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Copyright 2002 by Amos Press Inc. Reprinted by permission from the Nov. 25, 2002, issue of Coin World, Sidney, OH –www.coinworld.com

From BAD to worst: A tragic loss

One of the most fascinating and historic areas of numismatics is the field of national bank notes.

Starting in 1863 and lasting nearly 70 years, banks across the country were permitted to issue notes with their names on them. More than 14,000 national banks were chartered (though not all chose to issue notes). Between the names of issuing institutions themselves and the great historical figures of banking and industry who signed many of them, astute collectors can hold a great piece of history in their hands for relatively moderate prices.

The banks and signers are often not the only historically interesting aspect to nationals. Often notes acquire a history of their own after issuance. Notes can be found signed or redeemed (in the case of interest-bearing notes) by famous people such as Abraham Lincoln. Others can be traced to infamous robberies of the Old West, the sinking of the Titanic and other historic occurrences.

In April 1874, the National Bank of Pontiac, Ill., was issued Charter No. 2141, and a month later, the bank's first notes were issued. Of numismatic interest is the timing of the initial issuance, as a scant 10 banks in the short period around the end of 1873 to the beginning of 1874 are known to have issued notes with black, rather than red, charter numbers.

Four more banks probably issued them, although it cannot be confirmed. Of the 14 possible banks with black charter numbers, only eight have been confirmed, with 39 notes now known. These form a special, highly sought after variety for collectors.

Extensive counterfeiting
It is a sad fact that whenever money of any form is issued there will inevitably be counterfeiters waiting to take advantage of the uneducated.

It has been estimated that counterfeiting in the mid- to late 1800s was so extensive that as much as a third of the paper money in circulation was counterfeit.

Concurrent with the issuance of national bank notes there appeared on the scene a number of periodicals dedicated to keeping the public, banks and merchants informed about the numerous counterfeit notes plaguing the country.

Dye's, Bicknell's, Heath's and Underwood's publications were a familiar sight in many stores and nearly all banks. Some, such as those sold by Laban Heath, were generic, and tried to educate people in the ways of detecting counterfeit notes in general.

Others, such as Underwood's Counterfeit Reporter, printed extensive lists of notes known to have been counterfeited. Notes were listed by bank and issue, and often by serial numbers.

List of stolen notes
As they became more popular, some of these counterfeit reporters began printing lists of stolen notes as well as counterfeits. The January-February 1889 issue of Underwood's Counterfeit Detector detailed the theft of First Charter $5 notes issued by the National Bank of Pontiac, Ill., and gave the bank serial numbers as 741 to 765 (Treasury numbers D252111 to D252135). With the number of notes so small, and the number of notes in circulation so large (who had a personal checking account or a Visa card in the 1880s?), the chance of one of these notes surviving was minuscule at best.

As luck and fortune would have it, one did survive. A $5 National Bank of Pontiac note with Treasury number D252114, bank number 744, circulated until someone (probably at a bank) noticed the Underwood's listing of the note as stolen.

At the time, the comptroller of the currency had not yet ruled on whether a bank could be held legally responsible for redeeming notes that had been stolen. Since the note posed some risk, it was extensively punch-out canceled with the word "BAD." In fact, this is one of three notes traced from this stolen Pontiac group.

First appearance
The note eventually appeared publicly in the Nov. 14, 1986, Hickman & Oakes Auction, as Lot 261. As one would expect of someone with John Hickman's love of national bank notes and their history, John gave the note a full write-up, with a detailed honest descriptions of the grade and the full story of the Underwood listing and explanation of the "BAD" cancellations.

John summed up the importance of this note in his comment: "This note is not for the collector of pretty pieces of paper, rather for someone who will value a unique artifact of our national banking system."

Second appearance
The note subsequently appeared in Stack's January 2002 sale. Sadly lacking were the history of the "BAD" cancellations and Underwood listing, but the photo and description showed the note to be substantially as it appeared in the 1986 Hickman & Oakes sale.

Third appearance
The note now appears as Lot 2578 in Lyn Knight's Nov. 21, 2002 sale. Not only are the history of the note and its Underwood listing nowhere to be found, but the "BAD" cancellations and their historical connotations have also disappeared! The note is fairly described as "restored extensively," but the "BAD" cancellation holes that gave this note its charm and importance have all been filled in!

Much has been written recently in Coin World and other publications, about the problem of unskilled repairing of notes and blatant "processing" of notes for the sole benefit of bigger profits. Those defending these practices have done so with the opinion that they are "conserving" the notes: saving them from further destruction by careless handling or the ravages of time.

Conservation?
In this case, some public-spirited "conservor" has taken one of three known examples of what John Hickman called "a unique artifact of our national banking system" and in exchange created the new absolute worst known example of 39 Black Charter notes.

If turning a very rare and historic "BAD" note into the WORST known example of a far more common variety can be termed legitimate "conservation," perhaps we should put arms on the statue of Venus or finish that Gilbert Stuart painting.

Luckily, people like John Hickman who appreciate history and numismatics have not yet become extinct, but as long as people are content to buy processed, "conserved" notes, we are rapidly becoming an endangered species, as are nice original notes.

Martin Gengerke is a paper money specialist and researcher.

Image courtesy Hickman-Oakes Nov. 14 to 15, 1986, auction catalog.
SERIES 1875 $5 note issued by the National Bank of Pontiac (Illinois) as it appeared in the Hickman-Oakes 1986 catalog. Hickman's catalog description explained that the punched out "BAD" in eight places showed the note had been rejected by banks. It was common practice at that time for banks to reject suspected stolen notes.

Image courtesy Stack's Jan. 15 to 17, 2002 auction catalog.
SAME note was offered in the Jan. 15-17, 2002, Stack's auction catalog. All imperfections noted include the repeated canceling using the letters B-A-D plus a tear and chinked lower right corner.

Image courtesy Nov. 21 to 23 Lyn Knight Currency Auctions catalog.
SAME note is offered in the upcoming Nov. 21 to 23 Lyn Knight Currency Auctions catalog. Catalog description states that the note had been "restored extensively."