Introduction
Let’s face it… being well informed is always the best way to go about anything. This is no different in banknote collecting. Before I buy anything, I research it and make sure I really understand what I am getting into. So, let’s talk about some information you may find useful in your next banknote purchase!
Small- size Federal Reserve notes are the most familiar type of United States paper currency, as these bills are still issued today. However, the most modern of these notes contain high- tech security features that were but the stuff of science fiction in the mid 20th century when these small-size notes were first issued.
Small-size Federal Reserve notes are the sole type of paper currency presently issued by the United States government. However, the types of banknotes have changed significantly since the first of the Federal Reserve notes in 1928. Over the course of time since the late 1920s, notes ranging in denominational values of $1 to $10,000 were printed, though today only $1, $5, $10, $20, $50, and $100 notes are made.
The appearance of small-size Federal Reserve notes remained relatively unchanged in their overall format until the mid 1990s. At this time, the United States began implementing advanced security features on paper currency. With the Series of 1996, the $20 Federal Reserve Notes, $50 Federal Reserve Notes, and $100 Federal Reserve Notes began having larger portraits, enhanced watermarks, and color- shifting (black and green) ink. Similar changes were made to the $5 and $10 under the Series of 1999. Further security enhancements have been made to these notes in the years since.
Obsolete, Counterfeit, and Replica Banknotes
Obsolete banknotes are collected for the historical value. This, of course, translates to monetary value as well. In the early to mid 19th century, many banks, companies, merchants, and jurisdictions had their own currency. Each of these notes are obsolete and have a devout collector group. A lot these are more expensive to purchase, but sport high values in the marketplace. They are wonderful to have in your collection with their beautiful depictions and colors!
The Condition of Obsolete Currency
Like coins and other collectibles, the condition of a banknote will play a huge part in its value. Minor imperfections on the note can cause a big change in the amount it will sell for. Many people cannot agree on the same condition for certain note, so it is important to get it graded by a professional service in order to not maximize value, but also certify the condition.
Paper Money Guaranty (“PMG”) or PCGS Currency (“PCGS”) are both great companies, that have been around for years. These companies also inspect the paper that the bill is made from. PMG gives notes with high-quality paper an EPQ (exceptional paper quality) notation, and PCGS grades them PPQ (premium paper quality).
Counterfeit and Replica Notes
As I stated before, these notes existing in a lot of different counties, states and municipalities. That means a lot of them were made b independent printers and counterfeited readily at the time. A “counterfeit” is a note resembling a real one by the issuing entity. A “spurious” note is one that bears the name of an actual bank but carries a design that was never issued by that specific bank. Since there were so many different notes, these were actually common!
Unique Banknotes
Replacement Banknotes: These occur when a faulty sheet is removed and replaced with a perfect ‘replacement’ sheet, to maintain the stack’s numeracy. Common prefixes for these sheets include ‘M’ or ‘LL’, which can usually be found in the top left corner of the note.
Column Sort Banknotes: If a part-faulty sheet is removed from a stack, they’re put to one side and saved. Errors are marked with a phosphorescent pen, with the good columns guillotined and kept for numbering. They can be identified by a higher prefix and/or serial number. For example, A36 900001 compared to A36 400000.
Treasury Control Banknotes: Control banknotes are easy to identify as they always carry a ‘Z’ prefix, which is located in the bottom right corner. The rest of the sheet usually has a regular prefix.
OTHER TYPES OF NOTES:
There are also Red Seal bills and Blue Seal “Silver Certificate” banknotes.
1934 notes with yellow or brown seals. These banknotes are World War II emergency money, issued in Hawaii or North Africa.
Banknote Grading
Average circulated notes grade between Very Fine (VF) and Extremely Fine (EF). These notes contain aspects such as limited folds, semi crisp to crisp surface, no tears, and no water damage or environmental damage
Notes of lower quality (Fair to Fine) bring lower prices generally, as their condition plays a large role in the overall appraisal. “Unc or UNC” banknotes – uncirculated or also called Crisp Uncirculated (CU) are notes in new condition with absolutely no wear, no fold marks, and have SHARP corners. These bills exhibit no issue at all.
Lastly, a “Gem or Gem Mint” condition note contains all of the aforementioned aspects, but also has deeply impressed colors with solid/ vivid tones. These bills can command a high premium over their face value in auction and are highly sought after by collectors and resellers.
