. Gerome’s job required frequent moves but his attachment to Nebraska never wavered. “He married Ruth McConnell in 1960 and they parented three children, Valerie (1961), Vincent (1963) and Vicky (1970). Ruth was very supportive of Gerome’s numismatic pursuits. She died in January 2011. “In 1962, the Philco 2000 Model 212 computer was selected for use in the North American Aerospace Defense Command's (NORAD) famous Cheyenne Mountain Complex. NORAD is a joint U. S.-Canadian defense organization charged primarily with providing aerospace warnings of threats such as the launch of nuclear missiles by enemies. It operates satellites, ground-based radar, airborne radar and fighters to detect, intercept and, if necessary, engage any threats to Canada and the United States. “NORAD operates a nerve center from a tunnel complex in Cheyenne Mountain, a facility designed to withstand nuclear detonations. “Gerome was transferred to Cheyenne Mountain by Philco-Ford in 1972 to maintain vital electronic equipment there under a civilian contract. Philco-Ford became Ford Aerospace Communications, which eventually was assimilated into defense contractor Lockheed Martin. He retired after spending 32 years as he said “going up to the mountain and having the mountain swallow him up.” He held top-secret clearance and didn’t divulge anything of his work to anyone.” Pivotal Opportunities In 1973, Gerome purchased the 276-note collection of Fullerton, Nebraska, resident Dale Milby. The following year, on March 23, 1974, he added the 192-note collection of Oswin Keifer, Sr. of Bostwick, Nebraska. These collections propelled his holdings to the stratosphere. The disciplined engineer in him manifested itself in setting out to accumulate and organize data on every issuing bank in the state, and assemble this into what would become the first book dedicated to the currency issues from a sizable state. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 195 A primary goal of Walton’s was to illustrate at least one note from each issuing bank. Of course, this was impossible because no notes were reported from many Nebraska banks. However, about the time he began this project, rumors were leaking out that the Bureau of Engraving and Printing was in the processes of transferring its entire inventory of proof sheets lifted from intaglio printing plates that it had produced to the National Numismatic Collection housed in the Smithsonian Institution. This, of course, included national bank note proofs. Bank note companies held the contracts for the Original Series, but the BEP had made all the plates for the Series of 1875, 1882 and 1902. Walton quickly determined that between his collection and the photos that he could obtain from cooperating collectors, it was theoretically possible that the BEP proofs could give him coverage for all the unreported banks except one Original Series-only issuer in Nebraska! He vectored in on this opportunity, becoming the first numismatist to attempt to mine anything from the Smithsonian proof holdings. He immediately wrote to curator Vladimir Clain-Stefanelli requesting information on availability. Little did Walton know that those holdings were in a state of chaos. Much of the material had barely been unpackaged and shelved, let alone even roughly sorted. In fact, the last of the material wouldn’t be delivered until 1980. The last thing Clain-Stefanelli wanted to deal with was such a request. Walton received no response, but fortunately the proofs of the nationals had arrived and importantly collection manager Butch Vosloh knew about where they were stored in the vault. Walton persisted for at least a year finally sending an outline of his book, a list of the banks he desired, and a plea stating that the photos of the proofs were the last thing needed before his book went to press. Clain-Stefanelli realized he had tied into a serious researcher, graciously replied and assigned Vosloh to locate what Walton needed. At the time, the proofs for the entire country were arranged by series/charter number/certification date so Vosloh had a large and tedious task on his hands. Once found, arrangements had to be made to photograph the proof sheets containing the subjects that Gerome desired. It is certain that the work involved substantially delayed the publication of Walton treatise, pushing it out to 1978, but Gerome had a photo of at least one note or proof for all of his 349 banks with the exception of one Original Series-only issuer, which was The First National Bank of Ashland, charter 2121. He never was charged for the photos provided by the Smithsonian. Incidentally, an Original Series ace ultimately was discovered from The First National Bank of Ashland and consigned to a Spink America sale in 1995. Of course, Gerome acquired it with great satisfaction. It still holds the status as the only survivor from the bank’s brief issuance. Walton’s Foremost Contributions to National Bank Note Research Walton unlocked the door on our understanding of the significance of the plate dates written in script adjacent to the title blocks on large-size notes. The meaning of those dates remained a numismatic mystery until he came along. As he tabulated the data on the founding of the Nebraska banks and tracked their periodic extensions of corporate life, he learned the technical distinctions between dates of organization, charter, and extension. It didn’t take long before he realized these three dates comprised the SPMC.org * Paper Money * May/June 2023 * Whole No. 345 196 majority of the plate dates found on national bank note face plates made from 1882 forward. Thus, his 1977 article published in The Numismatist served as the opening salvo in our unraveling the significance of the all the plate dates on our notes. As Gerome was working with plate dates, he discovered two Nebraska banks; specifically, Omaha (2665) and York (2383) had corporate lives that were extended in 1902 and skipped directly from issuing the Series of 1875 to Series of 1902 red seals. He also found that these same two banks plus Lyons (6221) and Scottsbluff (6240) issued what national bank note collectors were errantly calling “4th charter” notes. These were banks that had been issuing Series of 1902 since 1902, and in 1922 received redesigned 1902 notes that carried 1922 plate dates. He deduced correctly that both the 1875/1902 skips and the so-called 4th charter instances were, in fact, peculiarities associated with the interplay between the laws governing the periodic extensions of corporate lives and the way the Comptroller of the Currency’s office arbitrarily assigned series to the specific banks. The so-called 4th charter situations represented the 2nd 20-year extensions for the 2000 charter numbered banks and 1st 20-year extensions for the 6000 charter numbered banks. He was entirely correct, and he had deduced all of this from the plate dates. He also was a pioneer in researching bank deposit guaranty legislation that won passage in several mid-continent states, including of course, Nebraska. These laws, an outgrowth of the populist political movement of the late 19th century, set up state deposit issuance programs that protected depositors against loss when their state-chartered banks failed. Many national bankers quickly abandoned their national charters in favor of state charters to get in on this opportunity. As those programs went bankrupt, the bankers in the surviving state banks rejoined the national system, often using their former titles. Gerome chronicled the impact of these conversions on banking throughout the region. Building a Monument Walton died August 7, 2021, from complications of a heart-attack that he suffered on July 22nd. His collection was inherited by his three children: Vincent Walton, Valerie Williams and Vicky Garner. In due course, they turned to Gerome’s longtime friend Peter Huntoon who had known Gerome since the late 1960s. They had collaborated in teaching “U.S. National Bank Notes” at the ANA Summer Seminars since 2008, where Gerome’s notes, and particularly his uncut sheets, were the centerpieces for all discussions. Huntoon recommended the services of nationally recognized upper midwest dealer Glen Jorde of Devils Lake, North Dakota, as the ideal person to market the collection. At the time, the collection was housed in Nelson, Nebraska, in convenient proximity to a closed motel owned by Vince Walton. Jorde, Huntoon, and Valerie Walton converged there for a three-day marathon to appraise and catalog the collection, with Valerie at the computer. At the outset, Jorde realized that high-resolution images had to be made of all the notes to properly market them, a decision that was made before a single note had left the holding. In the meantime, Matt Hansen, who maintains the Nebraska national bank note census, had been in contact with the Waltons and had raised the issue that making the collection available in the form of digital images would both nicely honor the significance of their father’s collection as well as provide numismatics with a terrific research tool. All interests agreed. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 197 Scanning the collection was no small task. There were more than 1,000 notes to scanned at 600 dpi color to capture everything in crisp detail. Jorde’s assistant Susan Martin tackled the grueling job, a task so time-consuming that they had to temporarily suspend Jorde’s on-line auction submissions until the weeks of scanning could be completed. At this point, Jorde had the images he needed for his marketing purposes so the process had not been carried out at a sacrifice to his operation. It just became a necessary priority that nudged other work aside. Hansen, located in Lincoln, Nebraska, used Gerome’s purchase ledger, which included not only the notes in his collection, but the notes that he had traded away, to flesh out the overall collection inventory spreadsheet. Jorde transferred the completed raw digital scans to Hansen for editing into presentation form and formal labeling, a task that took a few months of evenings and weekends to accomplish. At Huntoon’s suggestion, Hansen contacted Mark Drengson about the possibility of featuring the collection on the Society of Paper Money Collectors website. Mark maintains SPMC’s U.S. Bank Note History Project. He had been seriously contemplating just such presentations of landmark collections and jumped at the opportunity. Bringing the project to fruition required that Hansen tweak the collection spreadsheet into a form Drengson could use to create hot links to the image files on an appropriate server. Hansen got the onerous job of testing each of what turned out to be 1,970 links to the note images. The amazing fact is that not one national had wandered from Gerome’s collection before being recorded and scanned. The job is a complete monument to Gerome. Getting the job done took a desire to do so by everyone involved, a bit of coordination, and a lot of tedious work on the part of Jorde, his assistant Susan Martin, Hansen, and Drengson. Most of the work had to be carried out anyway to market the collection. View or download the Walton Collection at: https://content.spmc.org/wiki/The_Walton_Collection_of_Nebraska_National_Bank_Notes Sources Cited Walton, Gerome. Oct 1977. “Dates on Nebraska National Currency.” The Numismatist, v. 90, p. 2005- 2030. Walton, Gerome. 1978. “A History of Nebraska Banking and Paper Money.” Lincoln, NE, The Centennial, 674 p. Walton, Gerome. Mar-Apr 2002. “Impact of Nebraska’s bank deposit guaranty law of 1909-30.” Paper Money, v. 41, p. 75-92. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 198 Lyn Knight Currency Auct ions If you are buying notes... You’ll find a spectacular selection of rare and unusual currency offered for sale in each and every auction presented by Lyn Knight Currency Auctions. Our auctions are conducted throughout the year on a quarterly basis and each auction is supported by a beautiful “grand format” catalog, featuring lavish descriptions and high quality photography of the lots. Annual Catalog Subscription (4 catalogs) $50 Call today to order your subscription! 800-243-5211 If you are selling notes... Lyn Knight Currency Auctions has handled virtually every great United States currency rarity. We can sell all of your notes! Colonial Currency... Obsolete Currency... Fractional Currency... Encased Postage... Confederate Currency... United States Large and Small Size Currency... National Bank Notes... Error Notes... Military Payment Certificates (MPC)... as well as Canadian Bank Notes and scarce Foreign Bank Notes. We offer: Great Commission Rates Cash Advances Expert Cataloging Beautiful Catalogs Call or send your notes today! If your collection warrants, we will be happy to travel to your location and review your notes. 800-243-5211 Mail notes to: Lyn Knight Currency Auctions P.O. Box 7364, Overland Park, KS 66207-0364 We strongly recommend that you send your material via USPS Registered Mail insured for its full value. Prior to mailing material, please make a complete listing, including photocopies of the note(s), for your records. We will acknowledge receipt of your material upon its arrival. If you have a question about currency, call Lyn Knight. He looks forward to assisting you. 800-243-5211 - 913-338-3779 - Fax 913-338-4754 Email: lyn@lynknight.com - support@lynknight.c om Whether you’re buying or selling, visit our website: www.lynknight.com Fr. 379a $1,000 1890 T.N. Grand Watermelon Sold for $1,092,500 Fr. 183c $500 1863 L.T. Sold for $621,000 Fr. 328 $50 1880 S.C. Sold for $287,500 Lyn Knight Currency Auctions Deal with the Leading Auction Company in United States Currency $1 Late-Finished SC Series of 1935A Back Plate 470 Discovery Derek Higgins made what ranks as the U.S. small-size variety discovery of 2022. He found the first reported $1 Series of 1935A late-finished back plate 470 from the JC serial number block on eBay; namely, J97077064C-J4115/470. Previously, the ultra-rare 470 variety was known only from the KC block. Late-finished 470 $1s rank as the rarest of the late-finished small size varieties with only a handful reported. Notes bearing back plate serial number 470 were first recognized as odd by Leon Goodman who owned Elgee Coins in New York City and was the Goodman of the Goodman-Schwartz-O’Donnell Standard Handbook of Modern U.S. Paper Money published in 1968. What stood out to Goodman was the peculiar intermediate size of the 470s on the notes, being a bit larger than the micro numbers used on plates of that era. See Figure 2. This coupled with the fact that notes printed at the same time bore back plate serial numbers in the 2850 to 3300 range revealed that there was something special about this plate. Decades later, Jamie Yakes and I discovered that the plate shared the same origin story as now famous $5 micro back 637, which is the most avidly sought of small note varieties. A big difference is that the 470 back $1s are far rarer! Back plate 470 was begun on September 1, 1936 as a 12-subject iron electrolytic master plate. It was created through the deposition of iron ions onto an alto—a mold made from an earlier master—that Figure 1. Derek Higgins unearthed this first example of a $1 Series of 1935A late-finished back plate 470 note from the JC serial number block on eBay. The Paper Column Peter Huntoon SPMC.org * Paper Money * May/June 2023 * Whole No. 345 200 was submerged in an electrolytic bath. The process is similar to that used to chrome plate a car bumper, except in the case of a bumper the ions are chrome and only a thin buildup is applied. During its life as a master, plate 470 was used to produce altos that in turn were used to make numerous iron electrolytic production plates. No plate serial numbers were etched onto its subjects during this phase of its life. In due course, it ceased to be used as a master so it was placed in storage in the plate vault at the Bureau of Engraving and Printing. During World War II, the BEP actively participated in the nationwide metal conservation and recovery effort to extend metal supplies needed for critical war production. As part of this effort, Bureau personnel went through their plate inventory looking for out-of-service master plates that could be salvaged and fashioned into production plates. Master back 470 was found and resurrected for such use in 1943. At this juncture, an engraver etched plate serial number 470 into its 12 subjects using the number assigned to the plate back in 1936. The BEP had adopted macro plate serial numbers in 1939, but macro numbers were not used on the plate. Oddly, as with $5 back 637, the engraver attempted to mimic the old micro size numbers. The result was the intermediate size number illustrated on Figure 2. The completion of the plate as a printing plate in 1943 classified it as a late-finished plate. The obvious out-of-character intermediate size plate serial numbers made notes printed from it distinctive, thus creating an unusual highly collectable variety. A plate history ledger revealed that the plate was assigned to a production press between May 15 and June 18, 1943. It was canceled June 26, 1943. The earliest that those backs could have been fed to the face presses would have been a week or two later owing to normal ink curing and drying time. Another similar interval was required for the face inks to cure and dry. The sheets most likely began to arrive in the numbering division during mid to late June. The serial numbering blocks in production during the period were these. IC April 24-May 27, 1943 JC May 27-June 24, 1943 KC June 24-September 18, 1943 *A possible as well. It is unlikely that the first of the 470s could have been numbered in the IC block. However, they certainly arrived for the JC and KC blocks. The serial on Derek’s note was numbered during the fourth week of June 1943. O’Donnell (1977, p. 20) claimed that 2,402,700 notes (200,225 sheets) were printed from the plate based the total he recorded from its plate record card. All of us have used this total ever since but there is an obvious bust in it. The plate was assigned to a press for only 35 days. Using O’Donnell’s total implies that 5,720 sheets per day were produced assuming the plate was being used 7 days per week. This number is impossible. Typical average production from such a plate was less than 1,000 sheets per day then, often half that. The survival rate for notes from the plate is far too small from a 2,402,700 printing. I suspect Chuck accidentally inserted an extra digit into the total so the actual production was about a tenth of his number. Unfortunately, the card was discarded after he used it.. The current census of reported specimens is this. J97077064C J4115/470 vg Higgins K12724716C L4998/470 vf-xf Heritage FUN Jan 2006 Figure 2. Late-finished $1 back plate 470 was completed with intermediate size plate numbers in 1943. Micro 469 and macro 930 are shown for comparison. