Early Bank Notes Reveal a History of Our Country

QUESTION: My dad collected old currency and coins. Some of the currency is quite old and doesn’t look anything like today’s money. What can you tell me about this bill? And why is it so different from the currency we use today?

ANSWER: American banknotes have not always been green. In the mid-19th century, banknotes contained a rainbow of colors. By examining these paper artifacts, Collectors can take a tour of America circa 1800.

Prior to the Civil War. the U.S. government didn't regularly issue paper money. But people still needed to use some form of currency, so banks issued their own paper money—bank notes.



Many types of notes circulated during this era, known as the golden age of U.S. currency, which generally began in the late 18th century and lasted until the Civil War. The most common type of note, the "demand note," entitled the bearer to a certain monetary amount. Individuals would deposit something of value in the bank (usually herd current stock), and the bank would issue to the individual on-demand notes that he or she could use as a vehicle of exchange to purchase items from a merchant who could then redeem the note with the bank, that "on demand" would exchange the bank for gold or silver coins issued by the federal government.



A bank's capital, which often appears on the banknote, (capital $1,000,000), guaranteed the value of these notes, and for this reason, two officials often signed each note to ensure that a greater amount in banknotes was nut issued than the bank could cover. Private hanks and public banks, which obtained a charter to operate, and savings banks, which operated under a different set of rules, all issued the demand note. Some demand noted contained a space in which a bank official wrote a payee's name and thus allowed a bank to specify the identity of the hearer, who would endorse the note by signing its often blank reverse as one would endorse a modern cheek. Other types of notes circulated as well. Post notes worked like bonds and were redeemable only after a predetermined time noted on the bill (e.g. "redeemable after six months").



Private merchants also issued notes, sometimes referred to as scrip, which they used to pay employees. Some laborers were paid only in scrip, which was generally redeemable only at company 'stores. This often led to the economic enslavement of laborers who "owed their soul to the company store." Railroads, shipping lines and many other type, of merchants issued notes to their employees.

While the bank note system worked, poor or dubious business practices threatened the integrity of the private and state banking system that ran amok in the first half of the 19th century.

Most of the time, banks were honest. But stories of fraud were rampant. banks that issued more money than their capital guaranteed and banks with a phantom capital, or no money to guarantee their notes.

This led to the distrust of unfamiliar hanks, and as a result, the notes did not work well for inter-state banking. A merchant in one state wouldn’t honor a bank note from an unfamiliar bank in another.

With so many different bank notes circulating, the proliferation of fakes or counterfeit notes was inevitable. The sheer number of issuers and varieties of notes issued—more  than 1,600 banks in 34 states collectively issued more than 10,000 varieties—provided the hungry counterfeiter with a virtual smorgasbord.

The word counterfeit refers to an illegally replicated note. Some genuine notes had their denominations altered; consequently, the alteration raised the value of the note, hence the name "raised note." A variation on this theme, the "altered" note also appeared. An altered note was a genuine note altered to look like another bank's product. The more artistically inclined produced original designs and added a legitimate hank's name on the notes, thus creating a spurious note.

In fact, so many counterfeit notes circulated—some 55.000 varieties—that bank officials began to stamp or handwrote the word “counterfeit” across the surface of the note.

During the Civil War, the U.S.Congress took action to end private issuance of banknotes. Congress passed legislation that forbade the private issuance of currency, and the federal government began issuing its own notes. Banks could still issue currency bearing their own name, but to do so, they needed to obtain a charter from the federal government, which entitled them to issue notes, known as National Bank Notes, supplied by the federal government.



The new notes led to the modern association of money with the color green. This relative lack of variety could make the counterfeiter's job much harder, though, and the number of attempted counterfeits dwindled.



The most interesting aspect of obsolete banknotes is the detailed and often colorful vignettes they contain, which collectively offer a lithographic history of American culture. Each bank note told a story. A $1 note from The Merchants and Planters Bank f Savannah. Ga., for examplel, contained the image of a covered wagon. When the note was issued in the 1830s, the covered wagon would have been the preeminent mode of transportation taken by settlers traveling to the Western territories.



Scrip from the Delaware Mine on Michigan's Upper Peninsula features the image or a copper finer wielding a pickax. A $5 note from the. Bank of the Commonwealth in Richmond, 'a., contain, the image of planters standing next to the barrel of tobacco—one of the crops that drove Virginia's economy in the antebellum era. Moments frozen in time, dense images offer the closest thing possible to a photograph of 19th century life.

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A Penny Saved is a Penny Earned

QUESTION: I’ve always liked cast-iron banks. I see them displayed on the counter at my bank—I’m sure these are reproductions. So when I discovered one that wasn’t too pricey in a local antique shop, I scooped it right up. The bank has its name, “Jonah and the Whale,” displayed in a panel underneath the figures of Jonah and the whale. How can I tell if the bank is authentic? And what can you tell me about this bank?

