On Sunday, October 30, bidding ended at GreatCollections.com on an exceptional and rare piece of classic Civil War monetary history. This Proof Aug. 19, 1861 $5,000 Interest Bearing Note, graded as 63 – Choice Uncirculated by PMG, is one of only three known extant examples.
After 107 bids, the winner of the lot paid $63,250 USD – $71,156.25 with Buyer’s Fee.
Since the Federal Government of the United States was in dire financial straits during the Civil War, Congress issued the Act of July 17, 1861, authorizing emergency Civil War paper money. This bill included these Interest Bearing Notes, which effectively acted as early versions of war bonds. These were printed by the American Bank Note Company of New York and issued in one-, two-, and three-year varieties. The $5,000 example that sold recently is the three-year type, which paid 7.3% interest to the bearer. In their book Paper Money of the United States: A Complete Illustrated Guide, Ira and Arthur Freidberg state that this was “the highest [interest] ever paid by the Government on its notes.”
As a three-year note, after every six-month period, the bearer would cut off one coupon in order to redeem the accumulated interest in a manner similar to a government bond. Unlike a bond, the note itself would be turned in to redeem the last round of interest and the original $5,000.
Since this was an astronomical amount of money back in the mid-19th century ($168,640 adjusted for inflation) and the bearer was guaranteed a high interest rate, all issued notes were redeemed as soon as they matured. All redeemed notes were then destroyed, leaving only three Proof examples surviving to this day.
These Proof examples were printed as either tests or presentation pieces. As such, each face was printed on uniface India paper and then mounted onto thick cardstock. These rarely come to auction, and when they do, fetch a pretty penny. An example from the Rasmussen Collection, complete with all coupons, was sold for $11,000 by Stack’s in March 1997. Another example, this time from the John E. Herzog Collection and graded as 62 “New”, hammered for $48,000 in August 2018. The example sold by GreatCollections here is in an equivalent or even better state of preservation.
The lot contains two plates, the face and the reverse of a test Proof 1861 $5,000 Interest Bearing Note.
The face has two main vignettes. On the left can be seen a female allegory of Justice holding a sword in her right hand and a set of balance scales in her left. She is not blindfolded. At the top center is a seated Native American female with her arm resting on a shield decorated with the American flag. She is flanked by a tent on the right and an eagle on her left. In the background is a two-masted steamer ship. The entire note is bounded by a guilloché border that incorporates three legends: INTEREST ONE DOLLAR PER DAY on the left edge, CONVERTIBLE INTO 20 YEAR 6 PER CENT U.S. BONDS at the bottom, and American Bank Note Co New York on the top. The note is dated August 19th, 1861. There are three denomination counters, in the top left, right, and center, and the red serial number 00000 is repeated seven times.
As a test note, this bill still has all five coupons attached. There are, however, 10 cancelation punches: five in the note and one in each coupon.
The reverse has an extremely ornate guilloché design containing the repeating denomination (Five Thousand Dollars) with the legends PAY TO BEARER INTEREST ONE DOLLAR PER DAY and UNITED STATES OF AMERICA superimposed.
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