Fr. 202a $50 1861 Interest Bearing Note Very Fine....

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1861 Interest Bearing Note

Fr. 202a $50 1861 Interest Bearing Note Very Fine. We had the honor of selling this note once before in May of 2001 which was the first time any signed and issued example of this type was ever sold at public auction. At that time, we described the note as follows. "For the serious collector of U.S. Currency, the thought of getting to own this unique note someday should equal the thrill of being able to experience all of one's childhood Christmas mornings at once. This cataloger, jaded by great notes, to say the least, will never forget the moment he laid eyes on this piece or held it in his hands for the first time.
This issue, unlike many of the Interest Bearing or Compound Interest Treasury Notes, represented real currency which was intended to circulate as money and did indeed fulfill that purpose. As researcher Ron Horstman titled his monograph about these notes in the May-June 1988 issue of Paper Money magazine, this issue represented 'The First Greenbacks of the Civil War,' and was a direct precursor of the lower denomination Demand Notes which followed this issue by only a few months.
By early 1861, the government of the United States was virtually insolvent, with the national debt having soared from $29 million in 1857 to over $64 million by the time the enfeebled and dispirited Buchanan administration departed Washington in 1861. On March 2, 1861, just two days before President-elect Lincoln was to take the inaugural oath, and with the threat of civil war looming, the Congress, faced with the prospect of the nation's financial ruin, overwhelmingly passed an act calling for the issuance of bonds, or, if such bonds could not be sold at full par value because of a lack of market support, the issuance of Interest Bearing Notes in place of these bonds. The treasury notes were to be issued in denominations 'of not less than $50 and bear interest at the rate of 6 percent per annum.'
As former Comptroller of the Currency John Jay Knox later observed in his book 'United States Notes-A History,' published in 1885, the choice Congress allowed the incoming administration was most fortuitous, as the market for U.S. government securities collapsed after the commencement of hostilities with the attack on Fort Sumter on April 12, 1861. Notes were quickly printed under the Act of March 2nd, and, conforming to that legislation's requirement, only in denominations of $50, $100, $500, and $1000. As the Horstman article explains: 'These notes were, however, a general obligation of the United States government, and since they were payable to the bearer, they circulated in commercial transactions. A description of the $50, $100, $500, $1000 two year notes is found in 'Hodges American Bank Note Safe-Guard,' along with other federal and state chartered bank issues of the day.'' To fulfill the public's need for smaller denomination circulating notes, Congress passed enabling legislation on July 17, 1861. These Demand Notes were issued immediately following their plate date of August 10, 1861. Interestingly, this $50 example bears the hand-written issue date of August 9, 1861, literally on the eve of the Demand Note issue date.
The note we offer here is a clean, bright Very Fine, with strong printing, excellent colors, and no visible defects. There are minor, consummately expert restorations at the upper corners that affect no design elements but for the frame line and the center fold, which likely had been partially split at one time. This note is the only existing redeemable example not only of its denomination, but of its entire issue, as no $100, $500, or $1000 exists in or out of government hands. Three examples of this design type exist: the currently offered redeemable legal tender piece, which has changed hands only once since 1970 and has resided in a private collection since 1983; a redeemed and punch cancelled piece held by the Bureau of the Public Debt in Washington, DC; and an unsigned, unissued punch cancelled Specimen sold at auction 20 years ago. Just as with the Demand Notes, the words 'For the' were initially handwritten in front of the printed 'Register' and Treasurer' and then signed by clerks. After a short while, the words 'For the' were added to the plate to save time, creating a second variety. This note, which is of the first variety, has the words 'For the' handwritten at the left and signature of clerk G. Luff. On the right, however, Treasurer F.E. Spinner has affixed his own distinctive hand signature, and the words 'For the' therefore do not appear.
This note represents the only instance in the field of U.S. Currency where a single example exists in collectors' hands of an entire design type. The note is totally different in appearance from any other issue ever printed. The face is printed in black with the borders and overprint in bright orange, and the back, unlike any other U.S. Currency issue, is printed in blue. Both sides were executed for the government by the National Bank Note Co. Interest Bearing Notes as a category are the rarest type of currency issued by the United States. The Friedberg catalog comments: 'Interest Bearing Notes are the rarest of all issues of American currency. Even advanced collectors, after many years of ardent search, will not have had the pleasure of seeing one of these notes. Such rarity is only natural for these notes...when one considers the perilous state of the nation in those years, the scarcity of money, and the general fear, it was a rare person indeed, one either supremely confident or sublimely ignorant, who did not turn in his interest bearing money the moment the interest became payable.' When Robert Friedberg wrote those words in 1953, it was indeed true that most collectors never had the opportunity to own an Interest Bearing Note. Now, 48 years later, quite a number of new pieces have come to light, and now just under 120 examples of Interest Bearing Notes are known for all denominations, types, and issues including notes in collectors' hands, museums, and government institutions. Many advanced collectors now have the opportunity to own an Interest Bearing Note, but only a single collector can own a note of this design type. Only one person can own an example of redeemable circulating U.S. paper money from he Civil War period that predates the 1861 Demand Notes. Again, only a single individual can own any note of any denomination from the March 2, 1861 issue. That collector will be the individual who steps up tonight and purchases this unique example." In that sale, this piece realized $605,000. A figure which will be unreachable on today's market, but for this incredible note, we feel the $250,000 mark should be easily surpassed.