Paper, stacks, racks, Greenbacks, and bread are some of the common terms

for Government Issue banknotes or paper currency. The first known paper money

was printed by the Tang Dynasty in China (618-907) out of a combination of tree

bark and hemp. Today, banknotes have evolved out of various forms of materials

including special paper formulas and even polymers (plastics).

America produced its first coins for circulation in 1793, a large cent and half cent. It wasn’t until 68

years later that the first legal tender banknote was printed. From 1793 to 1861,

several events such as the War of 1812, Mexican War of 1846, and the financial panic

of 1857 brought much strain on the burgeoning early American economy. In an

attempt to remediate the lack of circulating currency, some states allowed private

banks to issue their own currency to meet the growing demand. These privately

issued notes were backed by the amount of money private banks had on deposit.

Unfortunately, times were rough for many private banks and customers could not

pay interest on their loans, therefore these banks became broke. They were known

as broken banks and their currency, you guessed it, “broken banknotes.” Today,

many of these “broken banknotes” are sought after by collectors. Most have a value

between $20-$250.  

The Civil War brought a huge shift in American history. Breaking out

in 1861, financing the war became a problem. Both sides had supply problems and

were in desperate need of money, therefore many solutions were formulated

including: increasing the national debt, implementing the first income tax, and

issuing national paper currency. This was the first time the public was expected to

accept currency backed by faith in the government that it would be good. The

confederate states began issuing their own currency as well from 1861-1865. The

banknotes were initially exchanged on par with regular money or bank notes, but as

the war progressed and southern finances began to dry up, Confederate Currency

depreciated drastically. Five-dollar banknotes became worthless, and a bar of soap

would sell for as much as $50! The nation lacked a central banking system and relied

heavily on private banks, therefore in 1863, the Union passed the National Banking

Act allowing private banks to apply for federal charters, giving birth to National

Banks or National Currency. These banks purchased Union bonds and deposited

them in the Treasury in Washington D. C.; they were then allowed to issue National

Bank Notes for up to 90% of the value of the deposited bonds. Most confederate

notes ($1-$100) have a value between $25- $200. The value of the average circulated $5-$20

National Currency banknote is between $40-$300, with uncirculated and rarer banks fetching a premium above that.  A general rule of

thumb is the smaller the city, the more value it has.