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Demand Note

2007 Schools Wikipedia Selection. Related subjects: Currency

   Top row: The distinctive green ink used on the backs of Demand Notes
   gave rise to the term "greenbacks" Bottom row: Prominent design
   elements used on the front of $5 and $20 Demand Notes (located
   respectively under their denomination); pictured in the middle is the
   front of a $10 Demand Note with prominent design elements listed
   Enlarge
   Top row: The distinctive green ink used on the backs of Demand Notes
   gave rise to the term "greenbacks"
   Bottom row: Prominent design elements used on the front of $5 and $20
   Demand Notes (located respectively under their denomination); pictured
   in the middle is the front of a $10 Demand Note with prominent design
   elements listed

   A Demand Note is a type of United States paper money that was issued
   between August 1861 and April 1862 during the American Civil War in
   denominations of 5, 10, and 20 dollars. The original legislation
   referred to the currency as " treasury notes." The term "Demand Note"
   was applied retroactively because the notes were redeemable on demand
   for gold coin. While Demand Notes were not the first type of paper
   money issued by the United States federal government, they were the
   first in wide circulation.

   Demand Notes were created to serve as a means of monetary exchange in
   place of gold and silver coins that were vanishing from circulation at
   the time due to hoarding of commodities. The U.S. government used the
   notes to pay its incurred expenses and also to pay the salaries of its
   workers and military personnel. Once the public learned the notes were
   redeemable in gold coin, the notes began to circulate as widely as gold
   and silver coins had.

   Because of the distinctive green ink used on the reverse of all Demand
   Notes, the notes were nicknamed "greenbacks". However, other U.S.
   government-issued notes of the time such as Interest Bearing Notes and
   the later Legal Tender Notes, which issued in larger quantities, were
   also known by this nickname. The obverse of the notes contained
   familiar elements such as the images of a Bald Eagle, Abraham Lincoln,
   and Alexander Hamilton; the portraits used on Demand Notes are
   different than the ones seen on U.S. currency today.

   After Demand Notes were discontinued, they were replaced with Legal
   Tender Notes. Legal Tender Notes of the time, however, were not
   redeemable in coin like Demand Notes, and thus Demand Notes took
   precedence. As a result, many more Demand Notes were redeemed and not
   as many notes exist today.

Pre-issuance

   After the outbreak of the Civil War in 1861, the Union needed funding
   for its war efforts and to pay its employees. Congress responded by
   passing the Act of July 17, 1861 which allowed for $250,000,000 to be
   borrowed on the credit of the United States. Of this sum, $50,000,000
   was to be issued in non-interest bearing Demand Notes in denominations
   less than fifty dollars and not less than ten dollars. The notes were
   to be redeemable through the Assistant Treasurers' offices at
   Philadelphia, Boston, and New York. They were to be hand signed by the
   first or second comptroller of currency or the register of the
   treasurer; they were also supposed to be counter-signed by any other
   treasury officials designated by the Secretary of the Treasury. These
   signature provisions would later be altered several times. This act
   also stipulated that prior to December 31, 1862, an individual Demand
   Note could be re-issued into circulation after it was presented for
   redemption. This act, however, never specified what the notes could be
   redeemed for.

   Another reason for Demand Notes issuance was the disappearance of gold
   and silver coins from circulation; these government-issued coins were
   the only form of legal tender at the time. The panic of war drove
   people to hoard coins due to their precious metal content. The reserves
   of gold and silver of the United States began to become depleted.
   Issuing paper money ensured that supplies could more easily be
   maintained. Also, gold and silver could be more readily available for
   international trade.

   Just before they were to be released, the Act of August 5, 1861
   stipulated several changes to the issuance of Demand Notes. It allowed
   for Demand Notes to be issued in denominations of not less than $5 and
   be redeemable through the Assistant Treasurer's office at St. Louis or
   the bullion depository in Cincinnati. This act also stated that
   Treasurer of the U.S. and Register of the Treasury or any treasury
   official appointed by the Secretary of the Treasury should sign the
   notes. Under this act, Demand Notes did not need to carry the Seal of
   the U.S. Treasury.

   Because the Bureau of Engraving and Printing did not exist at the time,
   the American Bank Note Company and National Bank Note Company were
   contracted to create Demand Notes. Both companies were prominent
   printers of banknotes for private and state-chartered banks throughout
   the country. Most likely, the American Bank Note Company engraved the
   printing plates for $5 and $10 notes while the National Bank Note
   Company engraved the printing plates for the $20 notes. All of the
   Demand Notes were printed by the American Bank Note Company.

