when is currency obsolete?

Good morning and welcome to the August 15th edition of a Wonderful Wednesday! This morning I’d like to look at early U.S. currency. What today is called “Obsolete Currency.” Before we begin, let’s refill our cups and pull up a chair and take a quick look at what the precious metals are doing. Electric Light Orchestra greets me this morning with their 1975 hit, Strange Magic.

Gold is currently down -$12.70 this morning at $1,181.

Silver is currently down -$0.53 at $14.50.

Platinum is currently down -$43 at $757.

Palladium is currently down -$60 at $833.

Folks, over the past week gold has dropped $31, silver has lost $0.87, and both platinum and palladium have dropped $71 each. And in the time it took to write the last sentence, all the metals are continuing to fall. I’m beginning to believe we are seeing much more than “The Dog Days of Summer.”

To open the discussion on Obsolete Currency, let’s first define what we mean. The word obsolete is defined as “no longer produced or used; out of date,” however, in using that definition we find that that would include any U.S. currency printed before 1928 which is the year that the U.S. Treasury redesigned and resized paper money to today’s standards.

What numismatists consider as obsolete currencies are those notes that were created during the years that the federal government didn’t have a national bank; specifically, from 1833 when then President Andrew Jackson shut down the Second Bank of the United States until after the Civil War in 1865. During this period, despite a few economic recessions, the country continued to grow westward. During the 1830’s and into the 1860’s the vast majority of the west was only beginning to becoming settled. This basically meant that there just wasn’t enough money circulating to meet the daily demand of the growing economy and without a federal bank, the responsibility of controlling the banks fell to the states.

So between 1833 and 1865, more than 3,000 private banks were authorized in 34 states to produce 30,000-plus varieties. That brings us to this one particular bank – The Bank of De Soto in De Soto, Nebraska. By 1857, the town had six or seven hundred residents and included three banks, nearly a dozen saloons and many stores. The Bank of De Soto was the first bank and had a brilliant yet short history. The bank was responsible for many of the loans that helped quickly build the town into the county seat.

With the “Panic of 1857,” the entire nation reeled under the loss of confidence in the banking industry. The recession was disastrous for over 5,000 businesses across the country. Unemployment skyrocketed. First came the defaults of personal loans in urban areas, then business defaults, with the rural areas like De Soto following not long after. By 1862 the failure of businesses including The Bank of De Soto and farms in De Soto, Nebraska reduced the town to less than 20 residents.

These notes, dated October 1st, 1863 were never issued and many can be found in mint condition.

If you would like to see these notes or possibly acquire them for your collection, give us a call or stop by our store in David Douglas Diamonds & Jewelry. Well, I’ll let that be it for today. Go out there and make a difference! See ya later!

*Disclaimer: Precious Metal Musings™ is written for entertainment and news purposes only and should not be used in making purchases and/or sales of precious metals.