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    Historic Fr. 1 $5 New York Demand Note

    Fr. 1 $5 1861 Demand Note PMG Very Fine 20.
    Considered by most as the first circulating Federal currency created, the 1861 Demand Notes played an essential role in Civil War financing. They introduced "greenbacks" into commerce and our lexicon, but unfortunately ushered in the era of fiat paper currency with the subsequent Legal Tender notes in 1862. All Demand Notes-less than 500 are known of all types-are scarce to exceedingly rare; some varieties were authorized but are unknown today.

    With the Civil War in progress, expenditures rose as the army and navy expanded, and revenue declined as trade plummeted. The depleted coffers of the United States Treasury created the need for the issuance of currency. Under the direction of Salmon P. Chase, Secretary of the Treasury, enactments for Federal paper money moved forward. The acts of July 7, 1861, and August 5, 1861, authorized an emission of $60,000,000; they were neither legal tender nor interest-bearing (like the slightly earlier Two-Year notes). Although the obligation does not specify payment in gold, Chase's circular sent to the Assistant Treasurers in September of 1861 regarding the aforementioned acts stated: They must be always equivalent to gold, and often and for many purposes more convenient and valuable." However, the Treasury's low supply of gold dwindled further and further, until specie payments were suspended on December 28, 1861.

    The Treasury needed to continue issuing notes, but without the promise of payment in gold or acceptance as the equivalent of gold. In 1862, the Legal Tender Notes were introduced. They quickly depreciated versus gold (in 1864, it would take more than $2.50 of those notes to purchase $1 in gold). That meant that Demand Notes, which were on par with gold, were much more valuable than the Legal Tender Notes, particularly to importers who used them for customs duties requiring payment in gold.

    Only $53,000 of the issued $60,000,000 (less than one percent of the total issued) in Demand Notes are still outstanding, with the majority redeemed or destroyed during the war. Most were issued from the New York, Philadelphia, and Boston locations. Far fewer were issued from Cincinnati, and the fewest from St. Louis, the westernmost office.

    All the Demand Notes are exquisitely engraved and printed at the American Bank Note Co. New-York. They bear a striking resemblance to later Obsolete banknotes printed by the firm. The left end shows the Freedom statue (a vignette that appears on several Obsolete banknotes) that crowns the dome of the U.S. Capitol. The right end shows a portrait of Alexander Hamilton below a "5" die. The Federal Government contracted this work to the ABN prior to the organization and formation of our own Bureau of Engraving and Printing. The ABN used state-of-the-art anti-counterfeiting devices: the $5 face shows intricate bordering with a repeating FIVE pattern and a green guilloche with a large "5" in the center; the intricate green back crosses the entire note and comprises a pattern of "5" micro-counters with UNITED STATES OF AMERICA curving at top center and FIVE DOLLARS arcing upwards at the bottom. In between, FIVE is outlined in white on dark green and each end has a "5" counter.

    New York Demand Notes are encountered, but often in low grades and with faults. This Series 15-position D example is one of approximately 130 pieces currently known and is quite attractive. It is also one of the lowest serial numbers currently on the census. The green color on both sides, especially the intricate back, is vibrant for the technical grade. Complete and nicely balanced margins are on both sides, and the note is in a comment-free encapsulation. The handwritten clerks' signatures for the officials are strong. Mike bought this in 1989 from Dean Oakes. An historic issue that set the stage for our modern-day paper money. This is a perfect representative type note for any Federal set.
    From The Mike Coltrane Collection.

    Auction Info

    Auction Dates
    June, 2021
    24th-25th Thursday-Friday
    Bids + Registered Phone Bidders: 17
    Lot Tracking Activity: N/A
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