ANSWER: Cast-iron mechanical banks have always been a favorite of American collectors. Perhaps it’s because they recall our country’s heritage, but more likely because they’re cute in a clunky sort of way.

Collectors have sought after old mechanical banks for over 50 years because of their  nostalgic look at America’s past.
 
Mechanical banks began to appear shortly after the end of the American Civil War and the American public was eager to purchase them. At the time, a severe coin shortage occurred because people saved them. In fact, the situation got so bad that shopkeepers had to resort to using postage stamps to make change. Both the Union and Confederate governments began issuing paper notes to supplement their coinage and help relieve this problem. But people didn’t like paper money because it could become worthless quickly. Coins, on the other hand, would always retain the value of their metallic content.

So mechanical banks became a product of the times and their popularity remained strong well into the 20th century. Not only were they fun toys, but parents could effectively use them to teach their children the practical aspects of being thrifty.

The Shepard Hardware Company of Buffalo, New York, was probably the premier maker of cast-iron mechanical banks. Walter J. and Charles G. Shepard founded their company to produce various pieces of hardware, but in 1882, they began a sideline business making cast-iron mechanical banks. Charles was an inventor.

Shepard entered into the mechanical bank field in about 1882 and available information indicates they sold out their line of toy banks in 1892. The impact Shepard had on the mechanical bank market was astounding when you consider the fact they were able to design, patent, produce, and effectively distribute 15 high quality banks within a time span of only about 10 years.

Their banks sold for $1 each, but dealers could purchase them wholesale for $8.50 a dozen, or about 70 cents each.

All Shepard banks had these common features. First, their artistic paint jobs were unsurpassed for attention to minute detail. Unfortunately, the company didn’t use any primer coating to prepare the metal for painting, so the paint eventually flaked off their banks.

Second, each Shepard bank has its name embossed on one of the casting pieces. The name is generally in large bold letters located on the front panel of the bank. Other cast-iron bank manufacturers didn’t put the names of their banks on them. This resulted in many banks becoming known by names other than the ones originally given to them by their makers.

Third, each Shepard cast-iron bank is very heavy for its size. It’s almost as if cast iron was free and had no bearing on the production cost of the items.

In all, Shepard produced 15 different banks. They have become known for two in particular—the Uncle Sam bank (discussed in my blog from July 8, 2015) and the Jonah and the Whale bank. Charles Shepard received a patent for the latter bank on July 15, 1890.  The overall length of the bank was 10-1/4 inches.

Shepard decorators painted the side and end plates of the base with yellow corners, and the letters of the name in gold. They striped the edges of the bottom plate and top part of the bank in yellow and black and painted the water and waves realistically in light bluish-green with white highlighting. The whale is a dark green-black color with a red mouth and white teeth. The boat is an off shade of yellow with stripes of gold, white, blue and red. The robes on the two figures are red and blue, and they have white beards, flesh color faces and hands.

To operate the bank, a person would place a coin on the back of the figure of Jonah. Then the user would press a lever, recessed in the end plate under the rear of the boat. As the whale opened his mouth wide, the figure holding Jonah moved forward in the boat towards the whale. The figure of Jonah tilted downward as though entering the whale's mouth, but instead the coin flew off his back into the whale. Releasing the lever returned the figures in the boat to their original position. The whale’s mouth closed and re-opened as though swallowing the coin. The whale’s lower jaw continued to move up and down for several seconds after the action takes place. To remove the coins, the user would use a key to unlock a trap in the underside of the base.

In 1892, Charles and Walter Shepard sold their cast-iron savings bank business to J. & E. Stevens of Cromwell of Connecticut.

Today, original Jonah and the Whale banks bring very high prices—if they’re in mint condition. Unfortunately, most are not.

Saving With Uncle Sam

QUESTION: When I was a child, my father gave me an cast iron Uncle Sam bank for Christmas. I recently purchased a similar one at an antique show. It stands 10 ½ inches tall and weighs about 7 pounds.  I’m not sure if it’s authentic. How can I tell if it is and what can you tell me about the history of my bank?

ANSWER: In all likelihood, the bank you bought at that antique show is a reproduction which probably dates from the early 20th century.

Peter Adams Jr. and Charles G. Shepard created the first Uncle Sam bank. But it was the Shepard Hardware Company of Buffalo, New York that produced the first one in 1886. This particular cast-iron mechanical bank features an umbrella-carrying Uncle Sam standing on a decorated base holding a suitcase. By placing a coin in his hand and pressing the knob on the box, Uncle Sam lowers his arm and puts the money into the U.S Treasury bag. The beard on his lower jaw moves as if he’s talking.

At the time it appeared on the market, the bank showed Uncle Sam, who represented the U.S. Government, taking citizens' money.

So who was Uncle Sam? The first use of the moniker “Uncle Sam” supposedly appeared during the War of 1812 in reference to Samuel Wilson, who was a meat packer who inspected meat  destined for the troops. People called him Uncle Sam, and he just so happened to have the same initials as the new country.