The physical characteristics of a note play an important part in determining its collectible appeal and value. There are some notes that have such limited availability that they are valuable in really any
condition, but there are also many notes that have no additional monetary worth beyond their face value in ordinary Circulated condition. However, those same notes may command a premium in the highest Circulated grades and in Uncirculated condition or if they contain errors, which we cover later in the book.
Only advanced collectors and paper money professionals have the necessary training and experience to accurately and consistently grade the condition of paper currency. The following grading definitions and photos are presented as a guide only.
$1 Bill Values
Average circulated notes grade between Very Fine (VF) and Extremely Fine (EF). These notes would be at the upper echelon of condition – containing no tears, folds or creases. Notes of lower quality (Fair to Fine) bring considerably lower prices in most cases as you can imagine, as condition of anything collectible plays heavily into its overall appraisal.
“Unc or UNC” banknotes – uncirculated or in some cases referred to as Crisp Uncirculated (CU) are notes in new condition with no wear, no fold marks, and have no imperfections. Lastly, a “Gem” note contains all of the aforementioned aspects, but also has deep or hard impressed colors that “gleam”. These would command a higher premium over face value.
$2 Bill Values
Average circulated notes grade between Very Fine (VF) and Extremely Fine (EF). These notes would be at the upper echelon of condition – containing no tears, folds or creases. Notes of lower quality (Fair to Fine) bring considerably lower prices in most cases as you can imagine, as condition of anything collectible plays heavily into its overall appraisal. “Unc or UNC” banknotes – uncirculated or in some cases referred to as Crisp Uncirculated (CU) are notes in new condition with no wear, no fold marks, and have no imperfections. Lastly, a “Gem” note contains all of the aforementioned aspects, but also has deep or hard impressed colors that “gleam”. These would command a higher premium over face value.
$5 Bill Values
Average circulated notes grade between Very Fine (VF) and Extremely Fine (EF). These notes would be at the upper echelon of condition – containing no tears, folds or creases. Notes of lower quality (Fair to Fine) bring considerably lower prices in most cases as you can imagine, as condition of anything collectible plays heavily into its overall appraisal. “Unc or UNC” banknotes – uncirculated or in some cases referred to as Crisp Uncirculated (CU) are notes in new condition with no wear, no fold marks, and have no imperfections. Lastly, a “Gem” note contains all of the mentioned aspects. These would command a higher premium over face value.
$10 Bill Values
Average circulated notes grade between Very Fine (VF) and Extremely Fine (EF). These notes would be at the upper echelon of condition – containing no tears, folds or creases. Notes of lower quality (Fair to Fine) bring considerably lower prices in most cases as you can imagine, as condition of anything collectible plays heavily into its overall appraisal. “Unc or UNC” banknotes – uncirculated or in some cases referred to as Crisp Uncirculated (CU) are notes in new condition with no wear, no fold marks, and have no imperfections. Lastly, a “Gem” note contains all of the aforementioned aspects, but also has deep or hard impressed colors that “gleam”. These would command a higher premium over face value.
$20 Bill Values
Average circulated notes grade between Very Fine (VF) and Extremely Fine (EF). These notes would be at the upper echelon of condition – containing no tears, folds or creases. Notes of lower quality (Fair to Fine) bring considerably lower prices in most cases as you can imagine, as condition of anything collectible plays heavily into its overall appraisal. “Unc or UNC” banknotes – uncirculated or in some cases referred to as Crisp Uncirculated (CU) are notes in new condition with no wear, no fold marks, and have no imperfections. Lastly, a “Gem” note contains all of the aforementioned aspects, but also has deep or hard impressed colors that “gleam”. These would command a higher premium over face value.
$50 Bill Values
Average circulated notes grade between Very Fine (VF) and Extremely Fine (EF). These notes would be at the upper echelon of condition – containing no tears, folds or creases. Notes of lower quality (Fair to Fine) bring considerably lower prices in most cases as you can imagine, as condition of anything collectible plays heavily into its overall appraisal. “Unc or UNC” banknotes – uncirculated or in some cases referred to as Crisp Uncirculated (CU) are notes in new condition with no wear, no fold marks, and have no imperfections. Lastly, a “Gem” note contains all of the aforementioned aspects, but also has deep or hard impressed colors that “gleam”. These would command a higher premium over face value.