   The idea of issuing paper money as a circulating medium in lieu of
   precious metal coins was not a new idea then. Only once, however, in
   1815, had the U.S. Treasury issued non-interest bearing notes that were
   intended to circulate in the place of coinage. These are
   retrospectively referred to as "Small Treasury Notes". Some $3,392,994
   were issued in denominations of $3, $5, $10, $20, and $50. This was far
   less of an amount than the 50 million dollars authorized for Demand
   Notes, however. Not only that, but Small Treasury Notes circulated
   almost exclusively to the Eastern United States. Banknotes issued by
   private and state-chartered banks, however, were rampant throughout the
   country at the time (with the exception of the Western United States
   where paper money generally was not very common and/or publicly
   accepted). These types of banknotes were predominately only useful in a
   close proximity to the issuing bank. The value of a banknote was based
   upon its ability to be redeemed in coin; thus, a nearby bank location
   was essential. Demand Notes, on the other hand, would later be
   redeemable at five U.S. government locations throughout the country,
   thus making them nationally usable. This would enable Demand Notes to
   essentially become the first broadly-circulating non-interest bearing
   paper money issued by the United States federal government.

Post-issuance

   Initially, various merchants, banks and especially the railroad
   industry accepted the notes at a discounted rate or did not accept them
   all. In order to ease public distrust in the newly issued notes, a
   circular was sent to the five payment locations and instructed the
   Assistant Treasurers to redeem the notes in gold coin if requested.
   This also created willingness of banks to redeem the notes for coin as
   well. This put Demand Notes on par with the value and purchasing power
   of gold coins; thus, the public was more willing to accept the notes.
   They could be redeemed for silver coinage as well.

   Initially the notes were hand-signed by F.E. Spinner (Treasurer), and
   L.E. Chittenden (Register of the Treasury). However, this proved
   unfeasible, and Congress authorized the notes to be signed by
   procurators. Seventy women were hired at an annual salary of $1,200 to
   sign the notes. A distinction of "for the" was written after a
   signature to indicate that it was being used in place of Treasury
   officials. Apparently, some skilled women could even imitate the
   signature of F.E. Spinner. In late August "for the" was added to
   printing plates to simplify the hand-signing operation.

   The American Bank Note Company stopped printing notes payable at St.
   Louis and Cincinnati several days after revising printing plates with
   "for the".

   After December 28, 1861 a worsening economic situation forced banks to
   stop redeeming Demand Notes for gold coin. The notes then began to
   appear at Assistant Treasurers' offices in great numbers for
   redemption.

   The Act of February 12, 1862 allowed for an additional $10,000,000 in
   Demand Notes to be issued. This act brought the final possible amount
   of Demand Notes that could be issued to a sum of $60,000,000. Not long
   after, on April 1, 1862, the full $60,000,000 in Demand Notes had been
   issued.

   Issuance of Legal Tender Notes soon followed Demand Notes. The obverse
   of 1862- and 1863-issue $5, $10, and $20 Legal Tender Notes were very
   similar in design to the respective Demand Notes; various minor changes
   were made along with the addition of the U.S Treasury Seal. Legal
   Tender Notes, unlike Demand Notes, were not redeemable in coin, despite
   a statement of "Will pay to the bearer on demand" or "Promises to pay
   the bearer" on the note. Demand Notes, still on par with gold, then
   traded at a premium with Legal Tender Notes and also had greater
   purchasing power over the newly issued depreciated notes.

   Once Legal Tender Notes were in circulation, the U.S. Treasury
   Department started to withdraw as many Demand Notes as possible from
   circulation. The advantage to this practice would be not having to
   redeem the notes for coin. A year after their issuance, Demand Notes
   became a rarity in circulation.

Production figures

                   CAPTION: Number of Demand Notes printed

                    Location   Notes printed Dollar amount
                              $5 denomination
                    New York     1,500,000    $7,500,000
                  Philadelphia   1,400,000    $7,000,000
                     Boston      1,340,000    $6,700,000
                   Cincinnati     44,000       $220,000
                   St. Louis      76,000       $380,000
                     Total:      4,360,000    $21,800,000
                             $10 denomination
                    New York      640,000     $6,400,000
                  Philadelphia    580,000     $5,800,000
                     Boston       660,000     $6,600,000
                   Cincinnati     75,000       $750,000
                   St. Louis      48,000       $480,000
                     Total:      2,003,000    $20,030,000
                             $20 denomination
                    New York      320,000     $6,400,000
                  Philadelphia    240,000     $4,800,000
                     Boston       300,000     $6,000,000
                   Cincinnati     25,000       $500,000
                   St. Louis      25,000       $500,000
                     Total:       910,000     $18,200,000
                  Grand Total:   7,237,000   $60,030,000†

   Note:
   †: 3,000 $10 notes were reissues of redeemed notes thus creating the
   $30,000 overage of the legislated $60,000,000

