Broken Bank Notes Message Board

Vermont and Virginia are also represented...

Here is a pair of interesting $4 notes.

The first $4 note is scrip from the infamous Benjamin Rathbun of Buffalo. In the mid 1830’s, Rathbun employed about 2500 people, a significant fraction of the Buffalo population. He controlled the construction industry building railroads, taverns, factories, the City Jail, hotels, banks, businesses, mansions, a theatre, etc. He supposedly built 99 buildings in 1835 worth about $500,000. A modified form of The Unitarian Church built in 1833 still stands today. He speculated widely in land in Buffalo, Lockport, and the Niagara Falls area.

Due to Andrew Jackson’s opposition to a central banking system, western New York had very little hard money or even paper money issued by the local banks for circulation. To facilitate payments of salaries and commerce in general, Rathbun issued his own scrip in denominations of 6.25, 12.5, 25, 50 cents and 1, 2 ,3 ,4, 5, and 10 Dollars. This particular $4 note is signed by B. Rathbun on July 4, 1836. It states “Due the Bearer FOUR DOLLARS in Goods at my Stores in the City of Buffalo, N. York”. These scrip notes are not listed in Haxby but are listed in “New York State Scrip and Private Issues” by Gordon L. Harris. There are at least 18 varieties of notes. There are also multi-thousand dollar promissory notes available.

Rathbun issued numerous “promissory notes” and notes from his “Buffalo Commercial Bank”, not to be (or to be) confused with the existing “The Commercial Bank of Buffalo”. He also attempted to increase currency circulation by hijacking failed but still chartered banks. One of the banks that he “established” was “The Commercial Bank of Fort Erie” located across the Niagara River from Buffalo in Canada. This $4 note (Charlton 160-10-08) “Promises to pay ‘John Warren’ or Bearer on Demand TWENTY Shillings currency at the Bank House Fort Erie”. The right signature is of M. B. Sherwood on July 20, 1836. Sherwood was one of Rathbun’s broker-agents who fronted as the bank’s organizer and president.

Rathbun accomplished similar “bank revivals” at the “Bank of Granville” in Ohio and the “Paterson Bank” (2nd) in New Jersey during 1835-36. The attached map shows the locations of the “wildcat banks” he formed. Note that the distance between Buffalo and Granville, Ohio is about 300 miles while between Buffalo and Paterson, New York the distance is about 400 miles. These presented significant travel times in the 1830’s and therefore facilitated the passage of “bad money” even though it meant that the notes would be significantly discounted.

His monetary machinations came to an end during the summer of 1836. On August 3, 1836 Rathbun was in custody in the City Jail that he had built. It turns out that Rathbun’s brother, Lyman, and his nephew, Lyman Rathbun Howlett, were actually responsible for forgeries of prominent Buffalonians on promissory notes of more than $1,500,000 and not Benjamin. However they fled Buffalo and Benjamin was convicted of the forgeries and served 5 years in prison. His speculations caused shock waves in New York City and elsewhere. Some argue that he precipitated the Panic of 1837. He died in 1871 after a career in the hotel industry in New York City. Even after serving his time in jail, he was still considered to be the “Builder of Buffalo”.

For a better understanding of banking in the 1830’s, I highly recommend reading “The Rise and Fall of a Frontier Entrepreneur: Benjamin Rathburn, ‘Master Builder and Architect’ ” by Roger Whitman, Scott G. Eberle, and David A. Gerber.

http://www.amazon.com/Rise-Fall-Frontier-Entrepreneur-Architect/dp/0815603371/ref=sr_1_1?ie=UTF8&s=books&qid=1202743657&sr=8-1

Bernie
Is this kind of information interesting?

Granville did not issue $4 notes; off the top of my head only the Bank of West Union did among Haxby banks. I can shed a little light on Granville though.

The Granville Alexandrian Society received a state charter for library activities in 1807, and assumed banking privileges in 1815. It failed in 1817, with its last entry dated August 5.