$100 Bills
Average circulated notes grade between Very Fine (VF) and Extremely Fine (EF). These notes would be at the upper echelon of condition – containing no tears, folds or creases. Notes of lower quality (Fair to Fine) bring considerably lower prices in most cases as you can imagine, as condition of anything collectible plays heavily into its overall appraisal. “Unc or UNC” banknotes – uncirculated or in some cases referred to as Crisp Uncirculated (CU) are notes in new condition with no wear, no fold marks, and have no imperfections. Lastly, a “Gem” note contains all of the aforementioned aspects, but also has deep or hard impressed colors that “gleam”. These would command a higher premium over face value.
$500 and $1,000 Bill Values
Average circulated notes grade between Very Fine (VF) and Extremely Fine (EF). These notes would be at the upper echelon of condition – containing no tears, folds or creases. Notes of lower quality (Fair to Fine) bring considerably lower prices in most cases as you can imagine, as condition of anything collectible plays heavily into its overall appraisal. “Unc or UNC” banknotes – uncirculated or in some cases referred to as Crisp Uncirculated (CU) are notes in new condition with no wear, no fold marks, and have no imperfections. Lastly, a “Gem” note contains all of the aforementioned aspects, but also has deep or hard impressed colors that “gleam”. These would command a higher premium over face value.
Banknote Grade Examples
Gem Uncirculated: A flawless note that displays the same crispness, freshness and vibrant color as when it came off the printing press. This note must be perfectly centered, have full margins and be free of any marks or blemishes. A superb note that is perfect in all respects. If this were a coin it would be graded MS-70.
Choice Uncirculated: A near perfect note, although not quite as select as the gem note. It will be brighter and fresher than ordinarily encountered in uncirculated notes of that particular issue. It must be reasonably well-centered and free of any marks or blemishes.
Uncirculated: A note that displays no evidence of having been circulated at any time. It may have a very tiny pinhole or two, counting smudge or some other evidence of improper handling, most likely performed by bank personnel. The note may be off- centered but not obtrusively so. It must maintain some degree of the crispness that is associated with a note that has never been circulated.
About Uncirculated: Sometimes referred to as “Almost Uncirculated”. This is a note that, due to its bright look and crisp feel, may at first glance appear to be uncirculated. However, upon closer examination it will show signs of very light use. This could be in the form of a corner fold or a faint crease, usually a vertical center fold. Conversely, any crease that breaks the paper fibers will only serve to reduce the note’s overall grade.
Extremely Fine: A bright note that maintains a good degree of original crispness. It will show some evidence of circulation. This note may exhibit two or three minor creases or folds but may not contain any tears or discoloration.
Very Fine: A decently crisp and clean banknote that has obviously been in circulation but not for an overly extended period of time. The colors may not be as vibrant or “bold” as on a higher-graded note but they
won’t appear faded or washed-out. This note may have several folds, creases or light smudges but the design in the crease must not be worn off.
Fine: A note that shows much evidence of circulation and thus exhibits considerable wear. Although numerous creases and folds are apparent, some slight degree of firmness will be present. A note in this grade will not be severely stained or soiled. At the crease areas, some portion of the design may be worn off. For some rare notes of many years ago, a fine note may well be the best one readily obtainable.
Very Good: A note displaying considerable wear. It may be dark, soiled and limp in appearance. One or two small tears may be evident on the notes margins. Other defects such as writing, foreign substances or rubber-stamp impressions, to name but a few examples, may be evident as well.
Good, Fine and Poor: Notes in these grades are seldom considered by collectors unless they are truly rare notes that are customarily seen only in these low grades. In general, collectors do not want notes grading less than very fine. But you must judge for yourself as to what you will collect and how much you can afford to spend on your hobby. If well-worn notes give you pleasure, then by all means pursue them.
Pricing
The pricing of banknotes is naturally commensurate with the grade, eye appeal, desirability and scarcity of a particular piece. For a relatively modern note that many dealers seem to have ample inventories of in gem condition, it may be foolish to pay a large premium for a gem uncirculated note over the price of its choice uncirculated counterpart.
The fact is that if there are plenty of gem notes in dealer inventory, then they can’t be that scarce. Oftentimes a choice note can be had for a considerable reduction in price over gem. But if absolute perfection is your goal, I would suggest a modest 10- to 20-percent premium over a choice note in this scenario.
Many banknotes are printed by the intaglio (or engraved) method. This involves the designer engraving steel plates with the design elements in a “mirror image”. The recessed lines will hold the inks used to print on the paper. The master plate is used to produce working plates and these working plates produce the notes.