Design

Common features among denominations

   The obverses of all denominations Demand Notes contained the following
   common features printed on them:
     * A statement that the United States would pay the bearer the
       denomination on demand (written uniquely per denomination)
     * A phrase stating the note was payable by the assistant treasurer
       (written uniquely per denomination)
     * Stated location of payment (redemption):
          + New York
          + Boston
          + Philadelphia (abbreviated as Philad. on $10 and $20 notes)
          + Cincinnati
          + St. Louis
     * "ACT OF JULY 17, 1861", the act that first authorized emergency
       Civil War paper money
     * The phrase RECEIVABLE IN PAYMENT OF ALL PUBLIC DUES (meaning the
       notes were a form of monetary exchange for government payment)
     * "AMERICAN BANK NOTE CO., NEWYORK", the company that printed Demand
       Notes
     * "Washington" and the date "August 10th, 1861" printed in a cursive
       font (the date, however, was written uniquely per denomination)
     * "Patented 30 June 1857." referring to a patent held by the American
       Bank Note Company for "Canada" green ink used on the obverse of the
       note
     * The serial number printed only once in red ink
     * Face plate letter – A, B, C, or D (indicating which metal plate was
       used to print the note)
     * Lines above "Register of the Treasurer" and "Treasurer of the
       United States" where the officials' signatures would normally be
     * Lack of an United States Treasury Seal (with the exception of
       fractional currency, this is unlike any other U.S. federally-issued
       currency)

   The reverses of all Demand Notes contained UNITED STATES OF AMERICA, a
   large numeral of the denomination, and an indication of the
   denomination (as a small numeral or Roman numeral) repeated many times
   in a small geometric shape; all of the reverses were printed in green
   ink.

Common varieties among denominations

   Variations of "For the" on a $10 Demand Note
   Enlarge
   Variations of "For the" on a $10 Demand Note
     * Either signatures of L. E. Chittenden and F. E. Spinner or
       signatures of authorized treasury personnel
     * For the was used to indicate that a person was authorized to sign
       in place of treasury officials and is either hand written or
       engraved with the following varieties:
          + Handwritten as either "for the", "For the", or "For The" above
            the line for the signature
          + Engraved as either "For the" or "for the" next to "Register of
            the Treasurer" and "Treasurer of the United States"
     * SERIES followed by a letter and period or no series indication at
       all

Collecting ability

   Of the surviving Demand Notes, the vast majority are of the type with
   "For the" engraved on them and from the locations of New York, Boston,
   and Philadelphia. No notes are known with the actual signatures of F.
   E. Spinner and L. E. Chittenden. Because of their rarity, Demand Notes
   are mainly collected by acquiring a single example of the $5 and $10
   denomination. Facsimile reproductions are also available.

   The price and value of a Demand Note depend primarily on its rarity
   (which location and "for the" handwritten or engraved) and secondarily
   on its condition. The most common five dollar notes usually range in
   price and value from $1,000 to $40,000. Ten dollar notes of the most
   common varieties usually have a price and value range of $2,500 to
   $60,000. Price and value ranges of the twenty dollar notes with "for
   the" engraved and from New York, Boston, and Philadelphia usually vary
   from $17,000 up to $100,000. Apart from the most common types, Demand
   Notes usually sell at auction; the sole exception to this is the $5 New
   York notes with "for the" handwritten, which usually have price and
   value of $5,000 to $12,000.

                     CAPTION: Estimated notes remaining

           Location      "For the" engraved    "For the" handwritten
              $5 denomination: Estimated 600-800 notes remain
           New York   Most common of $5 notes         8 known
         Philadelphia Most common of $5 notes         0 known
            Boston    Most common of $5 notes         1 known
          Cincinnati          5 known                 0 known
          St. Louis           9 known                 1 known
            $10 denomination: 140 notes known; 160-180 estimated
           New York   Most common of $10 notes        5 known
         Philadelphia Most common of $10 notes        3 known
            Boston    Most common of $10 notes        2 known
          Cincinnati          6 known                 1 known
          St. Louis           4 known                 0 known
                              $20 denomination
           New York           7 known                 1 known
         Philadelphia         6 known                 0 known
            Boston            5 known                 0 known
          Cincinnati          1 known                 0 known
          St. Louis           0 known                 0 known

   Note: Most common is used as a relative term to describe the percentage
   of notes of the $5 and $10 denominations that remain today

   Retrieved from " http://en.wikipedia.org/wiki/Demand_Note"
   This reference article is mainly selected from the English Wikipedia
   with only minor checks and changes (see www.wikipedia.org for details
   of authors and sources) and is available under the GNU Free
   Documentation License. See also our Disclaimer.