The bank was revived in 1836, with Henry Roop as President and A.G. Hammond as cashier. Redemption ceased in 1837, with the last director meeting being March 13, 1838. Roop resigned on October 3, 1837, though I do not know if that was before or after redemption ceased. A Mr. B. Brice took over, having been VP previously. A.J. Smith was the last cashier, and is often seen as a signer for surviving notes -- again, I do not know when he took over, or even if another cashier served in between (though that seems unlikely).

Here is a common note from the revived bank:


Here is another not uncommon note with a different signature combination. Note that the date is apparently 1839--there is some research to be done, still:


Finally, here is one of the very few surviving notes from the first incarnation:

Hi uzuiwek,

Thanks for the information on the Granville Banks.

I did not mean to imply that the “Bank of Granville” in Ohio issued $4 notes. I brought up the other banks to help tell the story of Rathbun and his machinations. I realize my thread was going off topic (from the $4 notes). That is why I asked at the end:” Is this kind of information interesting?”. I understand that Greg wants to make this discussion board more “active”. So Greg is it OK to veer off topic to facilitate further discussions and hopefully gain more understanding of obsolete notes and their issuers?

Getting back to Granville, Haxby indicates that the “Bank of Granville (1st)” existed between 1839 and 1842. This was confusing to me since Rathbun went to jail in August of 1836, that is, 3 years earlier. Wendell Wolka in “A History of Nineteenth Century Ohio Obsolete Bank Notes and Scrip” says:



The notes that I have seen from this bank are typically dated 1839. The earliest that I had seen in the past was the $5 note illustrated in Wolka’s book on page 411 (W1211-09) that is dated May 1, 1837. Heritage sold a $3 (Haxby G18) with the May 1, 1837 date on 9/21/2005. This was a year after Rathbun was jailed.

Now you present a $5 note and label it as “common”. To me the note is NOT “common” since it is dated July 4, 1836. This is the same date as on my $4 Rathbun note, which is about one month before Rathbun’s arrest during the time when he was trying to raise huge sums of capital to prevent his imminent downfall in August of 1836.

Whitman (see reference in my previous post) has several pages (see attachments) on Rathbun’s attempt to gain capital from the Bank of Granville starting in 1835. As you mention, the president of the “revived” bank was Henry Roop. It turns out that Roop was a Buffalo Rathbun minion and was appointed president by Rathbun himself. Your July 4, 1836 note is signed by Henry Roop as president on the bottom right!

In March of 1836, Rathbun received from Sherwood (the president of the Fort Erie bank in Canada) a proof sheet of the bank notes of the Bank of Granville. Rathbun was said to be ecstatic. In April of 1836 Rathbun traveled to New York City to complete the Paterson and Granville bank transactions and to arrange to have notes engraved for the Commercial Bank at Fort Erie, whose first notes are dated July 20, 1836. In July of 1836, Rathbun also sent agents by fast horse to pump more money out of Granville.

Whitman (p. 160-1) also discusses the $50,000 in notes of the Bank of Granville. He says that Rathbun was supposed to slowly release the bank notes. However, the Buffalo assignees who were to settle Rathbun’s business affairs after his arrest were not a party to the agreement and sent the notes, in their original wrappers, back to Granville for redemption, probably in late 1836. Your 1836 note could have been part of this bundle.

You say that redemption ceased in 1837. Wolka also mentions this. Do you have a separate source for this statement? Most of the notes of this bank are dated in 1839. Your 1836 note seems to be of the same series as the ones that I have seen dated in 1839? Are these spurious signatures and dates? How did the bank survive until February 1, 1842 if note redemption stopped in 1837? How did it survive the Panic of 1837? As you say: ”There is some research to be done.”

Thus, your “common” Bank of Granville note dated July 4, 1836 corroborates what I have read in the Whitman book that the bank was in existence before 1839 which is contrary to Haxby. It also makes the Rathbun connection stronger. If anyone ever finds another “common” Granville note dated in 1836, I would be very interested.

By the way did you win the 1816 note? I remember bidding on it in last October’s Smythe auction.

Bernie

P.S.