Toy banks became popular in the United States during the 18th century after hard currency went into circulation. But it wasn’t until the early part of the 19th century that the first chartered savings bank in New York City opened its doors. Being thrifty soon became a popular trend, and people began using toy banks as a way to follow the encouraging words of Benjamin Franklin—“A penny saved is a penny earned.”

Your bank was possibly cast from an historic mold made by Shepard. If Uncle Sam’s beard moves as the coin in his spring-loaded hand drops into the U.S. Treasury bag at his feet, then your bank is authentic.

Many reproductions have been made since the first Uncle Sam bank. Those produced in the 1920s may still hold considerable value, but never as much as the original. The most recent large scale production of these banks occurred during the U.S. Bicentennial celebration in 1976. But manufacturers cut corners and didn’t make these banks from real cast iron, choosing to use a lighter, cheaper metal instead. These cheap knockoffs also had more details than the originals. While some look similar to the originals, most can be spotted by the addition of embellishments and added details.

If your bank is heavy, it’s probably an early reproduction. Also, if the paint is really bright, it most likely is a later reproduction. Some people have repainted originals, but this is a mistake and ruins their value. Some reproductions also have incorrect colors. The correct colors should be a blue full dress coat with red and white striped pants. On the bottom of the base should be the words, "PAT. JUNE 8, 1886". Most reproductions show the mark, “Made in Korea” or “Made in China.” But some reproductions only have an eagle and banners on one side. On the original they appear on both sides. The beard moves on the originals but doesn’t move on many reproductions. A modern reproduction, made in Taiwan, sells for only about $15 to $25.

The value of these banks is always dependent on their condition, but many of the originals have little paint left on them. In good working condition and with all of its original paint, an 1886 bank could be worth between $1,000 and as much $18,000.

Protecting Your Investment

QUESTION: I’ve been collecting antiques and such for a number of years. Do I need extra insurance or will my homeowner’s policy cover what I have?

ANSWER: As a collector, you’ll want to take care to see that your treasures are adequately insured. And even if you have coverage, you may find that coverage you purchased several years ago leaves you financially vulnerable today.

Most collectors use one of three types of insurance—that found in a standard homeowner's policy, special endorsements to that policy, or a "floater" policy for valuables such as art and antiques.

The policy that covers your home includes insurance for your personal property as well as the structure it's housed in, usually at 50 percent of the amount of coverage for the dwelling. This means that if you have insured your house for $150,000, your belongings are protected for up to $75,000.

Is this amount sufficient for your collection as well as all your other belongings? That all depends on what your collection contains. If you have a small collection of "collectibles" or less expensive items, the coverage in your homeowner's policy is probably enough. But keep in mind that standard policies usually fix limits on certain types of items such as currency, documents, silver, and jewelry. You should read your policy carefully to see if these limitations affect your collection.

The coverage in homeowner's policies is "unscheduled," that is, it groups all of your goods together rather than listing and valuing them separately. Should a theft or fire occur, it’s your responsibility to prove ownership and the value of the items in your collection. The insurance company will then calculate your losses on the "actual cash value" of those items, figuring in depreciation. If you collect anything other than certifiable antiques, complications can arise over the settlement.

Your insurance company may deem "old and worthless" items you consider “vintage.” So you should keep receipts and other records, especially for less expensive "collectibles" and offbeat items—be sure to print out receipts for anything you purchase at online auction sites. Though claims adjusters are usually on target, any documentation will help —the more the better.

Even if you decide to work within the limits of your standard homeowner policy, you may find that increased coverage is necessary. While that $75,000 may sound like a lot of insurance, you’d be surprised how quickly the normal, everyday contents of a house add up, leaving only partial coverage of your losses.

To remedy this problem, most policies offer the option of a special "endorsement" which allows for a higher percentage of personal property coverage for an additional fee. If you have a collection of any size or value, you’ll probably want to take inventory of your home's entire contents to see whether you should purchase such an endorsement.

Finally, you can also purchase a separate policy to cover valuables such as art, antiques, silver, and the like. And in this case, silver means Sterling, not plate. These policies, known generally as "floaters," cover "scheduled," or listed, items. Each item is listed separately with its own value, usually by means of a written professional appraisal. Those cheap or free online appraisals just won’t do. The benefits of floaters are that each items is covered for its full replacement value because ownership and value are  pre-established, In addition, most floaters will protect the collection against loss as well as theft, a benefit not available through most homeowner's policies.

The cost of such a floater will of course depend on where you live and what you’re insuring. Very portable items of recognizable value command the highest rates. For instance, the amount for jewelry is always higher than for artwork. Prices may also be lower if you store your collection—or part of it—in a safe or safety deposit box, or if your home has a security alarm system. If your collection is worth more than $50,000, your insurance company will probably insist that you install such a system.