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 201 K20895154C J4115/470 xf Heritage Sep 2021 K20895155C K4115/470 xf O’Donnell catalog K20895156C L4115/470 xf O’Donnell catalog Tom Denly wrote a decade ago advising that he had found a circulated 470, but I didn’t obtain the serial number from it. Sources of Data Goodman, Leon J., John L. Schwartz, and Chuck O=Donnell, 1968, Standard handbook of modern U. S. paper money: Fleetwood Letter Service, 54 p. O=Donnell, Chuck, 1977, The standard handbook of modern United States paper money, 6th edition: Harry Forman, Inc., 342 p. Huntoon, Peter, May-Jun 1984, Late finished plates used to print small notes: Paper Money, v. 23, p. 122-125. Huntoon, Peter, May 2011, $1 silver certificate late-finished back 470 is rare: Bank Note Reporter, v. 60, p. 6-8. Huntoon, Peter, Jan-Feb 2016, Invention and evolution of electrolytic plate making at the Bureau of Engraving and Printing: Paper Money, v. 55, p. 4-17. Huntoon, Peter, and Jamie Yakes, Nov-Dec 2013, Salvaged plates, late-finished and other exotic plates explained: Paper Money, v.52, p. 427-437. Figure 3. Bottom left subject from the certified proof sheet for late-finished back 470 showing the May 13, 1943 date when it was certified for use as a production plate. It was originally made in 1936 to serve as a master plate. Smithsonian Institution photo. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 202 Laws Governing the Circulation & Denominations National Banks Could Issue Purpose The purpose of this piece is to summarize in one place the laws and administrative decisions that regulated the amount of currency national bankers could circulate during the note-issuing era and the denominations that they could use. Both how much circulation a specific bank could issue and the collective total that all the banks in the country could be issue is treated. Introduction A fundamental goal of the 1863 national currency act, and rewritten and reenacted 1864 successor, was to create a new form of redeemable paper currency that would circulate without resistance across the country. It was a bond-secured currency, wherein the bankers would purchase U.S. government bonds, Figure 1. What transpired in Congress to cause this bank to receive 3,099 sheets of 5-5-5-5 but only 68 sheets of 10-10-10-20 Series of 1882 brown backs? The Paper Column Peter Huntoon SPMC.org * Paper Money * May/June 2023 * Whole No. 345 203 deposit the bonds with the U.S. Treasurer, be issued currency backed by the bonds, and press the currency into circulation. Should the bank fail, the Treasurer would sell the bonds and place the proceeds in a redemption fund to redeem the currency, thus protecting note holders. Laws Governing Circulation See Table 1 From 1863 until passage of the Federal Reserve Act in 1913, the bankers were required to deposit a minimum value of bonds with the expectation that they would take out currency to make the concept work. Their incentive for engaging in the enterprise was that it provided a means for them to earn interest twice on the same investment; specifically, they earned interest on the bonds that were held by the Treasurer and again on the currency that was issued against the bonds that they could loan. Although bankers were required to purchase a minimum amount of bonds to secure circulation before passage of the Federal Reserve Act, there was no requirement that they actually take out circulation. Consequently, some didn’t. The officers in large numbers of existing banks sold their bonds and got out of the currency-issuing business after the Federal Reserve Act absolved them of the requirement to purchase bonds. Many officers in newly organized banks didn’t bother with circulation at all. The bankers who opted out could change their minds, purchase bonds, and begin or resume issuing. This explains delays or gaps in the circulation reports that can be observed in the statements of condition published in the annual reports of the Comptroller of the Currency. Laws Governing Denominations See Table 2 National bank notes comprised but a fraction of the total paper currency of the nation so the Treasury had to balance the nation's commercial needs for selected denominations in part through the manipulation of nationals. At the outset during the Civil War bankers could order any of the authorized denominations they wished between $5 and $1,000. The suspension of specie payments by the nation's banks and the Treasury by the beginning of 1862 had caused a severe shortage of coins and low denomination Federal currency so in 1864 Congress authorized the issuance of $1, $2 and $3 national bank notes to help alleviate the problem. The $3s never were adopted. A flaw that disregarded human nature in the 1863 and 1864 acts was that the bankers were not charged for their plates. Consequently, they tended to order several denominations whether their business required them or not. This was remedied in 1874. Once the Act of June 30, 1874 passed, the number of plates that were ordered dropped dramatically. The shortage of small denomination notes persisted so quite a few bankers in new banks, especially in small towns organized before the turn of the 20th century, opted to order only $5s. The $5-only issuers included the last of the Series of 1875-issuing banks and many 19th century Series of 1882 issuers. The Gold Standard Act passed in 1900 addressed the chronic shortage of small denominations by putting the burden for their issuance on the Treasury. This was primarily accomplished, by restricting the issuance of $20 and higher denomination silver certificates to only 10 percent of the outstanding silver certificate total, thus flooding the banking system with Series of 1899 $1, $2 and $5 silver certificates and ramped up production of Series of 1891 $10 silvers. The shortage of $10s was addressed further in the Gold Standard Act by a provision that small denomination legal tender notes were to be retired and reissued in higher denomination notes, mainly $10s. These $10s arrived in the voluminous issues of Series of 1901 bison notes. The national bank note issues were tweaked as well. The Gold Standard Act restricted the issuance of $5 national bank notes to 1/3 of the total circulation of a given bank. This diminished the supply of $5 national bank notes but they were more than offset by Series of 1899 $5 silver certificates. However, limiting national bank note $5s resulted primarily in an increased use of the 10-10-10-20 combination, thus augmenting the availability of $10s. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 204 The Treasury still perceived that there was a shortage of $10s during the ensuing years. This was addressed administratively on July 23, 1906 when the Comptroller of the Currency William Ridgely issued a circular to the cashiers of all national banks informing them that henceforth a 10-10-10-10 plate combination was being made available in the current Series of 1882 and 1902, so they were encouraged to adopt its use. The intent was that the officers of new banks would use a 10-10-10-10 instead of 10-10-10- 20 and existing banks would substitute 10-10-10-10s for a substantial part of their 10-10-10-20 needs, thereby increasing the availability of $10s. This helped a bit, but not enough. Circulation of $10 Treasury currency was finally given a huge boost with passage of an act in 1907 that authorized $10 gold certificates, the first gold certificates smaller than $20. These came forth as Series of 1907 gold certificates in great quantity. The Aldrich-Vreeland Act of 1908 provided for short-term issuances of national bank notes secured by state and municipal bonds and sound commercial paper. The act authorized the issuance of $500, $1,000 and $10,000 Series of 1882 and 1902 national bank notes in addition to the lower denominations. Treasury officials never saw the need for these high denominations and I never found models for them. The Treasury experienced an ever-growing demand for small denomination notes leading up to World War I and beyond. Thus, Comptroller of the Currency John Skelton Williams called for legislation to repeal the limitation on $5 nationals. This was granted by an amendment to the National Bank Act passed October 5, 1917 that repealed the $5 limitation. The act also authorized the issuance of $1 and $2 national bank notes but in amounts of no more than $25,000 per bank. The $1 and $2 denominations never were adopted although models were prepared for them. However, new banks began to issue nothing but $5s again, this time as Series of 1902 blue seal plain backs. Does Any of This Matter? We'll close with two examples that will illustrate how the interplay between legislated provisions and administrative decisions on Tables 1 and 2 can inform your understanding about why certain situations that you have run into occurred. These are the tip of the iceberg for the uses that can be made of these tables. Usually when a bank was issuing from 5-5-5-5 and 10-10-10-20 sheet combinations in the Series of 1882, the total numbers issued of each combination was similar. Occasionally, however, Series of 1882 totals such as those for Ishpeming, Michigan (3095) are starkly different. In the Ishpeming case there were 3,099 sheets of 5-5-5-5s versus 68 sheets of 10-10-10-20s. The explanation usually is that the bankers initially ordered only $5s, which was the case when the Ishpeming bank was chartered December 21, 1883. The Gold Standard Act of March 14, 1900 imposed a Figure 2. How did a flood of small-town banks with initial circulations of $6,250 come along after the turn of the 20th century such as this one? This Farmland, Indiana bank was washed out by the Post-World War I Agricultural Depression. Was this fate common for such banks? Can much of the blame for such failures be laid on shortsighted national bank legislation? SPMC.org * Paper Money * May/June 2023 * Whole No. 345 205 provision that limited the issuance of $5 for all banks to one third of a bank's circulation. This caused a rush of orders at the Bureau of Engraving and Printing in 1900 for 10-10-10-20 and/or 50-100 plates in order for existing banks to comply. In the case of the Ishpeming bank, this requirement came very late in its use of the series. Notice on Figure 1 the disparity in the certification dates written in the bottom margins of the proofs—Jan 5, 1884 versus Aug 9, 1900. The Series of 1882 emissions from the 10-10-10-20 plate lasted a mere six months, so the bank received only 68 sheets of 10-10-10-20s before being liquidated February 25, 1901. This story also was repeated for the last of the Series of 1875-issuing banks that began life by circulating only $5 Series of 1875 notes. Far more significant was an amendment to the National Bank Act that came along in the Gold Standard Act of March 14, 1900. The Gold Standard Act was a compromise piece of legislation where the hard money sponsors threw some bones to the soft money rural populists in order to win passage of their act. Section 10 halved the capitalization requirement from $50,000 to $25,000 for new banks in towns with populations of 3,000 or less. This encouraged the establishment of banks in small towns with the hope that some wealth would spread into the hinterlands to help grow their cash starved economies. Section 12 of the act raised the amount of circulation that could be issued against the bonds that national bankers bought to secure their circulations from 90 to 100 percent. This instantly inflated their note issues by ten percent, thus allowing them to infuse more currency into their economies through loans. The idea from the perspective of the populists was that some of the cash would trickle down to the working classes. Existing Section 8 of The Act of July 12, 1882 specified that banks having a capital of $150,000 or less were required to deposit bonds equal to a quarter of their capital to secure their circulations. The little banks capitalized at $25,000 in towns with less than 3,000 people therefore would have circulations of $6,250. These $6,250 banks are the most revered of the home town banks in national bank lore because, of course, their circulations were mere pocket change. Thus, notes they issued spelled rarity for future generations of numismatists. The image of those bankers standing outside the doors of their clapboard banks admiring the small businesses that they financed up and down newly graded main streets are the stuff of our fantasies. Figure 3. Bankers could opt to circulate only $5 notes before the Act of March 14, 1900 and after the Act of October 5, 1917, otherwise they were required to issue a mix of denominations. The life of this Clay City, Nebraska bank—1886-1889— fell entirely within the period before 1900 so those bankers decided to issue only $5 Series of 1882 brown backs. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 206 Laws can have serious consequences and Section 10 of the Gold Standard Act was an archetypical example. It was the most ill-advised piece of national banking legislation enacted during the note-issuing era because it resulted in ruinous impoverishment of a generation of rural Americans who had begun to claw their way up into the middle-class. The impact of the provision was that it allowed for the creation of a flood of minimally capitalized banks in rural areas, particularly in the Midwest, Northwest and South. The problem was that such banks were marginally viable economic enterprises so they tended to attract management with speculative tendencies and less than stellar business acumen. Business for them was satisfactory heading into the teens, then boomed as agricultural commodity and land prices soared during World War I. It appeared that the good times had come to stay. The bubble burst when the war ended. Agricultural commodity prices crashed and legions of troops returned to economies that couldn't absorb them. As the Post-World War I Agricultural Depression rolled over the heartland, the shakeout of such undercapitalized national banks was severe. The Great Depression that followed finished the job. These were the days before deposit insurance so the failures of those banks took the saving of their communities with them. The farmers they catered to were suddenly bankrupt. They walked from their homesteads joining their brethren and townspeople who depended on them, all of whom were in the same fix. They migrated to northern cities to compete against each other for the industrial jobs that were in short supply there or a decade later for any work they could find in California. Section 10 of the Gold Standard Act had appreciably contributed to one of the largest mass migrations in American history. Those involved were economic refugees. Table 1. Key legislative provisions governing the amount of circulation that national banks could obtain. How to use this table: Track a point of interest through successive acts. The point holds until it is specifically superseded, then that variant holds until it is specifically superseded, and so forth. Example 1: Circulation is limited to 90% percent of bonds (Act of February 25, 1863, Sec. 16); circulation is raised to 100% of bonds (Act of March 14, 1900, Sec. 12). Example 2: Maximum circulation cannot exceed the paid-in capital stock (Act of February 25, 1863, Sec. 16); maximum circulation is prorated based on paid-in capital stock (Act of March 3, 1865, Sec. 21); maximum circulation is 90% of paid-in capital stock (Act of July 12, 1882, Sec. 10); maximum circulation is 100% of paid-in capital stock (Act of Mar 14, 1900, Sec. 12). Even though a deposit of bonds to secure circulation always was required prior to the Federal Reserve Act of December 23, 1913, no law required bankers to take out circulation or prevented them from reducing their circulation by depositing lawful money with the U. S. Treasurer to cover such redemptions. February 25, 1863: Sec. 3: Minimum capital required is based on population as follows: $50,000 – population of 10,000 or less, $100,000 – population over 10,000. Sec. 15: Required deposit of bonds equal to not less than 1/3 of paid-in capital stock. Sec. 16: Circulation limited to 90 percent of bonds. Sec. 16: Maximum circulation cannot exceed the paid-in capital stock. Sec. 17: Total amount of circulation for all banks limited to $300,000,000 with $150,000,000 SPMC.org * Paper Money * May/June 2023 * Whole No. 345 207 apportioned according to the representative population of the states, District of Columbia and territories and the remainder apportioned by the Secretary of the Treasury in due regard to the existing banking capital, resources and business of the states, District of Columbia and territories. Sec. 41: Banks must maintain a lawful money reserve equal to 25% of their outstanding circulation June 3, 1864: Sec. 7: Minimum capital required is based on population as follows: $50,000 – population of 6,000 or less, $100,000 – population of 6,001 to 50,000, $200,000 – population of greater than 50,000, Sec 16: Required deposit of bonds equal to not less than $30,000 or 1/3 of paid-in capital stock. Sec. 21: Circulation limited to 90 percent of bonds. Sec. 21: Maximum circulation cannot exceed the paid-in capital stock. Sec. 22: Total amount of circulation for all banks limited to $300,000,000. Sec. 31: Banks must maintain a lawful money reserve against their outstanding circulation as follows: those in reserve cities – 25%, all others – 15%. March 3, 1865: Sec. 21: Maximum circulation is proportional to paid-in capital as follows and no more: capital up to $500,000 – 90 percent of capital, capital greater than $500,000 up to $1,000,000 – 80 percent of capital, capital greater than $1,000,000 up to $3,000,000 – 75 percent of capital, capital greater than $3,000,000 – 60 percent of capital. Sec. 21: $150,000,000 of total circulation apportioned according to the representative population of the states, District of Columbia and territories. Remainder apportioned by the Secretary of the Treasury in due regard to the existing banking capital, resources and business of the states, District of Columbia and territories. July 12, 1870: Sec. 1: Total amount of circulation for all banks increased $54,000,000 above the existing $300,000,000 limit, wherein the $54,000,000 was to be furnished to new banks in states and territories having less than their proportion of circulation under the terms of the Act of March 3, 1865 based on the census of 1870. If after one year the $54,000,000 was not subscribed for by such new banks, the Comptroller of the Currency could issue the remainder to banks in other states and territories having less than their proportion with preference to those with the greatest deficiency. Sec. 1: Maximum circulation for any bank organized hereafter limited to $500,000 (repealed by Act of July 12, 1882). Sec. 3: Circulation of national gold banks authorized and limited to 80 percent of bonds. Sec. 3: Maximum circulation of national gold banks limited to $1,000,000. Sec. 4: National gold banks must maintain a minimum reserve of 25 percent of their outstanding circulation in gold and silver coin. June 20, 1874: Sec. 2: Banks no longer required to carry a reserve against outstanding circulation. Sec. 3: All banks must maintain a redemption fund with the U. S. Treasurer equal to 5% of their outstanding circulation. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 208 Sec. 4. Bankers desiring to retire the whole or part of their circulations may do so in increments of not less than $9,000. Sec. 4: Minimum deposit of bonds to secure circulation set at $50,000. January 14, 1875: Sec 3. Repealed aggregate limits on total national bank circulation ($300,000,000 as per Act of June 3, 1864 + $54,000,000 as per Act of July 12, 1870). Sec 3. Repealed apportionment provisions in Sec. 21 of the Act of March 3, 1865. January 19, 1875: Sec. 1: Repealed the $1,000,000 limit on national gold bank circulations. July 12, 1882 (provided for a first 20-year extension of corporate life): Sec. 8: Banks having a capital of $150,000 or less required to deposit bonds equal to 1/4th of their capital to secure their circulations. Sec. 8: Circulation limited to 90 percent of bonds. Sec. 9: No more than an aggregate of $3,000,000 of circulation can be withdrawn upon deposit of lawful money by all banks per month. Sec. 10: Repealed limits on circulation imposed by Sec. 21 of Act of March 3, 1865. Sec. 10: Maximum circulation cannot exceed 90 percent of paid-in capital stock. March 14, 1900 (Gold Standard Act): Sec. 10: Halved the capitalization requirement for new banks in towns with populations of 3,000 or less from $50,000 to $25,000. Sec. 12: Circulation raised to 100 percent of bonds. Sec. 12: Maximum circulation cannot exceed 100 percent of paid-in capital stock. March 4, 1907: Sec. 4: No more than an aggregate of $9,000,000 of circulation can be withdrawn upon deposit of lawful money by all banks per month. March 30, 1908 (Aldrich-Vreeland Emergency Currency Act): Sec. 1: provided a bank has outstanding circulation secured by U. S. bonds to an amount not less than 40 percent of its capital stock, it can then issue: “or other security” issues backed by qualifying bonds limited to 90 percent of their market value and Sec. 1: “or other security” issues backed by qualifying commercial paper limited to 75 percent of its cash value as long as that circulation doesn’t exceed 30 percent of the unimpaired capital and surplus of the issuing bank. Sec. 5: The total amount of notes secured by both U. S. Government bonds and “or other securities” cannot exceed the unimpaired capital and surplus of the issuing bank. Sec. 5: The aggregate limit of all “or other security” outstanding at any time cannot exceed $500,000,000. December 23, 1913 (Federal Reserve Act): Sec. 17: Repealed requirements for deposit of bonds by national banks to secure circulations. Sec. 18: Beginning December 23, 1915, banks desiring to retire the whole or part of their circulations could submit applications to the U. S. Treasurer to sell the securing bonds, which the Federal Reserve Board could require the Federal Reserve banks to purchase. The aggregate of such sales SPMC.org * Paper Money * May/June 2023 * Whole No. 345 209 could not exceed $25,000,000 per year. August 4, 1914 (Federal Reserve Act Amendment): Sec. 1: The Secretary of the Treasury could (and did) waive the Act of March 30, 1908, section 1, requirement that the bank must have an existing bond secured circulation in order to receive currency secured by “or other securities.” Sec. 1: The Secretary of the Treasury could suspend the $500,000,000 limit on "or other security" currency" in Section 5 of the Act of March 30, 1908. Sec. 1: The total amount of notes secured by both U. S. Government bonds and “or other securities” cannot exceed 125 percent of the unimpaired capital and surplus of the issuing bank (expired June 30, 1915). June 21, 1917 (Federal Reserve Act Amendment): Sec. 9: Amended and reenacted all repeal requirements for deposit of bonds by national banks to secure their circulations. July 22, 1932 (Glass-Borah Amendment, Federal Home Loan Bank Act): Sec. 29: Bankers can use any Treasury bonds with interest rates of 3-3/8 percent or less to secure their circulations until July 22, 1935. Table 2. Congressional acts and administrative decisions governing the denominations that were issued by national banks. February 25, 1863: Sec. 18: Authorized $5, $10, $20, $50, $100, $500, $1000 notes. The following Original/1875 series plate combinations were used: 5-5-5-5 20-20-20-20 100-100 10-10-10-10 20-20-20-50 500 10-10-10-20 20-20-20-100 500-500-500-500 10-10-20-20 20-20-50-100 500-1000 10-10-20-50 50-50 500-500-500-1000 (Original only) 10-20-50-100 50-100 1000 (Original only) 10-50-50-100 50-50-50-100 1000-1000-1000-1000 Sec. 19: Bankers did not pay for their plates directly, all expenses associated with the production of the notes and operation of the Comptroller of the Currencies office were covered by a tax on the outstanding circulation of the bank. June 3, 1864: Sec. 22: Authorized $1, $2, $3, $5, $10, $20, $50, $100, $500, $1000 notes. The following additional plate combinations were used in the Original/1875 series: 1-1-1-1 (Orig only) 1-1-1-2 1-1-2-2 $3 denomination was not used Sec. 22: Not more than 1/6th part of a bank's notes shall be of denominations less than $5. Sec. 22: No $1, $2 or $3 notes to be issued after resumption of specie payments. Note: Specie payments resumed January 1, 1879. March 3, 1873 (Act making Appropriations for sundry civil expenses of the Government for the fiscal Year SPMC.org * Paper Money * May/June 2023 * Whole No. 345 210 ending June 13, 1874—Treasury Department): Note: Surprise legislation that authorized Circulating Notes to replace successfully counterfeited national bank notes. No denominations were specified. 5,625 sheets of Series of 1873 10-10-10-10 notes were delivered to the Comptroller of the Currency for seven banks and design work progressed on $1, $2 and $5 faces at the BEP before the series was killed as unnecessary. Bankers were required to pay for the plates but this probably was not enforced because they didn't receive their notes. June 30, 1874: Sec. 3: Bankers in banks organized hereafter had to pay for the plates they ordered. July 12, 1882 (provided for a first 20-year extension of corporate life): Sec. 6: All bankers in extending banks had to pay for the plates they ordered, Note: This act did not explicitly specify the denominations that extended banks could receive. The Treasury made the following plate combinations available to them in a new Series of 1882: 5-5-5-5 10-10-10-20 50-100 10-10-10-10 beginning July 23, 1906 50-50-50-100 beginning October 1910 when use of the 50-100 combination was phased out Hereafter, without specific Congressional authorization, the Comptroller of the Currency's office also issued the Series of 1882 to newly organized banks, thus phasing out the Original/1875 series for new banks. March 14, 1900 (Gold Standard Act): Sec. 12: The circulation of $5 notes was limited to 1/3 of the total circulation of the bank. April 12, 1902 (provided for a second 20-year extension of corporate life) Note: The Treasury made the following plate combinations available in a new Series of 1902 to banks extending for a second time: 5-5-5-5 10-10-10-20 50-100 10-10-10-10 beginning July 23, 1906 50-50-50-100 beginning November 1910 when use of the 50-100 combination was phased out Hereafter, without specific Congressional authorization, the Comptroller of the Currency's office also issued the Series of 1902 to both newly organized banks and extending banks extending for a first time, thus phasing out the Series of 1882 for new and extending banks. March 30, 1908 (Aldrich-Vreeland Emergency Currency Act): Sec. 11: Authorized $5, $10, $20, $50, $100, $500, $1000, $10,000 Series of 1882 and 1902 date back notes. Note: No $500, $1000 or $10,000 plates were made. October 5, 1917: Sec. 2: Repealed the limitation placed on the issuance of $5 national bank notes. Sec. 3: Authorized $1 and $2 notes but limited them to no more than $25,000 of a bank's circulation, Note: No $1 or $2 plates were made. March 3, 1919: Sec. 4: Authorized $500 and $1000 notes. Note: No $500 or $1000 plates were made. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 211 WILLIAM MORRIS MEREDITH 19TH SECRETARY OF THE TREASURY (1849-1850) By Rick Melamed There are a copious number of articles and books written about the Civil War; but there is much less written about the few decades leading up to the War. In the 1840’s and 1850’s the Congressional battles between the Southern and Northern states were escalating. William Morris Meredith, whose portrait graces the 5th issue 10¢ Fractional (Fr. 1264-1266) was in the thick of things with tireless battles in the political arena to end slavery and prevent the Southern states seceding from the Union. Meredith was a brilliant and successful attorney practicing in Pennsylvania who put aside his lucrative private practice on multiple occasions to attend to the serious national problems before, during and after the Civil War. In this article we will explore his contributions to our Nation. The man behind the image was a person of great intellect, a top-notch lawyer who throughout his life was a voracious consumer of classic literature. He was smart, honest to a fault and was a patriotic American who sacrificed his health and wealth to further the guiding principles of our great country. William Morris Meredith was born in the closing months of the 18th century on June 8, 1799, in Philadelphia. He was the eldest son of William Tuckey Meredith who was a successful attorney (William Morris was one of eleven children). William Tuckey’s father, Jonathan Meredith, who was of Welsh descent, immigrated from Herefordshire, England in 1750. Herefordshire is in western England on border near Wales. In his new adopted country, Jonathan became successful in the saddlery business – so much so, that his grandson, William Morris spent some time in the family business. In 1795, William Tuckey married the writer and poet Gertrude Gouverneur Meredith (née Ogden). Gertrude was the niece of Lewis Morris and Gouverneur Morris (both signed the Declaration of Independence). William Morris’s mother was highly educated and later became a published author. William Tuckey served on the Philadelphia Common and Select Councils, and on the Vestry of Christ Episcopal Church. William Sr. brother, Jonathan Meredith was a leader of the Bar in Baltimore, Maryland. In 1814, William Sr. became president of Schuylkill Bank based in Philadelphia. William Sr. had his career advancement stifled when he narrowly lost to Nicholas Biddle for the position of the Presidency of the Bank of the United States. William Jr. graduated from the University of Pennsylvania, as class Valedictorian, in 1812 at the age of 13 (graduation at age 13 not being unusual at the time). After working in the family saddlery business, William Morris returned to the University of Pennsylvania where he eventually graduated with a law degree. Meredith then applied and was admitted to the Pennsylvania Bar. On June 17, 1834, Meredith married the former Catherine Keppele. They had one son, William III, b. 1838, later a published essayist and poet; and four daughters: Gertrude Gouverneur Meredith, Euphemia Ogden Meredith, Elizabeth Caldwell Meredith, Catherine Keppele Meredith. Career Meredith had a reputation as being a fearless and scrupulously honest attorney. One example of his honesty refers to a case argued in 1844 before the Pennsylvania Supreme Court with Meredith and 2 senior attorneys. When the court stated only 2 attorneys could argue the case, the 2 senior lawyers took precedent. When the case concluded, Meredith returned his considerable fee of $10,000 indicating since he was not able to present in court, he could not in good conscience accept any fee. He litigated a noted case, Commonwealth v. Cook, a murder case involving 3 black men accused of killing a young white boy. Meredith drew considerable public attention, along with his co- counsel, James C. Biddle (later his brother-in-law), by questioning the conduct of Judge Frank Hallowell. During the SPMC.org * Paper Money * May/June 2023 * Whole No. 345 212 jury's deliberation, the American Daily Advertiser published an article on the case which Meredith thought was highly biased. The judge allowed counsel to question jurors as to whether they read the article, and when the judge refused to dismiss a juror who said he was offended by Meredith's questioning, the juror complained. The result was Judge Hallowell held both lawyers in contempt of court put them into prison for 30 days. Upon their release, Meredith and Biddle secured release of two of the prisoners in an appeal on double jeopardy grounds. Meredith had public sympathy which led to him be elected President of the Philadelphia Bar Association the following year. Subsequently Meredith, who was then a member of the Federalist party, was elected to the Pennsylvania General Assembly, where he served for five years (1824-1828). In 1828, Meredith’s mother passed away. William Tuckey was so grief stricken with the passing of his wife, that he never recovered emotionally, leaving it to his son to help support the family. Meredith showed his capacity for empathy for the downtrodden; he established a House of Refuge for juvenile offenders, where he served as that institution's manager. He was also a board member on the Pennsylvania Institution for the Deaf and Dumb, where he served on the board until his death. From 1839-1854, Meredith was president of the Philadelphia City Council and was a delegate to the Pennsylvania Constitutional Convention in 1837. The accomplishments continued. In 1837 he was elected as a member to the American Philosophical Society. He also served as United States Attorney for the Eastern District of Pennsylvania from 1841 to 1845. Meredith had a direct connection to President James Buchanan. Meredith, who profited from being a successful attorney, purchased a fine Federal style 10 acre estate in Lancaster, Pennsylvania; which he owned from 1845 until 1848 before selling it to future President James Buchanan (who was President of the U.S. from 1857-1861). Originally known as the Wheatland Estate, it is now an historic landmark and is more commonly known as the James Buchanan House, home of the 15th President of the U.S. In 1849, Meredith reached the pinnacle of his career when he became the 19th Secretary of the Treasury. He succeeded Robert Walker (known to Fractional collectors from his portrait on the 5th issue 25¢ note). He was appointed to the post by President Zachary Taylor, who wanted a Pennsylvania Whig* for his cabinet. Meredith strongly opposed free trade legislation. In an effort to protect American workmen from cheap European labor, he instituted a protective tariff. Meredith was also a strong advocate for allowing California to enter the United States; he exerted strong influence on President Taylor (they were close friends) and the rest of the Cabinet to allow its entry. The pro-slavery faction of Congress did not want to add another “free” state and called for Meredith to be kicked out of the Cabinet. President Taylor held firm, ignoring appeals from the Southern states and California became a state in 1850 (though it came shortly after President Taylor’s untimely death). Meredith was also strongly opposed the Missouri Compromise (an 1820 law that allowed Missouri to enter the U.S. but as a slave state in exchange for allowing Maine to enter the U.S. as a free state). The Missouri Compromise would remain in force for just over 30 years before it was repealed by the Kansas-Nebraska Act of 1854. In 1857, the Supreme Court ruled the compromise unconstitutional in the Dred Scott case, setting the stage for the nation’s final path toward the Civil War. Another example of Meredith’s anathema toward slavery was his strong opposition to the Fugitive Slave Act. The Fugitive Slave Act was passed by Congress on September 18, 1850. It was a compromise between Southern interests in slavery and Northern Free-States. The controversial act required that all escaped slaves, upon capture, be returned to the slave owner and that officials and citizens of free states had to cooperate. Abolitionists nicknamed it the "Bloodhound Bill", when the practice of using dogs was employed to track down escaped slaves. The Act contributed to the growing polarization of the country over the issue of slavery, and was another factor that led to the Civil War. Sadly, Taylor’s reign as President was short lived when he passed away suddenly after being in office for only 16 months. While Taylor’s replacement, Millard Fillmore, was anti-slavery he made concessions to slave states to preserve the Union (signing Fugitive Slave Act). This turn of events caused Meredith and all but 1 member of Taylor’s cabinet to resign en masse. Meredith went back into private practice but his career as a public servant was not over. Even in private practice Meredith took on many anti-slavery cases. During this time Meredith switched from the Whig party to the Republican party, where he was a supporter of Abraham Lincoln. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 213 Also in 1861, Meredith was a delegate to the Washington Peace Conference. The Peace Conference of 1861 was a meeting of more than 100 of the leading politicians of the antebellum United States held in Washington, D.C., in February 1861. The main goal was to prevent what ultimately became the Civil War. The success of President Abraham Lincoln and the Republican Party in the national elections of 1860 led to a flurry of political activity. In much of the South, elections were held to select delegates to special conventions empowered to consider secession from the Union. In Congress, efforts were made in both the House of Representatives and the Senate to reach compromise over the issues relating to slavery that were dividing the nation. The Washington Peace Conference of 1861 was the final effort by the individual states to resolve the crisis. With the seven states of the South already committed to secession, the emphasis for peacefully preserving the Union focused on the eight slaveholding states representing the Upper South Border, with the states of Virginia and Kentucky playing key roles. Despite drafting 6 different Constitutional amendments, the Peace Conference ultimately failed; it was the final legislative attempt to prevent the Civil War. With the outbreak of the Civil War, Meredith shifted his efforts to support the Union as Attorney General of Pennsylvania (a position he held from 1861-67). How Meredith got the position was a result of some malfeasance by the previous attorney general, Samuel A. Purviance. In the process of raising money to fund and equip a Pennsylvania based army, Purviance was caught in a scandal with corrupt contractors and had to resign his position. With Governor Andrew Curtin and the state under fire, Curtin turned to Meredith to take over as state attorney general. Meredith was the obvious choice based on his reputation as an accomplished, hard-working honest lawyer. Meredith quickly righted the ship and the scandal faded as Meredith arranged a loan of $3 million to help form and equip an army for Pennsylvania in defense of the state and the Union. It was a position Meredith took with great reluctance but did so in support of the Union. With Meredith’s wife passing away a few years prior (in 1853), he was left with 5 children without a mother. As Attorney General, Meredith had to reside in a boarding house at the state capitol in Harrisburg, leaving his home and children in Philadelphia. During his tenure, Meredith worked vigorously to increase enrollment of Pennsylvania army. William and his brother, Sullivan Amory Meredith (who had served in the Mexican War with the rank of Brigadier General) helped Pennsylvania meet its quota of troops needed to fight in the Civil War. His son, William III, served for a short stint as secretary to Major General George A. McCall. However, William III was forced to resign his position due to physical ailments (cataracts and a stutter). With all his accomplishments, Meredith was actively recruited to run for Congress in 1861, a position he declined because he felt that his duties as state Attorney General were too important. William later served on a commission that negotiated a settlement of the Alabama Claims (The Alabama Claims were a diplomatic dispute between the United States and Great Britain that arose out of the U.S. Civil War. The peaceful resolution of these claims seven years after the War ended set an important precedent for solving serious international disputes through arbitration and laid the foundation for greatly improved relations between Britain and the United States. President Ulysses Grant asked Meredith to travel to Geneva as senior counsel for the U.S. in an international arbitration proceeding. Meredith declined the position due to poor health but invested a considerable amount of effort in preparation. Once again, Meredith waived his fee. Meredith was suffering terribly with gout and declining health. Even with his strength and health dissipating, Meredith took on his last political post as President of the 1872 Republican National Convention. William Meredith passed away on Sunday morning, August 17, 1873. William Meredith on Revenue Stamps and Fractional Currency Meredith portrait on government issued financial instruments are small, but noteworthy. The (3) revenue stamps for Stock Transfer, Documentary and Silver Tax, were all made out for $20. They use the same portrait of Meredith as found on Fractionals. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 214 Meredith’s portrait is found on the green seal (Fr. 1264) and red seal (Fr. 1265 & Fr. 1266) 5th issue 10¢ fractional. On the whimsical side, the very common Meredith note, which is the most cost friendly Fractional, made it ideal for some artistic embellishments. Also known as “satricals”; they are avidly collected. The results are humorous, and some are very well executed. Here are (9) of the better renderings. They include matronly women, a bishop, Native American, Nurse, Sultan, wounded soldier, etc. William Meredith was a gentleman of great accomplishments and should be admired. He sacrificed his own personal ambition in support of the Country. While some might wonder why his portrait was chosen for the 5th issue 10¢ Fractional and not someone more noted (like Alexander Hamilton, the 1st Secretary of Treasury), one needs some context. At the time of his passing Meredith was a leading figure in the Republican Party. His accomplishments at the time were highly regarded and he certainly earned his place onto our national currency. However, time has not been fair to Meredith since all his efforts to prevent the Civil War could not curtail the inevitable. Obviously, the Civil War was the much bigger story overshadowing much of the Nation’s history in the 1840’s and 1850’s. A great deal of thanks to Heritage and Stack’s Bowers archives for the Satirical images. Also, thanks to Richard Lewis Ashhurst of the Pennsylvania Bar for his comprehensive biography om Meredith written for The American Law Register in April 1907. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 215 Challis Idaho Territory Postal Note by Bob Laub Lewis and Clark first explored Idaho in the early 1800’s. This geographic region was part of their search for a viable water passage route to the West Coast. In actuality, Idaho was the last of the continuous lower 48 states explored by non-native Americans. By 1880, the entire territory boasted a population of only 32,610, and as a Territory, issued only 89,077 postal notes. Statehood was authorized ten-years later, July 3, 1890, making Idaho the 43rd state to join the Union. The state capital, since its inception, has been located in Boise. From the time of statehood until the last day postal notes were issued, June 30, 1894, the state issued an additional 93,916 postal notes. As evidenced by the numbers any Idaho Postal Note, territorial or state issued, should be considered extremely rare. At the time of this article only four Idaho Territorial notes, and ten Idaho State issued have been recorded. Idaho is located in the extreme North-West section of the country and shares its boarders with six other U.S. states as well as Canada. To the East lies Montana and Wyoming while to the West the states of Washington and Oregon are its’ neighbors. Along Idaho’s Southern boundary are Nevada and Utah; to the North is the Canadian Province of British Columbia. The town of Challis is located in Idaho’s central most section, and founded in 1878, the same year a post office was established. The town was named after A.P. Challis, who was a surveyor when the town boundaries’ where first being laid out. The Challis Idaho Territorial Postal Note All post offices, upon their first day of issue, started with a serial number 1 note, and continued to progress numerically as demand increased. All issued postal notes were subject to a three-cent administrative fee, and Government regulations to state all notes must be issued for under $5.00 (1-cent-$4.99). This postal note is a Type II, and along with Type I notes were the only types to have a paying city designated at the time of issue. All remaining types (Types III-V) were payable at “any money order office”. This made future issued notes more convenient to smaller towns. Many rural areas of the country were completely devoid of any banking institutions. Earlier pioneers, in some cases, had upwards of a day’s travel just to reach a credible banking establishment. This serial # 501 was the first Type II (grey paper) issued from the Challis Post Office. A confirmed fact: All Type I books contained 500 notes. This ten-cent note, issued February 3, 1885 by Postmaster R.N. Hull, was payable only at the Challis, Idaho office. Upon closer examination this note was issued, endorsed, and cashed all on the same day. The issuing, and cashing circles, part of the reverse engraving, has both circles with the same cancellation applied: “Challis, Idaho; Feb. 3, 1885; M.O.B. (Money Order Business) R.N. Hull, P.M. (Postmaster) This note was obviously to be retained by Postmaster Hull as a personal keepsake. In speculation, one can only hope Postmaster Hull also retained the serial # 500 note as well, which would have been the last Type I note from the Challis Post Office. A first I have seen in 20 years of collecting postal notes, this Postmasters name and title are incorporated into his own custom cancel. Prior to 1891, stamp cancels were ordered by individual postmasters, and then were reimbursed by the Government. This brought about a diverse variety of designs on the cancels. Towards the end of 1891, the Government supplied these cancelers directly to individual post offices in an attempt to standardize these cancels. What was generally approved was a small circular application. An early safeguard, implemented into postal note design, (Ty. II- Ty. V) was the use of the engraved star. The star is located on the notes obverse in the lower right quadrant. This engraved area reads as follows: “Paying Postmaster Must punch out this star Cancelling This Note” which in this case has been so cancelled. According to government regulations all postal notes having been redeemed would be forwarded to the Post Office Auditors Department in Washington, D.C. for verification. If all the information was correctly presented, the processed note would be credited to the postmaster’s account. The note would then be moved to a secure storage warehouse for up to seven years, and eventually sold off as waste scrap to the highest bidder. Any cashed postal notes which escaped destruction, should be considered extremely rare. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 216 From September 3rd, 1883, until June 30th, 1894, 70,824,173 notes were officially issued. As of mid-January 2023, current census numbers reflect only 2,232 survivors, and of that number only 37 redeemed notes have escaped destruction. As always comments or questions and can be directed to me at briveadus2012@yahoo.com. I would also be interested in hearing about any postal notes you may have. Obverse: A Ty. II Postal Note issued for 10-cents, Feb. 3rd, 1885 by Postmaster R.N. Hull, and bearing serial #501. The first of the Ty. II notes issued from that location. Reverse: The design features clearly show two cancelation circles, issuing, and paying. Each of which shows the same custom cancel. CHALLIS IDAHO FEB 3 1885 M.O.B. (Money Order Business) R.N. HULL P.M. (Postmaster) SPMC.org * Paper Money * May/June 2023 * Whole No. 345 217 Edward H. Stroecker and George Hutchinson – Fairbanks, Alaska Bankers By Frank Clark The officer tandem of Cashier Edward Henry Stroecker and President George Hutchinson managed, in their respective offices, the First National Bank of Fairbanks, Alaska from 1922-29. Below is what I learned about the two men. Edward H. Stroecker was born in 1878. Early adulthood found him in San Francisco working as an accountant. Gold was discovered in the Klondike region of Canada in August 1896. The earliest prospectors arrived in San Francisco and Seattle laden with the yellow metal in July 1897. The newspapers in those two American cities announced the gold find to the world. Stroecker caught "Klondicitis," as it was described in the newspapers, in 1900 and headed north. However, he and his group did not head for the Klondike, but to Kuskokwim River in southwest Alaska. Successful gold exploration escaped this mining party and they headed back to San Francisco after a few months in the interior of Alaska. Stroecker's second trip to Alaska was a quick turnaround as he and a companion (whose name has been lost to history) landed at Valdez in January 1901. In March, they proceeded to dogsled up the Copper and Chistochina Rivers to Slate Creek, where they prospected. As winter approached, they rafted down the waterways to Valdez. The year 1902 saw Stroecker mine for wages on Slate Creek and tend bar at the Montana Saloon in Valdez. Stroecker would spend the year 1903 with a group of miners going up the Nizina River and then prospecting along the Chititu Creek. This did not pan out and he moved on to try his luck on other creeks in the area during 1904. In the fall, the group went to the head of the White River and then down the Tanana River to Fairbanks. At Fairbanks, which had only recently been incorporated, Stroecker decided to stay in one place. Over, the next few years, his resume would include jobs such as mining, cutting wood, cooking, running the mail, and working at the E.R. Peeple's store in town. He also found time to marry his wife, the widow Mrs. Mattie Gertrude Anderson, in 1915. The First National Bank of Fairbanks, charter number 7718, was founded in March 1905 and survived the National Bank Note era. Today, it is under the KeyBank National Association umbrella. The former accountant, Edward Stroecker, was hired by the First National Bank of Fairbanks as cashier. He served with President Luther C. Hess in 1921-22 and President George Hutchinson during the years of 1922-29. Stroecker became the president in 1930 when Hutchinson had to step down due to poor health. Stroecker's rubber stamped signature as cashier appears on Series 1902 Plain Backs and his printed signature as cashier is found on Series 1929 Type I notes. His printed signature as president appears on Series 1929 Type II examples and the cashier on those Type II notes is George B(ernard) Wesch. Stroecker died in 1954. His two sons, Edward P. and William G., also became executives of the First National Bank of Fairbanks. George Hutchinson took a similar path to get to Fairbanks. He was born in 1867 in Ontario, Canada. He came north to the Yukon Territory during SPMC.org * Paper Money * May/June 2023 * Whole No. 345 218 the Klondike Stampede gold rush at the end of the nineteenth century. It was in the Klondike where Mr. Hutchinson worked in the lumber trade. He found his way to Fairbanks and was one of the organizers of the First National Bank of Fairbanks in 1905. He climbed up the corporate ladder at the bank. From 1910-20, he served as the cashier. He served a short time as vice president during 1921-22, and he achieved the office of president in 1922. President Hutchinson served in several community organizations as treasurer including the municipal government and the school board over the years. He did not take any remuneration for his civic work. He suffered a paralytic stroke in July 1929. He had recovered enough by September to leave with his wife for the warmer climate of San Diego. His health was improving and in the spring of 1929, the Hutchinsons sailed for Seattle. While in Seattle waiting to take the ship, the Aleutian, back to Alaska, he had another stroke, and died in May 1930. Mrs. Hutchinson was his only surviving relative. Hutchinson's rubber-stamped signature as president is found on Series 1902 Plain Backs and his printed signature as president is on Series 1929 Type I notes. I could not find an example of his signature as cashier on a large size National. It was interesting to research these two officers of the nation's farthest north national bank. Announcing the SPMC online showcase of significant National Bank Note Collections The Society of Paper Money Collectors (SPMC.org) is proud to announce an online showcase of significant National Bank Note Collections. The notes in each collection are listed in an easily searchable and sortable table with links to high resolution images. Currently there are two National Bank Note collections included: The Huntoon Collection of U.S. National Banks Notes--Peter Huntoon assembled an incredible collection of 490 nationals between 1964 and 2006 that included notes from all 50 states and the District of Columbia as well as comprehensive state collections for Arizona and Wyoming. Included are 25 territorial notes. The Walton Collection of Nebraska National Bank Notes--Gerome Walton assembled between 1965 and 2021 the most comprehensive collection of Nebraska National Bank Notes yet assembled. The collection consists of 1,121 notes from 260 of the 290 Nebraska banks from which notes have been reported. Over time, SPMC plans to include additional important National Bank Note Collections in this online showcase. Here is a direct link to the Significant National Bank Note Collections home page: https://content.spmc.org/wiki/Significant_National_Bank_Note_Collections You can also link to the showcase home page from the SPMC.org website. The National Bank Note Collections link is found under the Education & Research menu. There are also links to this showcase on the SPMC Bank Note History wiki/website and the SPMC Collecting Paper Money website (on the Collecting U.S. National Bank Notes home page). SPMC.org * Paper Money * May/June 2023 * Whole No. 345 219 You Collect. We Protect. Learn more at: www.PCGS.com/Banknote PCGS.COM | THE STANDARD FOR THE RARE COIN INDUSTRY | FOLLOW @PCGSCOIN | ©2021 PROFESSIONAL COIN GRADING SERVICE | A DIVISION OF COLLECTORS UNIVERSE, INC. PCGS Banknote is the premier third-party certification service for paper currency. All banknotes graded and encapsulated by PCGS feature revolutionary Near-Field Communication (NFC) Anti-Counterfeiting Technology that enables collectors and dealers to instantly verify every holder and banknote within. VERIFY YOUR BANKNOTE WITH THE PCGS CERT VERIFICATION APP UNESCO World Heritage Sites Depicted on Bank Notes – Albania Albania is a country in Southeastern Europe. It is located on the Adriatic and Ionian Seas within the Mediterranean Sea and shares land borders with Montenegro to the northwest, Kosovo to the northeast, North Macedonia to the east and Greece to the south. While there are currently four UNESCO sites in Albania, only two are shown on Albanian banknotes. The Historic Centres of Berat and Gjirokastra well-preserved Ottoman towns, decorated with kule: Balkan-Ottoman style tower houses. A Gjirokastra site is depicted on B225 and B226 in the Bank Note Book. Both (20 lekë) notes dated 1985, have coat of arms, National Museum of Albanian History, Tirana Hotel, Opera Hall, and bridge under construction in Skanderbeg Square in Tirana, and mountains on the front. Enver Hoxha’s house in Gjirokastra is on the back. Butrint, an archaeological site that provides valuable evidence of ancient and medieval civilizations on the territory of modern Albania, is shown on two Albanian banknotes. Pick P7 (B320) and B325, 2000 Leke of 2007 and 2020 respectively have Gentius (the last king of Illyria), three ancient coins, an outline of Bank of Albania building in OVI and the coat of arms on the front. The medicinal plant gentiana lutea (great yellow gentian, or bitter root) and ancient Butrint amphitheater near Sarandë) are on the reverse. The newer B325 has more security features and the Butrint amphitheater is a larger format – a better choice for an UNESCO theme banknote for your collection. Figure 1 - B325 2000 Leke, 2020 Figure 2 - Butrint amphitheater archeological site UPDATE – UNESCO SITES FOUND ON WORLD BANKNOTES  Countries with UNESCO sites – 115 countries  UNESCO sites depicted on banknotes – 147 sites  Total banknotes found with UNESCO sites – 1,339 banknotes _____________________________________________________________ SPMC.org * Paper Money * May/June 2023 * Whole No. 345___________________________________________ 221 The Exchange Note (Billete de Canje) of Puerto Rico (1895) by Ángel O. Navarro Zayas, PhD Don Bartolomé Maura y Montaneri, in 1899, was appointed to the Royal Academy of Fine Arts of San Fernando. There in the Academy said a famous speech and, in response to his words, the Spanish press affirmed:ii Mr. Maura is, in short, today, the most notable engraver in Spain and not only the most memorable but the most popular because if, as the saying goes: "the king is known by the currency," by the coin is also Maura known. In all of them, the initials B.M. are now read.iii Not all people of the time knew the banknotes of the Bank of Spain, nor could they have studied the currency. However, because he designed them, people indirectly knew about Maura's great notoriety in the Spanish coins and banknotesiv. In Puerto Rico, his work is also reflected in the Puerto Rican Provincial Peso currency and his billete de canje or exchange note, both designs, pillars of our numismatic history, made by this famous Spanish engraver and artist. In 1895, the Minister of Overseas Affairs, Tomás Castellano, commissioned Bartolomé Maura y Montaner, while he was artistic director of the Fábrica Nacional de Moneda y Timbre, to write the conditions, basis, and budget for the manufacture of the exchange note. In the basis for manufacture, he had to expose how the paper money should be issued and how much it would cost to manufacture five million one- peso exchange notes, as a minimum. The paper money was to be used to exchange Mexican silver coins circulating in the Philippine Islands and the province of Puerto Rico. It first recognized the condition of urgency in the manufacture of the exchange notes and focused first on the Manufacturing Procedure. Bartolomé Maura recognized the most rudimentary knowledge of those that can be used advised for the exclusion of chalcography due to the slowness of its stamping. The typographic, for the long time necessary for the steel engraving of its matrices and galvanic reproduction of its clichés, limited the creation of the paper money because It had to be done very expeditely. The lithographic procedure applied to the stamping of steel plates engraved, the stamping of dry stamps, and the automatic triple numbering on a very resistant thread paper were the most recommended and practical conditions to manufacture these provisional paper money. The circulation was going to be of limited time [twenty- one days]. The second condition that he imposed with a special nature of the work was the reserve, and this made it necessary to take care of the artistic- industrial entity that would carry it out. The private industry could not be entrusted to manufacture the paper money. There were no establishments in Madrid, which had sufficient elements to carry out the multiple and heterogeneous operations that required the manufacture of a banknote that had all the guarantees compatible with the circumstances in which it was to be made. Nor could they be manufactured in the Fábrica Nacional de Moneda y Timbre because it lacked lithographic presses. On the other hand, its numerous staff and the indispensable practice of administrative procedures necessary to start it up. It was an almost insurmountable obstacle to carry out a job in it, with the reservation (discretion) that the one in question must be surrounded. By the considerations expressed about the haste of time and reserve with which the exchange notes would be manufactured. Bartolomé Maura judged that it was his duty (putting to contribution his relations in the private industry to gather under his direction and that of officials of his absolute confidence, the disseminated manufacturing elements necessary to bring this undertaking to a successful conclusion) shall be offered to carry it out in accordance with the following: Basis 1st. They shall be engraved in steel, the obverses, backgrounds and back of the bi-checkbook banknote following the accompanying drawing. 2nd. A general matrix, a punch, and the dies necessary for dry stamping shall be engraved in hollow and steel. 3rd. All these effects will be formally delivered under inventory once the operation is concluded. 4th. The stamping will be of lithographic report and three inks; two on the obverse and one on the back. 5th. Dry stamping shall be made. 6th. The numbering will be triple, automatic and in carmine ink. 7th. The paper will be made of thread and everything will be the same as the sample that is accompanied. 8th. The binding shall be made in books of the volume to be agreed by the Administration and the SPMC.org * Paper Money * May/June 2023 * Whole No. 345 222 first and last of the numbers comprising each volume shall be stamped on the cover. 9th. The delivery of the finished banknotes will be made partially by remittances that will not fall below five hundred thousand bills and by November 5 the delivery of the total of the five million marked as minimum will have been completed. To carry out the work of the above mentioned basis, it will be formulated below: Budget to manufacture a minimum of five million bills and for the others you may need. The remuneration for this service comprising: original designs (see Figure 1a and Figure 1b), without engraving at the sweet and hollow carving, the three-ink stamping, the ringing, the automatic triple numbering, the binding, the artistic-industrial direction of all the manipulations, the administration, the custody of stocks and the cost of wages and materials is valued at three and a half cents of Peseta each banknote of the first five million marked as minimum and in three cents each of the others that may be needed, in which case this budget and its consequences would be considered extended to a second run in which the colors of the front and back and the dry timbre could be varied, if it were a question of exchanging currency in another place. The payment will be verified in Madrid, by the Caja del Ministro de Ultramar, in current currency and in the form expressed below with the receipt of the official order, a document will be accompanied to be received the sum of thirty-five thousand pesetas indispensable for contracting paper, inks, machines, and other manufacturing elements. This money advance is equivalent to the value of the first million banknotes that are made (If a second run is arranged, the advance would be in the same proportion, that is, a fifth of the total amount of it, but in respect of three cents). Figure 1a. Obverse of exchange note; only known copy (SPECIMEN) or artist's proof with both counterfoils. This exchange note was manufactured by the Royal Decree, of the Queen Regent María Cristina de Borbón, on August 17, 1895. This specimen is located in the National Historical Archive of Madrid, Spain. The first time it was reported in Latin American literature was by this author in the book Índice General de los Documentos Relativos al Canje de la Moneda Mejicana. 1895-1896 (expediente sobre canje de moneda mejicana que circula en la isla) (2009). Figure 1b. Exchange note reverse; only known copy (SPECIMEN) or artist's proof with both counterfoils. This exchange note was manufactured by the Royal Decree, of the Queen Regent María Cristina de Borbón, on August 17, 1895. This specimen is located in the National Historical Archive of Madrid, Spain. The first time it was reported in the Latin American literature was by this author in the book Índice General de los Documentos Relativos al Canje de la Moneda Mejicana. 1895-1896 (expediente sobre canje de moneda mejicana que circula en la isla) (2009) SPMC.org * Paper Money * May/June 2023 * Whole No. 345 223 Within six days following each of the successive deliveries, payment will be made by the Fund of said Ministry. For the purposes of due intervention, the contractor shall notify this Ministry of the date and time on which the last operation is to begin, namely the numbering of the banknotes. At its hearing, the Ministry shall designate the officials who are to witness this operation by drawing up a record of the banknotes to be numbered and sealing the machines, with the Seals of the Minister, each time and for so long that the operation is interrupted. Once approved, this budget shall be covered by all the guarantees (compatible with the reserved nature of the service) of a public contract, which shall place at the expense of eventualities the substantial moral and material interests. It intends to meet its realization requires putting into play the one that subscribes and its obligation in favor of the State to comply with it in all its parts Madrid on August 20, 1895. Bartolomé Maura accepted the proposal and authorized the service subject to it, and following the provisions of the Royal Decree of August 17, 189, exempting from the auction formalities. The Minister of Overseas, Tomás Castellanov21. When Bartolomé Maura designed the exchange note, he did so using the technique he used for all his engravings, in brush and in colours (see figure 1a and 1b); the description of his style when designing is demonstrated in the following description of the time: [the design]... with the tip and the burin, his essential characters, he studied them with the brush, in full color, instead of limiting himself to the use of black and white drawing, as the antique engravers proceeded, or to the use of photography, always inaccurate in the representation of chromatic values, as modern ones generally do. For this reason, Maura's engravings give an impression of colorism, relief, and vigor, which make them so interesting, as if they were original designsvi Figure 2a. Obverse of exchange note, with a single counterfoil on the left, used in Puerto Rico (exchange note from the private collection of Dr. Francis Zayas Montalvo, photograph used with his permission). Figure 2b. Reverse of exchange note, with a single counterfoil on the left, used in Puerto Rico (exchange note from the private collection of Dr. Francis Zayas Montalvo, photograph used with his permission). SPMC.org * Paper Money * May/June 2023 * Whole No. 345 224 These exchange notes (figures 2a and 2b), which were manufactured in Spain under the Royal Decree of August 16, were issued and used for 21 days in some 42 places in Puerto Rico to be exchanged for Mexican currency. The counterfoil tickets had attached checkbooks on both sides of the counterfoil; each ticket or counterfoil and its respective checkbooks bore the same numbering. The exchange notes or paper money was exchanged to all persons carrying Mexican pesos; a checkbook was retained by the officer in charge of the monetary exchange. When the new Peso Provinciales (Puerto Rican provincial currency) arrived in Puerto Rico, the Exchange Notes were redeemed to the bearer for the new currency. The exchange of the new Pesos (Puerto Rican provincial currency) arrived from Spain, for the Exchange Notes, this new exchange was made within eight days. There has been much uncertainty about the amount of cash in circulation in Puerto Rico. Estimates varied greatly, some estimates were much higher than others. The estimate accepted by the Spanish authorities turned out to be excessive. There was a minting of provincial coins for Puerto Rico, in the years 1895 and 1896, in the Mint of Madrid, of the following denominations in silver: Figure 3. Total manufacture of all denominations of provincial coins minted Puerto Rico. Of this amount, only 6,426,395 Pesos were used. The rest was returned to Spain during the years 1896-1897. Although the expenses of the exchange were very large, the difference between the value of the silver of the new coins (provincial peso) and the difference in the value of the silver of the old coins (Mexican currency) provided a sufficient margin that would give a net profit of the complete transaction of P 480,000 Pesos gold. The gold coins were sent to Puerto Rico in the form of 5 Pesos gold coins, which are legally valued to circulate at the rate of 1.20 pesos. Of this amount, 410,916 Pesos were exported to Spain in early 1898 to be used in the construction of a Spanish ship called "Puerto Rico", which was never built and left a balance of only 69,084 Pesos, which remained in Puerto Rico. While this amount of gold appeared in most of the securities of monetary circulation in Puerto Rico during 1898, it was not part of the circulating coins. The markets were valued with a high premium, but the coins remained largely treasured or as souvenirs. In Puerto Rico, another currency that deserves attention in this period is the Puerto Rican metallic coin of Spanish copper. 70,000 Pesos of these Spanish copper coins were sent to Puerto Rico in 1895. As this monetary unit was less valuable in Puerto Rico than in Spain, copper currency began to flow back into Spain under the force of Gresham's Law. Between 20,000 to 25,000 Pesos of the copper currency were remitted by merchants to Spain, according to the Deputy Governor of the Spanish Bank of Puerto Rico, before the authorities realized the fact that the coins were being exported. To prevent copper coins from being exhausted in Puerto Rico, the remaining copper coins were holed and mutilated. They made the coin lose the privilege of having legal circulation in Spain. In 1896, the Minister of Ultramar, Tomás Castellano, affirmed before the Cortes that there were thirty- three different types of bronze coins in Puerto Rico at the time of the exchange of the Mexican silver coin in circulation and eighteen types of silver coinsvii. The billete of canje (1895), or paper money designed by Bartolomé Maura y Montaner and the Provincial Peso and its fractional silver coins, is an intrinsic part of the numismatic history of Puerto Rico in the late nineteenth century. Historians and numismatists recognize that these pieces of our economic history are inherent to the Hispanic heritage and culture of Puerto Rico. Acknowledgments I am in a debt of gratitude to Mr. Andy Newman and Mr. Leonard Augsberger for awarding me the Eric P. Newman Numismatic Education Society (EPNNES), 2020 and 2022 Grant. Also, I wish to thank Mr. Christopher McDowell, Dr. Jesse Kraft, Dr. David Yoon, and Dr. Andrew Reinhard for their support in my previous research endeavors. Thank you to Dr. Damaris Mercado, the first woman president of the Puerto Rican Numismatic Society, and my friend and numismatic mentor, Dr. Jorge Crespo Armáiz. To my parents, Dr. Nelson Navarro Ramas and Flor del Carmen Zayas Yordán, thank you for being the best of them all. I thank my beautiful, patient, and caring wife, Pilar Cristina, for being the Pillar of our home. To my two young sons, Lucas Mateo and Matías Manuel, you boys make us proud, and I hope you someday love history and numismatics like Papá. 1 Peso 8.500.021 40 cents 290.000'80 20 cents 670.001'20 10 cents 70.000'60 5 cents 30.000’30 TOTAL 9.560.023’90 SPMC.org * Paper Money * May/June 2023 * Whole No. 345 225 Bibliogaphy Primary Sources National Historical Archive, Ultramar, 6316, exp. 4, doc. 8. Expte. sobre canje de moneda mejicana que circula en la isla. Secondary Sources Enrique Vaquer Atencia, Bartolomé Maura y Montaner, Hijo Ilustre de Palma. Estudio Biográfico hecho por D. Enrique Vaquer Atencia y leído por D. Antonio Piña, jefe del Negociado de Alcaldía, en el Salón de la Solemne Proclamación (Palma de Mallorca: Imprenta de J. Tous, 7-8). La Ilustración Española y Americana, April 15, 1899, number XIV, 214. La Ilustración Española y Americana, April 22, 1899, number XV, 231. Navarro Zayas, A. O. (2022). El canje de la moneda mexicana por el peso provincial en Puerto Rico (1895-1896) y Bartolomé Maura y Montaner. Documenta & Instrumenta - Documenta et Instrumenta, 20, 183-209. Navarro Zayas, A.O. The billete de canje of Puerto Rico (1895) and it’s designer: Bartolomé Maura y Montaner (Numiexpo, 2015). Navarro-Zayas, A.O. 2011. “Canje de la Moneda en Puerto Rico. Discursos Pronunciados por Don Tomás Castellano Ministro de Ultramar en las Sesiones del Congreso de los días 6 y 8 de Agosto de 1896 y en la del Senado del 11 del mismo mes y año. Cartas de los Gobernadores de P.R.” (Annotated facsimile edition). Lulu enterprises. p. 203. https://nnp.wustl.edu/library/book/605836.  