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Queerer than a three dollar bill....
blaisepascal
Before the US Civil War most paper currency wasn't printed by the US Government but rather by private banks. The Bank of New York issued currency, so did the Bank of Tennessee and over 1600 other state-chartered private banks. With over a thousand banks, each printing several denominations of bills, there were thousands of types bills floating around in circulation. Counterfeiting was common and pathetically easy -- a merchant in New York would have little contact with a purported $10 note from the 1th Bank of Atlanta. Merchants had to rely on books which printed pictures and descriptions of various notes with information on how to detect counterfeits. So the New York merchant might be able to verify that the purported bill was genuine, but might not.

Different banks found it convenient to print different denominations, so you'd have $1 bills, $2 bills, $5 bills, even $3 and $7 bills. So it was genuinely possible, if you got it from the right bank, to get a perfectly legal $3 bill.

So my question is.... Is a $3 bill issued by a State-chartered bank between 1836 and 1861 still legal tender? The US generally doesn't have a policy of invalidating currency in circulation; the standard technique is to remove old worn currency from circulation, but not to actually declare currency invalid. A 1-cent stamp issued in 1900 can still be affixed to an envelope and used to pay for postage, a $1 gold certificate issued in 1929 is still legal tender for $1. What about a $3 bill issued by the Bank of New York in 1847?

(Note: I am well aware that if I had a genuine non-counterfeit $3 bill issued by a state-chartered bank from between 1836 and 1861 that was in good enough condition to use as currency it would be worth far more than $3 to a collector. That's not the question. I'm also aware that if I were to successfully deposit a $3 bill in a bank it would be removed from circulation and probably destroyed immediately.)

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Oddly enough, do you know how few counterfeiters actually do that? *snort*

If I find the site that I got the info from, I'll post it for Buddha - it was interesting to note that the money fakers always seem to look at the new designs as the thing to break. I guess the goal is to 'hack' the new design, rather than make huge sums.

(ANd then I remember the case of the old man they found who had counterfeited probably millions in his lifetime - all one dollar bills, that he ran off when he needed something. Never bought yachts or anything, just things to make himself comfortable.)

In answer to Buddha's question, though, I believe that it is expressly stated somewhere that ONLY Federal issue is considered valid. Any State issued currency is merely interesting.

What's interesting is that the currency I'm talking about wasn't even State issued. It was issued by private banks with State charters -- like the locally owned and run Tompkins County Trust Company.

(Deleted comment)
I hear Alan hitting his head against the monitor right now

Alan isn't in favor of this whole paper money thing. It's not his thing, it doesn't go clink.

A different question would of course be if a US coin minted in the same time period would be still legal tender, and I think the answer there is a definite yes. I would be happy to accept, as payment for a debt, the face-value of the debt in genuine US 1/2 cent coins.

he likes geeking weird stuff like for the sake of thoughh

I'm pretty sure that all non-Treasury-printed notes are non-monetized at this point. You're right that the US is loathe to formally withdraw currency or coinage from circulation, but this was a big enough change I suspect they made an exception.

According to the US Treasury's website:

"United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues."

My reading of this is that "United States coins and currency" refers to coins & currency minted or printed by the US government. (Until the 1920s, the treasury printed some notes that were distributed through national banks and had the national bank's name printed on the bill.)

The website goes on to say:

This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.

I read this to mean that if a debt has already been incurred, any form of US currency is considered a legal & valid offer of payment, but a private business is not required to accept any particular form of payment in exchange for a service not yet rendered.


Yes I knew that. The specific question was whether currency legally issued by private State-chartered banks during the mid-1800's was considered legal tender. During this time period the Treasury did not print paper money and there were no Nationally chartered banks.

I have a partial answer: in 1866 the Federal Government imposed a 10% tax on the notes of State banks -- which drove non-Federal currency out of circulation.

Assuming I was able to find a $3 bill legitimately issued by a State-chartered bank from the mid-1800's, and assuming that it hasn't be demonetarized, then its value if redeemed would be no more than $2.70.

The State-chartered bank currency is no longer legal tender. As you've noted, though, it's generally highly collectible, especially in top-notch condition.

I spent over four years working in the coin business (and my father made at least part of his living at it for the first 25 - 30 years of my life, so I was always around it). When we got old U.S. currency in that was too beat up to be collectible and that was still legal tender, we'd spend it and enjoy the strange looks we got from store clerks and bank tellers. When we got currency from State-chartered banks in that was too low grade to be sold on its own, we'd add it to a "junk currency lot" that included other non-legal tender but still cool currency and wholesale it for what amounted to a fraction of the face value. Those lots typically ended up as parts of starter collections for kids. It was rare that we got currency from State-chartered banks that was in such poor condition that it qualified for a junk lot, but it did happen. If it were spendable, we'd have spent it. So although I can't point you to a specific source for the knowledge that I have, I can guarantee that it's accurate.

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