What are national banknotes?

National banknotes, issued from 1862 to 1935, represent a successful effort by the U.S. government to guarantee the value of circulating paper currency. Prior to the Civil War, currency was issued locally by banks, merchants, companies, states, cities and towns. Some had legitimate value, while others were or became worthless. All of the privately issued notes were taxed out of circulation, and replaced by national banknotes by 1866. If a bank wanted to become a national bank, it would obtain a charter from the government, and purchase U.S. bonds and leave them on deposit in the U.S. treasury. It could then issue a corresponding amount of national banknotes. These were printed by the government, and all were uniform in appearance except for the different bank name and charter number. They were shipped in sheets, as printed, to the banks where they were signed, cut, and put into circulation. They generally just circulated locally, but because of their uniform appearance, they were readily accepted throughout the country. They are still U.S. legal tender today.

Over 14,000 banks were chartered and most issued notes during this period. Many millions were issued, and an estimated 300,000-400,000 survive. Over 200,000 have been documented over the past 30 years, and this population information is published in a book by Don Kelly.