i Navarro Zayas, A. O. (2022). El canje de la moneda mexicana por el peso provincial en Puerto Rico (1895-1896) y Bartolomé Maura y Montaner. Documenta & Instrumenta - Documenta et Instrumenta, 20, 183-209.  ii Navarro Zayas, A.O. The billete de canje of Puerto Rico (1895) and it’s designer: Bartolomé Maura y Montaner (Numiexpo, 2015).  iii La Ilustración Española y Americana, April 22, 1899, number XV, 231.  iv La Ilustración Española y Americana, April 15, 1899, number XIV, 214.  v National Historical Archive, Ultramar, 6316, exp. 4, doc. 8. Expte. sobre canje de moneda mejicana que circula en la isla.  vi Enrique Vaquer Atencia, Bartolomé Maura y Montaner, Hijo Ilustre de Palma. Estudio Biográfico hecho por  D. Enrique Vaquer Atencia y leído por D. Antonio Piña, jefe del Negociado de Alcaldía, en el Salón de la Solemne Proclamación (Palma de Mallorca: Imprenta de J. Tous, 7-8).  vii Navarro-Zayas, A.O. 2011. “Canje de la Moneda en Puerto Rico. Discursos Pronunciados por Don Tomás Castellano Ministro de Ultramar en las Sesiones del Congreso de los días 6 y 8 de Agosto de 1896 y en la del Senado del 11 del mismo mes y año. Cartas de los Gobernadores de P.R.” (Annotated facsimile edition). Lulu enterprises. p. 203. https://nnp.wustl.edu/library/book/605836. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 226 BNR Press 132 East Second St. Port Clinton, OH 43452-1115 New Fifth Edition shipping in March. Order your copy today for earliest shipping. 419 349 1872 fredschwan@yahoo.com 224 large format pages • full color throughout $75 shipped on first available date U N C O U P L E D : PAPER MONEY’S ODD COUPLE Joseph E. Boling Fred Schwan More on “The Obsolete Corner” Last issue Robert Gill showed us an uncut sheet from the Bank of Greensborough, Georgia, and reported some of its checkered history. The bank seemed to have several lives under different management teams, but in the end joined the ranks of failed banks in the immediate ante-bellum decades. He wondered whether the bank’s officers might have had access to the plates for the bank’s notes, and continued to print from them even though there was no office open where notes could be redeemed. Let me propose a different scenario. It often happened that notes of a failed bank (even unissued ones) came into the hands of shysters who continued to circulate them far from home. As soon as a bank failure was listed in the bank note reporters of the day, that scheme failed because many merchants and all bankers subscribed to the reporters, and would quickly know that the bank’s notes had no value. The next step would be to alter the existing notes— change them slightly so that they were no longer associated with the failed bank. The simplest way to do this was to change the address—show a different state as the state of issue. This was especially effective if there was a same-named bank already operating in a city of the same name in that other state. The next simplest was to change both the state and the city, which worked well when the chosen city had a bank of the same name. Least easy was to change the name of the bank on the worthless notes—that required a lot more skill and effort. But skilled engravers were around—all they had to do was agree to be involved. The notes of the Bank of Greensborough were used in at least two of these approaches. Before looking at how, note that all of these notes are uniface (except for the image of the protector that is also applied to the backs), and none shows any obvious signs of alteration on the back. See Boling page 230 State war bonus bonds When Joe and I created World War II Remembered in 1995, we were quite excited by our inclusion of war bonds from many countries. This was an important innovation and we have mentioned it before. Today I want to discuss a tiny subset that we also introduced in 1995, but which have hardly been considered since then—veterans’ bonus bonds. Many states paid bonuses to their citizens who had served in World War II. Such payments had been made in World War I and before, and such bonuses were paid after later conflicts. Ohio and Pennsylvania paid bonuses for service in Vietnam. How many states paid for World War II, or for that matter, for Vietnam? I do not know, but I do know that the numismatic aspects of these payments have been entirely ignored. Obviously, the checks issued to pay veterans would be great numismatic items, but it is unlikely that you will ever find one of those. Fortunately, there is a twist. Most if not all of the states issued bonds to finance the bonus payments. At least some of these bonds remain for collectors today! In 1995 we knew only of veterans’ bonds for the state of Michigan. I do not recall when or how I located the bond that we illustrated in Remembered, but it was in my collection. It is telling and a bit funny that I have to show you the black and white image from 1995 because even though the piece is still in my collection, I do not know where it is. I have not seen it in years. Make that decades.  SPMC.org * Paper Money * May/June 2023 * Whole No. 345 228 That, however, does not mean that I have not found anything regarding the Michigan bonds. The miracle of the internet led me to the amazing news photograph of Michigan Veterans’ Bonds being machine-signed. See the nearby photograph with the great caption that appears on the back of the original photograph. A signograph machine is used March 18 [1947] in New York to sign $1,000 bonds, part of a $200,000,000 bond issue being raised to provide bonus payments for Michigan men and women veterans of World War II. Left to right: Mrs. Opal Whitford, Keeper of the Great Seal of Michigan; Frederick M. Alger, Jr., Michigan Secretary of State; J. Dean Stanley, Municipal Finance Commission consultant of Michigan, and D. Hale Brake, state treasurer. Associated Press Photo, GFR 119 pes 3.18.47 JDC 7 Dt-CX Bureau-DT Bureau It took at least ten years after the publication of Remembered to find anything more on the subject of World War II veterans’ bonds. I was driving hard in a rental car in rural New York state when I came upon a large antique mall. I did not have time, but I could not resist. I had to go in. My wife insisted that we were going to miss our train. I begged for ten minutes and sprinted into the place. I have been in many antique malls. This was a big one. I loathe asking for suggestions rather than browsing, but I was desperate. I asked for “World War II stuff.” Confirming my bias, that was a waste of twenty valuable seconds. It got worse before it got better. Only near the door on the way out empty handed did I decide to spend a few minutes in the book booth. There it was–The Empire State at War: World War II by Karl Drew Hartzell. State of New York 1949. It was big—I knew that I would like it and headed for the car and a lecture with my treasure. I did not have a chance to look at it until I got on the train for home (we made it with plenty of seconds to spare). Of course government histories tend to be dreadfully boring, but also often full of information seldom found elsewhere. The book was indexed very nicely and had an entry for “veteran’s bonus!” In a longer discussion was one paragraph that summarizes the situation nicely. “The New York State constitution prohibits the borrowing of funds by the State for making gifts to private individuals. For that reason one early bonus law, 1920, had been declared unconstitutional. After a delay of four years it was found necessary to pass a Constitutional amendment providing specifically for the borrowing of moneys to pay the bonus. In the light of the earlier experience, the committee finally recommended a concurrent resolution of the Legislature proposing an amendment to Article VII of the State Constitution to authorize a bond issue in the exact amount of 400 million dollars for payment of a soldiers’ bonus. The amendment was made as specific as possible to give voters a clear program on which to vote. The concurrent resolution was passed by the Legislature in 1946 and 1947, and approved by the people at the November elections. Certainly no bonus can compensate veterans for their sacrifices but it can at least express a people’s sense of gratitude.”  This paragraph certainly gives more information than I could ever have expected to find on any one state and probably outlines the general idea for many if not most states. If you are really into the legalese of the matter, send me an email and I will send you the entire entry (fredschwan@yahoo.com). The strange thing is that I have no recollection of when or how I found the New York Bonus Bonds that are now in my collection. There were at least two different bonds. In the crudest comparison I have a red and a blue bond. They were both issued in 1948 and were American Bank Note Company products. The two bonds that I have seen were issued for $10,000 each. The denominations were entered at the time of purchase so the number of possible denominations may have been wide or narrow. The sample size is small but SPMC.org * Paper Money * May/June 2023 * Whole No. 345 229 the two serial numbers seen are low: 189 and 193.  There are some technical differences in the provisions, but until I can find more time to compare, I think that the red and blue distinctions are enough. After another long dry spell in the pursuit of World War II bonus bonds, I got two different states in one evening—sort of. I found a beautiful specimen State of California $1000 1943 veterans’ bond. After I concluded the purchase of the bond, the seller sent me a scan and offered me a State of Louisiana $1000 bond at the same price as the California piece. Of course I jumped on it and promptly sent payment. Also promptly the California piece arrived but the seller explained that he could not find the Louisiana piece! Of course, I of all people dare not criticize someone for this problem, which I face frequently. The good news is that we do have the image and one wonderful question. The text identifies the bond as being of Series A, suggesting that there might be additional series. Those are the bonds that I can confirm as being in collections (perhaps we should not count Louisiana yet), but I can confirm and speculate on some others being issued. The Service Recognition Board of Springfield, Illinois issued a pamphlet: General Rules for Payment of World War II Bonus. There is a very good chance that Illinois issued bonds to fund the bonus payments. Alternatively, or in addition, Illinois (or the other states above) could have issued the bonus in the form of a bond, but it seems certain that Illinois had something. I do not know what it means, but they are not rare. Connecticut paid veterans’ bonuses. We know this because I found a notice that was included with the check paid to a Connecticut veteran under the World War II Veterans’ Bonus Act. It is very unlikely that we will find any uncashed bonus checks; it might be possible to find more items like this that were associated with a paid bonus.   So that completes what I know about state bonus bonds and payments. This is an area where there must be readers who have some information. Please help me fill in some of the other state issues! fredschwan@yahoo.com Boling continued Figures 1 and 2 show $5 notes of an early issue from the bank. Gill reported that the second emission of notes was dated May 2nd 1857 in the plates. The notes in figures 1 and 2 have that date, but hand- written. The hand-signed signatures (Peden and Thom (?)) do not match any of the names that Gill showed as principal stockholders. One wonders if these were real people. Note that these early notes have two imprints— Bald, Cousland & Co (lower left margin), and Baldwin, Bald and Cousland (lower right). Figure 1 (above) and Figure 2 (below) SPMC.org * Paper Money * May/June 2023 * Whole No. 345 230 Figure 3 shows the word “Georgia” in the upper right margin of the figure 1 note. It is paired with the words “State of” at the other end of the bank name. In figure 4 those words have been obliterated and changed in pen-and-ink to “New York.” “New York” has also been added to the note in the same hand below the center vignette. This is the crudest attempt to re- locate a note that I have seen. As the Heritage cataloger said, anyone who was taken in by this alteration deserved to be swindled. The problem with this approach, even if it had been done skillfully, is that there is no bank with this title in NY state or in New York City. Figures 5 through 10 show a more intelligent approach to fraud. In this case the title and state of a real bank have been used—the New London Bank of New London, Connecticut. The bank title, city, and state have all been changed. Figures 5-7 show a $1 note. On the original note the city is engraved in a script font at lower left on the same line as the date, June 1st, 1858; it is removed and replaced with a block font on the altered note. Here the plot thickens a bit. Now the signatures are of the sheriff and stockholder whom Gill described, and the notes have been printed by ABNC (see their logo in the left margin). The second of the original imprints is gone. As an ABN product, it is very unlikely that the plates were released to anyone in the bank. It appears that somebody received a quantity of finished notes that survived the bank’s close. It is unusual to see notes of this period with the signatures in the plate. That also raises some questions about intent when the notes were ordered. Figure 3 Figure 4 Figure 5 (genuine note above and city in script font below) Figure 6 (altered note above and city in block font below) SPMC.org * Paper Money * May/June 2023 * Whole No. 345 231 The bank title is the most important change to make. It might not have been the most difficult—the city name had to deal with the ONE blue protector, part of which was damaged. But the most obvious feature that was going to be changed was the title—nothing was being done to the vignettes. All of the alterations are intaglio, and a pretty good job was done. Figures 8-10 show the same changes on a $5 note. In this case the city name is near the top of the note, and here involves the FIVE protector, which again was damaged, but the effect is not very conspicuous. More obvious on this note is the damage to the right signature. On the $1 note that signature was modified, but still came through as showing legitimate wear. On the $5 note it is hard to see what was intended—it’s a real mess. The person removing and replacing elements on these two 1858 notes was very skilled. Removing an intaglio element involves a combination of abrasion (or chipping) and perhaps some chemicals. One expects the underlying paper to have been damaged. Holding either of these notes to a light reveals no thin spots and no darkening. Under the right light, the $5 note shows some restoration of the paper surface (see the white area around “BANK” in the title in figure 10). It seems that some kind of paint was applied to repair damage and build the paper up again, but it is pretty subtle. In- hand that is barely noticeable. The only problem area on this note is the right signature. And what of the last signatures to appear on this bank’s notes—the Stevens brothers, whose sheet was in last month’s Gill column? Were those notes ever circulated? I await my next altered piece from the bank. Figure 7 (Connecticut added) Figure 9 (lightened area around BANK & damaged counter) Figure 10 (white area at top and damaged signature at bottom) Figure 8 (genuine note) SPMC.org * Paper Money * May/June 2023 * Whole No. 345 232 Another Dispatch from the War on Cash: the Nigerian Front In December 2022, this column looked back at India’s quixotic attempt to demonetize the bulk of its circulating rupee banknotes. Undertaken in late 2016, the Indian authorities called in all high-denomination notes in order to replace them with new issues. Cash holders who could not explain the origins and size of their balances risked having them confiscated. Hoards outstanding after the redemption date expired as worthless. The motives for this policy seemed to boil down to a basic ambivalence about cash itself. People’s desire to hold their wealth and transact using paper currency—the freedom that physical money gives them—is increasingly regarded by governments as an inconvenient barrier to the exercise of their power. As that column appeared, another campaign against cash was brewing, this time in Nigeria. In October 2022, the Central Bank of Nigeria’s governor Godwin Emefiele announced an exchange of all banknotes in denominations of 200, 500, and 1,000 naira. In exchange for their old naira, Nigerians were promised supplies of new, “redesigned” naira notes (basically, their color changed). Nigeria’s president Muhammadu Buhari unveiled the new note series in November, and these went into circulation on December 15. Nigerians had until January 31, 2023, to exchange their notes, after which they would lose their legal tender. Governor Emefiele gave several reasons for Nigeria’s currency exchange. Too much currency was being hoarded outside the banking system, he argued. The effect was inflationary and encouraged corruption (vote-buying by politicians flush with cash is a Nigerian specialty). Curbing cash would also deter criminal extortion and racketeering, in particular kidnappings for ransom (also a Nigerian specialty). A new note series would foil counterfeiters. Finally—and this justification overlapped with all the others—a swap of old naira for new would encourage a trend towards digital payments favoring the use of “eNaira”, the country’s central bank digital currency established in 2021. Going cashless, Emefiele promised, would somehow make the economy more “inclusive” (that magic word!). The results so far have been disastrous. Obeying the authorities’ deadline, millions of Nigerians duly deposited their old naira in the banking system, only to find out later that there wasn’t enough new naira to meet their demand for withdrawals. The