I found some more information on the bank and its officers at:

http://publications.ohiohistory.org/ohstemplate.cfm?action=detail&Page=0021308.html&StartPage=296&EndPage=320&volume=21&newtitle=Volume%2021%20Page%20296

I had to click the link twice to get a readable page.
This is part of an article by A. B. Coover “Ohio Banking Institutions, 1803 to 1866” in Volume 21 of “Ohio History”. These archives contain several hundred pages on Ohio banking during the Obsolete banking era.

P.P.S.

For the fun of it, I attach a picture of the Bank of Granville building built in 1816 that is still used today as the local Historical Society Museum.

http://www.granville.oh.us/PDF/Historic%20Home%20Inventory.pdf

P.P.P.S.

Greg,
As you can see my research is being fostered by more detailed discussions on this subject. However, since it is “off-topic” with respect to “Four Dollar Notes”, should this stream be moved to a separate discussion topic.

Yes, I was the high bidder on the 1816 note in the November Smythe auction. I think had it been advertised a bit better in the catalog, I might have needed to bid substantially higher.

I do have a copy of Ohio Banking Institutions, and also am drawing from Bushnell's 1889 History of Granville, chapter XLV. I think that for many of these banks, someone's going to have to get to some original documents, because I often find myself discounting "histories" that are not factual.

When I wrote that the note was "common", I was only talking in terms of the design -- Wolka lists that issue as R-4 (26-50 known). I do not have any substantial data on dates of issue for surviving notes, though the notes in my collection range from the 1836 you saw to a Jan 1, 1839, to a 1842 note whose sigs and date might be spurious.

It's Bushnell's work that has the 1838 closing date, though he mentions that "[a]fter the failure, Mr. A.J. Smith, who was Cashier at the time, associated with John H. James, Esq., of Urbana, Ohio, Mr. Simeon Reed and others of Granville, opened a Bank of discount and exchange in the dwelling house on the south side of Broad Street, built by Col. Lucius D. Mower, in 1824." James was president of the Urbana Banking Company at the time, and also closely associated with the Mechanics & Traders Bank of Cincinnati. A substantial biography of him exists, and the next time I'm in Urbana (just 10 minutes from me) I'll check it out and look for more info.

Thanks for the picture of the bank building -- so far the only existing building I had come across from the obsolete era was the old Bank of Xenia building, which now is for rent, with a hair salon in the basement.

Very interesting. Please feel free to post as much of this type of information as you wish.



Absolutely. This is exactly the sort of thing I set up the message board to read.

- Greg

So why were $4 notes issued?

My supposition is that it goes back to the British Pound that had a value of about $4 (both US and Canadian) during most of the first half of the 19th century.

This supposition is perhaps validated by exploring details of the Canadian bank note issues. The $4 note from the Commercial Bank of Fort Erie that I showed above also shows its value as 20 shillings. The $4 corresponds to one Pound, that is, 1 Canadian Dollar equals 5 local shillings. This equivalence of $4 to 1£ was not universally accepted by the different provinces and many more details can be found in “A History of the Canadian Dollar” by James Powell, which is available as a free pdf file at:
http://www.bankofcanada.ca/en/dollar_book/

The Canadians also issued “obsolete” banknotes. However, instead of calling them obsolete, they are referred to as “chartered” bank notes. The definitive catalog for these notes is the Charlton Catalogue: “Canadian Bank Notes” by R. J. Graham. It has about 1/5th the number of pages as the Haxby catalog. It lists about 160 banks that issued notes from 1818 to 1943 whereas Haxby lists around 2500 banks. The notes from some chartered banks are still redeemable by the Bank of Canada. Graham also recently released “Canadian Merchant Scrip”.

