Obsolete U.S. bank notes comprise currency that is no longer in circulation. By currency one means legal tender or government authorized monetary units.(1) In U.S. history bank notes were printed by state chartered banks until 1861; following this period the U.S. Department of the Treasury became responsible for the printing of legal tender.(3) Even with centralized printing of currency, currency still becomes obsolete when changes or improvements to the bank notes occur.
• Reasons why bank notes become obsolete
Bank notes become obsolete for a number of reasons, one being the aforementioned centralization of currency printing. Other reasons include changes to security features of the currency that prevent counterfeiting, and more cost efficient methods of printing. In the U.S., numerous printings of banknotes have occurred, and are documented by the U.S. Treasury.(1) Another reason some U.S. bank notes became obsolete was lack of use in the case of $500, $1000 and larger denominations.(1)
• Obsolete bank notes as collectors items
Obsolete bank notes are sometimes part of collections. In this case the purpose of the bank notes is no longer for exchange of goods or services, but rather as collectible assets of historical and personal value to the collector. In some cases, the obsolete bank notes may be worth far more than their face value making them potentially quite valuable.
• Quality of obsolete bank notes
Like other collectible items such as comic books, bank notes are graded for quality. According to Banknotes.com, this area of banknote collecting can be problematic.(4) Grading is essentially the determination of how well a banknote has been preserved in its original form, and how much it deviates from such. For example, small creases, discolorations, or tears can all reduce the value of an obsolete banknote. The highest grade of obsolete bank note is ‘Uncirculated’ or UNC, and the lowest grade is Poor or PR.(4)
• Collectors market
Obsolete banknotes are kept alive through a collectors market. These collectors informally and formally appraise, trade and exchange banknotes through personal collections, stores, fairs, and swaps. An example of a U.S. obsolete bank note collection is Tom Chao’s Paper Money Gallery which contains images of numerous obsolete state bank notes.(5) Obsolete banknotes also hold a historical value in terms of the knowledge they convey and represent regarding specific times in history. In such cases collectors and admirers of obsolete banknotes may also include historians or academics.
• Identification of obsolete bank notes.
Identification of obsolete banknotes is important in distinguishing time periods, authenticity, and printing details such as the banknote series. Numismatic Associations are organizations that preserve a large amount of information on obsolete banknotes in addition to providing membership services to obsolete banknote collectors. An example of a Numismatic Association is the American Numismatic Association (ANA).
Numismatic Associations in addition to museums, historical archives, other collectors, reference books and magazines are all sources of information used in the identification of obsolete banknotes. The ‘Banknote Reporter’ magazine is recommended by the U.S. Federal Reserve Bank (2) and provides valuation guides and directory information on obsolete U.S. bank notes.
Sources:
1. http://bit.ly/b6BP8z (U.S. Treasury)
2. http://bit.ly/bP1Q0C (U.S. Federal Reserve Bank)
3. http://bit.ly/dub2Fp (U.S. Secret Service)
4. http://bit.ly/ay1yt3 (Banknotes.com)
5. http://bit.ly/aQ2XJW (TomChao.com)