resulting currency shortages have throttled trade, disrupted Nigeria’s large, cash-dependent informal sector, and damaged the overall economy. By February 2023 the country descended into widespread civil unrest, with bank buildings torched and their ATMs destroyed—all while a presidential election was underway. Thanks to an intervention by the country’s supreme court, the old exchange deadline was suspended. Old naira banknotes now remain legal tender and will stay in circulation until the end of 2023. Throughout this turmoil, it has been disputed why the Nigerian authorities messed up so completely. Not to put too fine a point on it, Nigeria is a badly run place, renowned for its corruption. Unusually for Africa, Nigeria prints its own banknotes, and the underlying problem may have simply been that its official printer couldn’t produce new notes fast enough to replace the old ones. Allegations also abounded that bank managers responsible for distributing supplies of the new notes set them aside in hopes of selling them at a profit. The cynical take on this is that governor Emefiele engineered the currency crunch in retaliation for not being anointed as Buhari’s electoral heir apparent. While Emefiele, the outgoing president Buhari, and the incoming president Bola Tinubu all hail from the same political party, the sheer idea of a naira swap seemed to benefit more the opposition parties than the incumbents. Given how entrenched cash-fueled vote buying is in Nigerian politics, the opposition might have felt it had nothing to lose from its restriction. At the very least, they hoped to benefit electorally from the chaos unleashed by the government’s naira policy. Indeed, one effect of the currency debacle was to drive down voter turnout in the election, as many cash-bereft citizens couldn’t even afford to travel to the polls. Yet which party this low turnout would’ve most benefited remains unclear. A more charitable interpretation of this episode would take Emefiele’s stated motives at face value. Nigeria’s annual inflation rate of over 20% is a real problem. Unlike the Indian authorities, the Nigerians didn’t try to flush out or otherwise demonetize cash balances associated with illegal or corrupt activities. Instead, it was the simple fact that some 80% of the country’s currency circulates outside of the banking system which central banker Emefiele found problematic. Much as communist countries once collectivized agriculture heedlessly, out of a hatred of private property, government bureaucrats who view digital payments as the wave of the future now regard crackdowns on cash use as justified, no matter how stupid or brutal the policy, no matter the human cost. Chump Change Loren Gatch SPMC.org * Paper Money * May/June 2023 * Whole No. 345 233 The Obsolete Corner The Corn Exchange Bank by Robert Gill Well, Summer is just around the corner, and so far, the year has been good to me in regard to my paper money collecting. I have picked up a nice sheet that upgraded my collection by quite a bit. I hope it continues, as I have some big plans for the future in reference to researching this wonderful hobby. But now, let’s look at the sheet from my collection that I’ve chosen to share with you. In this issue of Paper Money let’s go up North, and look at The Corn Exchange Bank, that was located in Waupun, Wisconsin, back during obsolete days. The notes are by no means rare, in fact, very common in “sheets” and “singles”. But it is the history that makes this old bank so interesting. In 1857, William Hobkirk was the force behind the securing of a charter and opening The Corn Exchange Bank in Waupun, Wisconsin. It was located in a stone building on the South side of Main Street, erected by Hobkirk just for the purpose of operating the Bank. This institution was organized under State Law as a “bank of issue” with a capital of $50,000. Hobkirk served as Cashier. When State Banks were compelled to withdraw their circulation because of high taxes purposely imposed by the National Bank Act, this institution continued on in general banking business. The saga of this institution is best understood when the actions of Cashier Hobkirk are clearly understood. Never during the history of Waupun has an event occurred which can be compared with what Hobkirk did to The Corn Exchange Bank. He had resided in Waupun upwards of twenty-five years and enjoyed the most unbounded confidence of all. When it was revealed that the Bank had closed, the wildest excitement prevailed. The details of the matter are as follows. The Bank had been for some time without any officers except for a Cashier and Teller. It was on a Friday evening in August of 1875 that Hobkirk took the train, saying that he was going to Iowa, and would be absent a few days. The next day, the Teller, C.W. Henning, was unable to unlock the currency safe in the vault. Not wishing to take the responsibility of forcing an entrance to the safe, he immediately telegraphed to Chicago for $10,000, and to New York for $7,000, for Bank business use until Hobkirk's return. Later in the day, he was informed by telegraph from the Chicago bank that Hobkirk had appeared there, taking $8,000 in currency, after his (Henning's) order for funds had been received. This very naturally aroused Henning's suspicions. On Monday morning, he asked for assistance from someone in Milwaukee, a Mr. D. Ferguson. After arriving on the evening train, Ferguson investigated matters and returned to Milwaukee. Upon consulting with competent advisers the next day, he telegraphed word to close the doors to The Corn Exchange Bank, which Henning obeyed. Developments show a well laid plot, on the part of Hobkirk, to get away with the bulk of the funds of the Bank. The safe in the vault was used for surplus currency not needed for immediate use, and on Friday, contained $17,500. Aside from this, there was $5,000 in the vault, which under ordinary circumstances, with deposits, would have been sufficient to do business for several days. It was supposed that Hobkirk took the $17,500 from the safe, changed the combination of the locks and locked it up, anticipating that several days would elapse before any suspicions were aroused. And if the Teller had not needed the money on Saturday, Hobkirk's actions would have probably remained unknown for a few days longer. Of the amount of funds Hobkirk took with him, nothing definite is known. But it is supposed that he took the $17,500 from the safe, which, with the $8,000 drawn in Chicago, and $6,000 realized on a check which he drew on New York, added up to $31,500. A few days later, at the request of the Teller, a safe opening expert was summoned from Chicago to open the safe. But before his arrival, the Bank was taken possession of by the County Sheriff, and its assets were confiscated. The Bank's creditors held several meetings about what course to pursue in the matter. And it was discovered that all of Hobkirk’s real estate had been deeded to someone else several days before his departure. After failure of The Corn Exchange Bank, the village of Waupun went for several months without a bank. It was in early 1876 that Almon Atwood, a Waupun resident, opened The Citizens Bank in the building that had been the place of operation of the failed Bank. William Hobkirk, who will be remembered as The Corn Exchange Bank swindler of Waupun, tired of his SPMC.org * Paper Money * May/June 2023 * Whole No. 345 234 voluntary exile, returned to the area after two years, and turned himself in to authorities. At best, this experience was a hard blow for Waupun, and from what it took some time to recover. Many of the depositors lost their total earthly possessions; money scraped together by hard labor and put away for a "rainy day". So there’s the history behind this old bank. And its outcome was the norm; the people that supported it are the ones that lost. I invite any comments to my personal email address robertdalegill@gmail.com or my cell phone (580) 221- 0898. So, until next time, HAPPY COLLECTING! As I always do, I invite any comments to my cell phone number (580) 221-0898, or my personal email address robertgill@cableone.net So, until next time, HAPPY COLLECTING. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 235 The front of the Type-40 Treasury note endorsed by Maj. John C. Palmer, Commissary of Subsistence. image: Richard Lee Herron Maj. John Coleman Palmer, CS Hindman’s Division This Quartermaster Column features a new endorsement. After roughly two decades of searching, a new military endorsement is now a rarity which occurs only once or twice a year. With this new discovery from Richard Lee Herron we have now identified 275 unique military endorsements. Herron correctly identified it from original documents in the National Archives, where we find forty documents in the Officer files for John C. Palmer. Although Palmer is from Arkansas, there are no documents listed for him in that state. 1862 Following the Battle of Shiloh, John C. Palmer from Arkansas was appointed on April 17th as a Major and Commissary of Subsistence, reporting to the 1st Brigade, Gen’l Thomas C. Hindman’s Division. His commission was confirmed on the same day, taking rank retroactively to March 29th, and accepted on May 26th. Maj. Palmer was ordered to proceed on May 26th with Gen’l Hindman’s new command of Arkansas, Missouri, the Indian Territory, and Louisiana north of the Red River, all in the Trans-Mississippi District.1 Palmer signed documents as Maj. & Chief Commissary, Trans- Mississippi District, at Little Rock, Arkansas, from October 25th to November 12th. On November 26th Palmer was relieved as Acting Chief Commissary of Subsistence and ordered to report to the 1st Corps, Gen’l Hindman commanding. Hindman lost the Battle of Van Buren on December 28th, and retreated to Little Rock, Arkansas. 1863 On January 30th Gen’l Hindman was ordered to Vicksburg, Mississippi, to await orders. The illustrated Treasury note was endorsed on February 9th, 1863. The endorsement reads: “Issued Feby 9 1863 John C. Palmer Maj & CS” The Quartermaster Column No. 30 by Michael McNeil The endorsement of John C. Palmer, Maj. & CS. image: Richard Lee Herron SPMC.org * Paper Money * May/June 2023 * Whole No. 345 236 Writing letters on May 18th and June 25th at Camp Bragg, near Selma, Alabama, Palmer discussed issues relating to his bond with the Secretary of War. Writing on July 22nd from Camp Morgan at Selma, Palmer noted that “It has been very dull and we have been looking for orders to go somewhere; but up to this time Gen. Hindman has not received his orders, although he has concluded the labors of the Court of Inquiry and made his own report of his proceedings in Ark., which proved satisfactory to the President and Sec. of War. He is promised a fine command.” This is an interesting comment from Palmer, and its context can be found in the Wikipedia article reference.1 Hindman was a very controversial actor in Arkansas, and brought controversy with him to other commands. Palmer signed a voucher for 1,646 beef hides for $17,050.50 on November 22nd at Columbus, Georgia, and another voucher on December 31st at Dalton, Georgia. During the reorganization of the army in late December after Johnston replaced Bragg, Hindman temporarily commanded a corps until Gen’l Hood arrived to take command. 1864 Hindman began to support the arming of slaves and did not want to serve under Hood. He threatened resignation but was reassigned to command a division, and Palmer signed a return as a Maj. & CS of Hindman’s Division in February. The last record from Palmer is a voucher signed on March 31st near Dalton, Georgia, as a Maj. & CS. 1867 Gen’l Hindman fled to Mexico at the end of the Civil War and befriended the Emperor Maximilian. Just before the overthrow and execution of Maximilian, Hindman returned to Helena, Arkansas, and asked for a pardon from President Johnson, which was denied. He eventually resumed a legal practice in Arkansas with John C. Palmer.1 Charles Derby provided many details on Palmer’s life. John Coleman Palmer was born May 12th, 1823 at Lexington, Kentucky and died on May 1st, 1900 at Brinkley, Arkansas. He graduated in law from Transylvania University in Lexington in 1845 and in September set up his own law firm in Helena, Arkansas. He served as 1st Sergeant in Colonel Archibald Yell’s Arkansas Cavalry in 1846 in the Mexican War. Thomas Hindman became a partner in 1856. Palmer was married on January 29th, 1852, to Margaret Esther Shell. He resided in Arkansas after the Civil War and practiced law until his death. ◘ Carpe diem References: 1. en.wikipedia.org/wiki/Thomas_C._Hindman, accessed 19 February 2023. Quartermaster Column No.29 UPDATE: Hugh McDowell McElrath Charles Derby, whose internet research skills far surpass mine, solved the mysteries of Maj. Hugh McDowell McElrath’s name and his disappearance in late 1863 ― he died at the age of 48 on October 1st, 1863, and was buried at Calhoun Community Cemetery in McMinn County, Tennessee. McElrath was born on September 6th, 1815, to John McElrath and Elizabeth McDowell at Morganton, North Carolina. After Major McElrath’s death, his paroled wife, Elizabeth Lowrey Morgan McElrath, made a journey to Washington, D. C., to resolve her problems with none other than President Abraham Lincoln. Her description of her audience with President Lincoln is a treasure, not only for its description of the effort Lincoln took to meet with his constituents, but also its character descriptions of the people Lincoln had to deal with. There were far fewer degrees of freedom between a common citizen in 1864 and the President than we have now today. A scene like this is unfortunately unimaginable today. The following essay from Elizabeth McElrath and images of her and her husband are courtesy of Rob Melton, who kindly gave me permission to use them in this column. Here is Elizabeth McElrath’s vivid description of her encounter with Abraham Lincoln: SPMC.org * Paper Money * May/June 2023 * Whole No. 345 237 A REBEL WOMAN’S VISIT TO PRESIDENT LINCOLN By Elizabeth Morgan McElrath On the 14th of July 1864, I was arrested at my home in Tennessee for my “rebellious walk and conversation” and after various trying episodes, found myself on the morning of September 15th at Willard’s in Washington. With a heart torn with conflicting hopes and fears I had left Nashville under a parole and gone to Washington to implore the clemency of the President. Arriving at night, the next morning I ordered a carriage and was whirled up to the White House where I soon found an usher to take up my card, having previously written on the back a beseeching prayer for an immediate audience. It was returned with the information that the President was engaged with five senators and four governors and could not see me. I did not know just what to do, but hearing two ladies from Baltimore venting their disgust at having made four trips from that city to see the President, and failed each time, I with a willpower born of the circumstances that environed me, determined to wait, if it should be for a week, right in the ante-room. This was crowded with a mixed multitude exhibiting various degrees of impatience and all, like myself, waiting for an audience. For four mortal hours, I, poor lonely rebel, the solitary representative of a desperate cause, sat and watched the seething, moving crowd and rather enjoyed their ejaculations of impatience and disgust. One tall, seedy looking individual, having the appearance of a used up politition or a chronic office seeker, stalked through the room muttering his thunder and asserting in rather unmeasured terms – “that it was as much and more to the President’s interests to give him an audience than it was his to see him.” Another to whom I was particularly attracted was a young “greenhorn” in a spick and span new suit of citizen’s clothes with a stiff pair of yellow gloves on his enormous hands – hands that the poor fellow in his new “court dress” found superfluous appendages and could not dispose of to his satisfaction. Sometimes they spraddled their capacious grasp over each knee, then up they would go in a vain attempt to hide in his pockets, then settle hopelessly on his knees again. One poor old woman with a thin striped shawl upon her shoulders, addressed me several times, saying, “Don’t it take a long time for him to git ready” and “Haint you tired of waiting?” Tired! I was worn out, but just as I had reached the very limits of endurance we heard the glad “Open Sesame” proclaimed by the usher and what a rush then for the audience chamber! From sheer weariness some of the crowd had dispersed but there were quite a number of us left. I knew nothing about the modus operandi of approaching potentates and powers, and so followed in the wake of those whom I supposed had made the “grand entree” before. I suppose the room was the library. It was very large and the walls were covered with maps and charts and several well-filled bookcases. The men all ranged themselves on one side of the room and the women fell into line on the other, just like a spelling match at a country school. The President sat behind a long table covered with green baize and had a worn and weary expression on his face that was not dissipated when the seedy individual advanced with a profound bow and presented his scrap of paper. I did not hear the colloquy but a very few moments ended his dream of glory and he backed out of the Presence. When the Elizabeth Lowrey Morgan McElrath wife of Major Hugh McDowell McElrath SPMC.org * Paper Money * May/June 2023 * Whole No. 345 238 poor greenhorn’s turn came he looked as if he would shake to pieces before he arrived at the “port of delivery” across the table. The President hastily scanned his credentials and with a voice hurled with all the force of scorn against his new coat and yellow gloves, said “You go back to your regiment sir!” The poor fellow withered beneath that sirocco and got out as fast as he could. One after another handed in their petitions and retired, some looking glad and some disappointed. When the old woman in the shawl went up, the President handed her paper back saying, “Why my good woman your business is with a Justice of the Peace, not me.” As the ranks of petitioners were thinning I thought I had better pluck