Of these 160 Canadian banks, about 40% issued $4 notes. Not counting different dates, protectors, signatures, etc., these 66 banks issued about 90 face different $4 notes. Since Canada is part of the British Commonwealth, it might be expected that Canada issued many more (at least relatively) $4 notes than the U.S. The first attached graph shows the number of $4 notes issued as a function of “decade”. The second graph shows the yearly number of banks that were operating between 1830 and 1880. It also shows the yearly number that either opened or closed its doors for business. The distribution of $4 notes issued is interesting. There seem to be significantly more $4 notes issued in the odd decades. For the 1830’s and 1850’s this seems to correlate with the number of bank openings in the corresponding decade. The 1830’s was the decade of the many spurious wildcat banks that opened around the panic of 1837 and then rapidly failed. The number of banks stabilized (few openings or closings) during the long depression years of the 1840’s and therefore few new $4 notes were issued. The 1850’s was the decade of industrial expansion and speculation and therefore many new bank charters were issued in addition to several banks that opened under the Free Banking Act of 1850. Many $4 notes were issued in the 1870’s because there was a law passed during the early 1870’s that limited the chartered banks from issuing notes below $4 (1£). The Dominion Government would issue the lower denominations. In 1881 the Dominion Government restricted the banks to only issuing notes in multiples of $5.

See continuation below. I am doing this so that the images are not removed too far from the words.

Bernie

Continued from above:

Getting back to some actual $4 notes.

Although several banks were established between 1817 and 1830 that issued notes in dollars, pounds, and shillings, none issued either $4 notes or 1£ notes in this time frame. The Currency Museum of the Bank of Canada has a $10 and a $20 issued note from The Montreal Bank with a date of January 1, 1818. These might be the first notes associated with the chartered era although these notes were issued before the bank received its actual charter in 1822. http://www.currencymuseum.ca/eng/collec ... .00001.000

Unless I missed something, the $4 note issued on November 3, 1830 by The Bank of Upper Canada at York (Toronto) was the first $4 note issued in Canada. It uses the Arabic numeral 4 (for Dollar), 20 shillings (for 1 Pound), four coins, and what looks like a Roman numeral IIII, although the Roman numeral would be IV as used on the Monroe RR note that you show. This IIII is similar to the one found on the Connecticut Bank and the Farmers Bank of Homer, Michigan that you show above and was used on several Canadian chartered notes.

The eastern Canadian provinces had a closer connection to Britain than the provinces of Upper and Lower Canada that were more closely associated with the US. Thus the 1831 bank note from the Bank of New Brunswick in St. Johns does not mention the dollar denomination but only the "ONE POUND". This is also true for the 1837 1£ note from the St. Stephen’s Bank located across the Croix River from Calais ME. More about Calais later.

See continuation below.

Bernie

Continued from above:

The 1836 $4 note from The Farmers Joint Stock Banking Co says it “Promises to pay ONE POUND currency …” It has several FOUR’s and the numeral 4. However, the “dollar” seems to be assumed.

Since a significant fraction of Canada speaks French, is there any French connection? The 1847 $4 note from the La Banque du Peuple of Montreal is bilingual. It equates 4 (dollars understood) to 20 shillings (1£) and in French Vingt Chelins (20 shillings).

The 1853 $4 note from the Bank of British North America also uses the 1 Pound symbol, £, as being equivalent to $4. This bank was actually formed in England in 1836 as a private bank to conduct business in the North American provinces. Notice that the note has a vignette of Britannia on the left.

See continuation below.

Bernie

Continued from above:

In the 1860’s, after Confederation, even the eastern Provinces started to show the equivalence of 1£ to $4. Before Confederation, the Commercial Bank of Newfoundland issued notes using the British denominations only. The 1867 1£ note from this bank uses a blue protector with “FOUR DOLLARS” while the main printing is still in pounds only.

The 1871 $4 note from LaBanque Nationale is also bilingual. It uses 4, FOUR, Four Dollars, QUATRE, and Quatre Piastres. The Piastre is still used as a slang term in Quebec for the Canadian Dollar. It is also still used in Cajun French in the US. The central vignette shows a nice engraving of the Quebec City harbor with a paddle wheeler that resembles those seen on many US obsoletes.

The beautiful 1880 $4 note from the Halifax Banking Co. is probably the last $4 note issued by a chartered bank.

See continuation below.

Bernie

Continued from above:

After the Dominion Government restricted the chartered banks from issuing $4 notes in 1881, the Dominion of Canada itself issued a $4 note in May of 1882.

The Dominion of Canada issued another $4 note in July of 1900. This note (DC-16) has a central vignette that shows the Sault Ste. Marie locks that connect Lake Superior to Lake Huron. Through an error the note showed the American side of the locks. This was corrected in the January 1902 issue (DC-17a) that has the vignette showing the Canadian side of the locks. These notes had “4” counters in the upper corners and “FOUR” in the lower corners. To facilitate sorting, new notes (DC-17b) that reversed the 4’s with FOUR’s were printed in 1911 even though they carry the 1902 date. The backs of these notes have a nice engraving of the Parliament Buildings on the Ottawa River. These last Canadian $4 notes were withdrawn in 1912 when the new $5 notes were issued.

And so ends the saga of the Canadian $4 notes.

See continuation below.

Bernie

Continued from above:

Since Canadian notes circulated in the US and vice versa during the 1st half of the 19th century, one might expect that more $4 notes would be issued by the Border States, especially New York. A scan of the New York notes listed in Haxby (around 1/6 th the total number of notes listed in Haxby) reveals only 3 notes. One was issued in the early 1800’s at Hudson, NY. The other two were issued in the 1830’s just across the St. Lawrence River at Ogdensburgh (NY-2065-G8) and at Clayton (NY-645-G8). The latter note is the one that you show above from the Sackets Harbor Bank. See the map below for the locations of the $4 bank notes issued in the Border States.

Vermont issued one $4 note in the 1830’s from the Bank of Bennington (VT-10-G8).

New Hampshire issued three: Cheshire Bank (NH-145-G58, 60) in Keene in the 1800’s, New Hampshire Union Bank (NH-275-G44) in Portsmouth in the 1800-1820’s, and Portsmouth Bank (NH-290-G64) in the 1800’s.

Michigan issued four: The Bank of Adrian (MI-5-G8, 8a) in 1838, The Farmers Bank of Homer (MI-205-G8), The Bank of Marshall (MI-260-G8), and The Bank of Monroe (MI-280-G26) in 1836.

Pennsylvania issued one at the Philadelphia Bank (PA-485-G104) in the 1800-1810’s.

Ohio issued one at The Bank of West Union (OH-440-G48, 48a) in 1837.

Maine issued two: The Union Bank (ME-230-G28) in Brunswick in the 1820’s and the Ship Builders Bank (ME-510-G8) in Rockland in the 1850’s. The latter is the latest issue from the US that I have found in the Border States.

I found none in Minnesota and Wisconsin.

Some banks seemed to avoid the $4 denominations. In the late 1830’s the Washington County Bank in Calais ME issued 1, 2, 3, 5, 6, 7, 8, 9, and 10 Dollar notes but skipped the $4. Why? Maybe because it was on the border with New Brunswick, where at least 3 banks in Saint John, New Brunswick (70 miles from Calais) issued 1£ notes in the 1830’s? Across the river in St. Stephen, The St. Stephen’s Bank of New Brunswick (see image above) had also issued a 1£ note in 1836. The same year this bank also issued notes in Dollar denominations of $1 and $2. In 1863 this Canadian bank even issued notes in US funds payable in New York. So why did the US bank avoid the $4 which was equal to 1£?

The attached map shows the locations in the US Border States with Canada of the banks that issued $4 notes. The magenta colored dots represent $4 notes already listed with images in this thread. The red colored dots represent the ones not yet shown in this thread. The dark blue colored dots represent the story of the lack of a $4 note issued in Calais.

So what about my supposition that $4 notes were issued because they equaled 1£? There certainly seems to be a correlation that is significantly stronger for Canadian than for US notes. However, the US banks issued notes in many denominations and maybe there is nothing special about the $4 denomination?

Any comments are always appreciated.

Bernie

P. S. You can find images of most Canadian notes on the Bank of Canada Currency Museum web site. http://www.currencymuseum.ca/eng/collection/ I highly recommend this website and the free pdf file on the Canadian Banking system.

Bernie,

It's an interesting supposition. I had not considered the possible connection to Canada previously. I have to say though that it doesn't "feel" right to me. I don't have any data to back my feeling at this point, but I'll try to see what I can find.