up heard of grace and go forward. But I had no written petition! I did not know that it was necessary, but as I sat in the ante-room I had found in my pocket an old letter that I had written to the President six weeks before but never mailed, so in default of something better, I concluded to present that as a something to inaugurate my talk. I was a prisoner on parole but neither felt nor affected the humiliation that such a state imposes. Had I been a man I should have trembled, but being a woman I fearlessly took the inside track and approached the President on his own side of the table, and as he reached out his hand for my petition, I grasped it and gave it quite a fraternal shake saying, “I have no written petition but here is a letter written sometime since that will perhaps elucidate my object.” As he opened it I said, “With your permission I will take a seat” for – to tell the truth – I began to feel slightly nervous. After reading down the first page he turned to me and said, “I understand you, – you are living on the lines and entertaining guerillas all the time.” “I’m doing no such thing sir” said I. “I’ll bet you have someone fighting against me now” said he. “I have but one son and he is doing his best, and that reminds me sir, that your son and mine were classmates at Harvard in ’61, and interchanged occasional courtesies such as boys are wont to do who do not receive regular remittances, and you should have some regard for the mother of your son’s friend.” But the incorruptible patriot relied, “I don’t care a thing for that.” I asked, “Do you know General Carter now at Knoxville?” “Yes, and he is no better friend of mine than you are. By what General’s orders were you arrested?” “Gen. Steadman’s, and he said by General Sherman’s verbal order. I did not know your military officials did business that way,” said I. “Well Madam, the most that I can do will be to telegraph General Steadman and if he will let you go home I don’t care.” Thereupon he wrote a telegram and shuffled wearily across the room to the bell and sent it off. As he took his seat I asked, “How long before you will get an answer to that?” “I don’t know, perhaps in two or three days.” “Well sir, in the present state of my finances I cannot remain in Washington so long. Can you let me hear from you at Nashville?” After a moment’s deliberation – “Well yes, if I should be reminded of it,” and thereupon he turned squarely from me and extended his hand to the next suitor. I withdrew to my old place in the line feeling that I was neither a wiser nor a better woman. I stood Abraham Lincoln image courtesy of Heritage Auctions, ha.com SPMC.org * Paper Money * May/June 2023 * Whole No. 345 239 there for a half-hour with the tension of my nerve and willpower considerably relaxed despair glowering down upon me from every corner of the room. The crowd was growing beautifully less, so with a recklessness born of desperation, I once more approached the President on the near side again saying as I did so, “It is but seldom that a lady has an opportunity of pleading her own cause before such a magnate as the President of the United States and my business is not in the shape I want it.” His lips relaxed into a gentle but weary smile and he said, “Now I want you to tell me just exactly what you want, for I want to get rid of you.” I told him what I wanted and he wrote to Governor Johnson. Handing the card to me to read he said, “Will that do?” I thanked him and told him it was perfectly satisfactory, adding that if his officers and soldiers had treated me with half his consideration I might not have been such an uncompromising rebel. “Well,” said he as he took me kindly by the hand and raised his other as if in blessing, saying, “Go and sin no more.” So ended my first and last interview with the lamented President Lincoln. The card from President Lincoln to Governor Johnson is in my possession and is worded as follows: Governor Johnson is hereby authorized if he sees fit to send Mrs. McElrath to her home or her friends further south. September 15 1864. (Signed) Abraham Lincoln The foregoing card was written and signed entirely by President Lincoln. /s/ Elizabeth Morgan McElrath Major Hugh McDowell McElrath, Pay Quartermaster at Knoxville, Tennessee Major Hugh McDowell McElrath SPMC.org * Paper Money * May/June 2023 * Whole No. 345 240 NOTES FROM THE FARMERS & MECHANICS BANK OF FAYETTE COUNTY, NEW SALEM PA by Gerald Dzara The Farmers & Mechanics Bank was a fraudulent enterprise set up in New Salem Pennsylvania in 1816. Timothy Smith, Aaron Torrance and Peter Black purchased a lot and erected a stone building in the settlement of New Salem. This hamlet was close to the county seat, but far enough “in the back country” to make it ideal for their plans. New Salem was "wide open," known for gambling and drinking, a great place for a bank with no assets or plans for redeeming their notes. The trio contracted with three printers for notes; John Bouvier of Brownsville, John Snowden of Pittsburgh and William Harrison of Philadelphia. Bouvier printed fractional notes in 12 ½, 25, 37 ½, 50 and 75 cents, no 62 ½ cents have been reported. These notes have rather crude images. Snowden also printed fractionals in 6 ¼, 12 ½, 25 and 50 cents. These notes are plain, generic looking. Harrison printed 1, 3 and 5 dollar notes. These have clean, detailed images. These notes were spread as far as possible, and when the scheme collapsed in 1817, the four fled to “the wilds of the Ohio” with the High Sheriff of Fayette County in pursuit with warrants for fraud for all three and one for Mr Black for murder. Smith, Torrance and Black faded from history leaving a great quantity of worthless banknotes for modern collectors. The $1, $3 and $5s are the only common obsolete notes from Fayette County. The fractionals are very scarce and may well be rare. Any and all comments and suggestions are welcome. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 241 $MALL NOTE$ By Jamie Yakes Series of 1934 $5 Kansas City with Back Plate 637 Derek Higgins picked this wonderful and scarce $5 note from a dealer’s junk box. It’s a Series of 1934 $5 Kansas City face paired with late-finished back plate 637. This type is the scarcest of all $5 back plate 637 varieties. The note has face plate 14, which was used for over ten years in two distinct stints. The Bureau of Engraving and Printing (BEP) started face 14 in August 1935 and certified the plate on September 19. They sent it to press for a short, three-day run in December, and then wouldn’t use it again for nearly seven years. In 1937, the Treasury had a need for more silver certificates; those notes were mostly issued as $1s and $5s, and the bulk of Federal Reserve Notes were issued as $10s and $20s. To meet those demands, the BEP ceased production of all $5 Federal Reserve Notes and wouldn’t resume production until July 1941. Numerous Series of 1934 faces from each district were relegated to storage for the intervening four years. For that story, see Yakes and Huntoon.1 Eighteen 1934 Kansas City faces were available when the BEP started printing $5 Federal Reserve Notes again in 1941. All those faces were sent to press in late 1942 when the BEP began printing sheets specifically for Kansas City. Face 14 had press runs in September and December 1942; in June 1944; from September to November 1944; and a final press run from July to September 1945. The BEP canceled it in December of the following year. Back plate 637 followed a different fate. The BEP used 637 as the sole $5 back master plate from 1935 until 1943.2 They then certified it as a working plate on November 10, 1944, and used it for sheet production from June 1945 to June 1949. The plate produced 600,000 sheets during its lifetime that were mated with a variety of Julian-Morgenthau, Julian-Vinson, and Julian-Snyder faces for United States Notes, Silver Certificates, and Federal Reserve Notes. What makes Series of 1934 Federal Reserve Note 637s scarce was the brief overlap in the use of 1934 faces and back 637. The first two press runs for 637 lasted from June 23 until September 24, 1945; and November 30, 1945, until January 28, 1946. During that time, the BEP concurrently used 1934 faces for Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, St. Louis, and Kansas City (no 1934 faces for Chicago, Minneapolis, Dallas, or San Francisco were used after April 1945). The last 1934 face on press was for Richmond on January 23, 1946. Seventeen Kansas City faces were used along with 637. This was the second most of any district (Atlanta had 18). Face 14 was on press from July 9 to September 24, 1945, which coincided with the first press run for 637. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 242 Diligence served Higgins well. Other collectors will need an example of this variety to complete a set $5 Federal Reserve Note varieties or a collection of back plate 637 notes. There is a greater story to be told of this variety. Stay tuned for this column in the next issue. Notes 1. Yakes, J., and P. Huntoon. “$5 Federal Reserve Series of 1934 Blue-Green Seal, Yellow-Green Back, Non-Mules.” Paper Money Whole No. 344 (2023, Mar/Apr): 136. 2. Yakes, J. “The Extraordinary First Ten Years of Micro Back 637.” Paper Money Whole No. 303 (2016, May/Jun): 212. References Record Group 318—Bureau of Engraving and Printing: Entry P1, “Ledgers Pertaining to Plates, Rolls and Dies, 1870s-1960s,” Containers 147 (1934 FRN plate histories). National Archives and Records Administration, College Park, Maryland. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 243 by Robert Calderman There Can Be Only One! Major auctions always have a handful of incredible treasures for dedicated collectors to fight for. The excitement of going to battle and dueling for prized trophy notes can be the ultimate pinnacle peak moment of joy or pain for the entire year. It all depends on the result, sweet glorious victory or a brutally painful defeat! Collectors had a potentially once in a lifetime opportunity this past January, as a very important five dollar silver certificate became available for only the second time ever at major public auction. The Heritage FUN auction is one of the biggest highlights of the year for rarities to become available and for collectors to dream about the opportunity to add legendary notes to their collections. This year’s FUN sale did not disappoint, and our featured note in this installment found a new home with a very fortunate collector. A note with this level of heavy circulation is usually found in the bargain box of your average coin show bourse table or local brick and mortar coin shop. Even as a star note, the initial appearance does not shout, “Buy me!” to the typical observer. Instead, there is a very good chance it loudly screams, “Eew!” to the unbeknownst collector. However, if you are an advanced student of the hobby, you know exactly what makes this note an incredible miracle survivor, one that may never be equaled in our relative lifetimes. First appearing in 2015 at the Central States Heritage Auction, this unique Fr.1653 mule star with back plate #629 made its glorious debut as part of the Pat Barnes Collection. Amazingly the note sold for the bargain price of $7,050. Then almost a full eight years later, collectors had a second chance to acquire this earthy PMG VF25 star note when it appeared again at this year’s FUN sale as part of the Douglas Gregory Collection. This time, the $5 rarity brought an even sweeter bargain price of $6,000!!! So why on earth are we considering a note with a, beauty can only be found in the eyes of the beholder, crusty appearance to be so special? How can a VF25 star note example with pinholes even be considered a bargain at over five thousand dollars!?! Let us take a closer look Back plate 629 $5 mules are amazing treasures! Any example found in any grade should be considered an exceptional trophy. Why? What do three little numbers on the bottom right hand corner of the back of a note matter? What a seemingly insignificant anomaly! If you’ve been around the block a few times, the easy notes are already in your collection. The type notes have all been acquired and it takes more than a common block note in Top-Pop condition to get your motor running. What we have featured here is not only an exceptional rarity it is absolutely unique, the only example known to exist in any grade! 629 mules are the result of a cost saving recycling measure in the 1940’s by the Bureau of Engraving and Printing. SPMC.org * Paper Money * May/June 2023 * Whole No. 345 244 Instead of making brand new printing plates that required using metals that were needed for the war effort, any retired plates kept for reference, including partially completed plates were to be made ready for service and utilized. The caveat with back plate 629 was the fact that it was an old gauge plate, an out of date format with different specifications that was no longer supposed to be used in production. None the less, over a very brief three and a half glorious months beginning November 24, 1947 and ending February 2, 1948 a total of 35,225 12-subject sheets of 629 backs were produced. These would go on to be mated amazingly with three different seal color types: Red, Blue, and Green! Specifically 1928E Legal Tender H-A block, 1934C Silver Certificate: M-A, N-A, *-A, and finally 1934C Federal Reserve Notes with known examples currently observed within the following blocks: B-C, C-A, D-A, and G-B. The most prolific observed examples fall under the N-A block of silver certificates with a total of 18 examples graded by PMG. Finding an example of an original XF or higher 629 N-A block SC is very significant as the majority of known examples are found in low grade VG to VF condition. Only six examples have reached coveted uncirculated status at PMG. For the M-A block silver certificate examples, all known notes are low grade with only two examples in total certified by PMG. 1928E legal tender 629 notes are extremely tough to locate, only five examples in all grades combined have been certified by PMG with just two notes reaching uncirculated status. Incredibly, the finest known 65EPQ example is part of a spectacular changeover pair! For the Federal Reserve Notes, out of all four districts known, there have only been nine individual notes observed. PMG has graded six of these: (2) New York, (0) Philadelphia, (1) Cleveland and (3) Chicago. Amongst all of this fabulous 629 mule rarity, the delicious icing on the cake came to light in 2014 as an incredible star note example was first discovered on a silver certificate! The very first star of the three possible types to appear and with only 422,700 notes in total featuring 629 ever to be printed, what an unlikely occurrence for a star to even be produced at all, let alone survive the harsh battlefields of circulation! The likelihood that another star 629 example will ever surface is extremely unlikely. While it is not entirely impossible, the odds are dramatically weighted on the probability scale against the possibility! If you’ve seen the classic 1986 movie Highlander, sometimes you just have to accept the fact that, “There can be only one!” Do you have a great Cherry Pick story that you’d like to share? Your note might be featured here in a future article and you can remain anonymous if desired! Email scans of your note with a brief description of what you paid and where it was found to: gacoins@earthlink.net Recommended reading: The Enduring Allure of $5 Micro Back Plates 629 and 637 by Peter Huntoon Paper Money *Sep/Oct 2015 * Whole No. 299 SPMC.org * Paper Money * May/June 2023 * Whole No. 345 245 OUR MEMBERS SPECIALIZE IN LARGE SIZE TYPE NOTES They also specialize in National Currency, Small Size Currency, Obsolete Currency, Colonial and Continental Currency, Fractionals, Error Notes, MPCs, Confederate Currency, Encased Postage, Stocks and Bonds, Autographs and Documents, World Paper Money . . . and numerous other areas. THE PROFESSIONAL CURRENCY DEALERS ASSOCIATION is the leading organization of Dealers in Currency, Stocks and Bonds, Fiscal Documents and related paper items. PCDA To be assured of knowledgeable, professional, and ethical dealings when buying or selling currency, look for dealers who proudly display the PCDA emblem. For further information, please contact: The Professional Currency Dealers Association PCDA • Holds its annual National Currency Convention in conjunction with the Central States Numis- matic Society’s Anniversary Convention. Please visit our Web Site pcda.com for dates and location. • Encourages public awareness and education regarding the hobby of Paper Money Collecting. • Sponsors the John Hickman National Currency Exhibit Award each year, as well as Paper Money classes and scholarships at the A.N.A.’s Summer Seminar series. • Publishes several “How to Collect” booklets regarding currency and related paper items. Availability of these booklets can be found on our Web Site. • Is a proud supporter of the Society of Paper Money Collectors. Or Visit Our Web Site At: www.pcda.com Susan Bremer – Secretary 16 Regents Park • Bedford, TX 76022 (214) 409-1830 • email: susanb@ha.com Paul R. Minshull #16591. BP 20%; see HA.com. 71676 DALLAS  |  NEW YORK  |  BEVERLY HILLS  |  CHICAGO  |  PALM BEACH LONDON  |  PARIS  |  GENEVA  |  BRUSSELS  |  AMSTERDAM  |  HONG KONG Always Accepting Quality Consignments in 50+ Categories Immediate Cash Advances Available 1.6 Million+ Online Bidder-Members For a free appraisal, or to consign to an upcoming auction, contact a Heritage Consignment Director today. 800-872-6467, Ext. 1001 or Currency@HA.com Fr. 1202 $100 1882 Gold Certificate PMG Very Fine 30 Realized $750,000 – Long Beach 2022 Fr. 2230-E $10,000 1928 Federal Reserve Note PMG Choice About Uncirculated 58 Realized $504,000 – Long Beach 2022 Fr. 2220-F $5,000 1928 Federal Reserve Note PMG Choice Very Fine 35 Realized $216,000 – Long Beach 2022 Fr. 187j $1,000 1880 Legal Tender PMG Choice Very Fine 35 Realized $360,000 – FUN 2023 Fr. 377 $100 1890 Treasury Note PMG Very Fine 30 Realized $336,000 – FUN 2023 Fr. 284 $10 1878 Silver Certificate PMG Very Fine 30 Realized $312,000 – FUN 2023 U.S. CURRENCY SIGNATURE® AUCTIONS Now Accepting Consignments to Our Industry-Leading Signature® Auctions