Here's my line of thinking behind the feeling.

The link between the dollar and the pound was established on the colonial currencies, and was anything but constant. I also note that the colonial currencies came in a wide variety of deonominations, some of which translated into shillings and pence, as opposed to shillings (or pounds) alone.

Once these currencies were replaced by the notes we now call obsoletes, it seems apparent to me that there continued to be no defined standards of denominations. Indeed, that is one of the things that draws me to obsoletes. Some banks issued every single digit deonomination... others jumped from $3 to $5 and then to $10... still others went for fractionals based on the "bit" (and multiples or fractions thereof). My sense is that they were simply trying to accommodate local economic transactions with the most convenient currency possible. It should also be noted that once currency exchanges went into operation there was some variance between the value of the "dollar" as expressed by different banks in different states.

Now having read your posts, it may well be that for those on the Canadian border there would have been a need for denominations that translated well with Canadian currencies. But then I have to consider why that might be useful if they didn't trade at par with the Canadians.

It would be very helpful to have more background on the currency exchanges of the time, especially to know if they traded across the border like that (paper to paper) or if they had to go to metal for cross-border trades.

Great research on the Canadian banks, by the way. Thanks for posting it.

- Greg

Searching the Heritage archives today I found 36 varieties of four dollar notes. Of those, the state with the most varieties was North Carolina with eight cities/types. Georgia, Michigan and New York tied for second place with four types in each state. Missouri Defense Fund $4 notes are very common, but there's another interesting note in that series... the $4.50 note. Trailing the pack are a host of southern states, including Texas, Louisiana, Florida, Mississippi and Tennessee.

Now to be sure, NC did have colonial currency based on Shillings and Pounds. So this might help explain why they had a local demand for the notes... familiarity with the old currency may have bred a long-standing familiarity with the denomination that made it easier for banks to move notes faster if they had that denomination.

- Greg

Greg,

Thanks for the thoughts.

When I started out with my supposition I had hoped that there would be more $4 notes from the Border States. I noticed that NC had a lot of $4 notes. I found it extremely interesting that right on the border at Calais ME, a bank issued everything but the $4 denomination.

I think that it is a little dangerous to use the HA archives for this purpose since the distribution of surviving notes (and subsequently auctioned by HA) does not have to resemble the distribution of issued notes.

Since I have already gone through about 30% of Haxby, I might just do the rest, unless of course you are interested in helping.

The dollar certainly fluctuated significantly during this time frame. The attached graph shows the US Dollar per British Pound Sterling ratio, which is closer to $5 per Pound Sterling (Coin). The ratio is closer to $4/£ for paper currency.

The $4.5 note (Haxby UNL) seems to be in between. I wonder if the issuer, Missouri Defence Bond of the State of Missouri, that was sympathetic to the South in 1860 was going to do business with Great Britain during the Civil War. Heritage in one of their description says: “This issue was printed by Confederate printer Keatinge and Ball. The Confederate sympathizing Missouri government was not able to release these into circulation. This state government eventually took refuge at Marshall, Texas.” Would Great Britain have taken this paper bond or more likely required hard currency? Also $4.5 is probably too small for trade with a country? There are many interesting articles on these bonds on the net. Here is one: http://members.aol.com/ozrkreb/currency.htm

Given that bank notes during this era were discounted (typically proportional to the distance from the location of the bank of origin), that paper currency was valued differently from coin, that many banks were barely solvent, that there were many counterfeits, and that there were no common centralized rules, it is a wonder that business could flourish at all.

There certainly was significant trade between the US and Canada, especially in the Niagara area. Many of the Canadian banks during the 1830-1860’s were at least partially owned/run by US citizens. For example, The Niagara Suspension Bridge Bank in Queenston, Upper Canada, was mainly established by US railroad interests for the purpose of building a bridge across the Niagara River.

However, given all the different denominations issued during the obsolete era, there probably is little relationship between the Pound and the Dollar at least in the US. There certainly is a strong relationship in Canada!


Bernie