What is obsolete currency or broken banknotes?
Prior to the Civil War constitutional law prohibited the federal government from releasing legal tender currency. This was essentially a reaction to the failed efforts of the continental government to issue currency during the Revolutionary War, and the ultimate collapse of that currency (and the public confidence in the national government to manage currency).
The law that stood in the way of the government releasing currency had no explicit prohibitions against banks releasing currency. Seeing both an opportunity for profit and a means of addressing a very real need for a portable medium for exchange, many banks began printing currency. In some cases the banks backed their currency with some form of subscribership or hard assets, but this was by no means the path followed by all banks. Almost every bank eventually issued more bank notes than they could back with assets, and when a currency panic ensued, the banks found themselves unable to redeem their notes, and had to suspend specie (coin) payment, usually resulting in the bank going out of business. When that happened the notes issued by the suspended banks were deemed worthless, and are now referred to as Broken Banknotes (or obsolete currency). If you would like to learn more, there is a lof of information posted on the message board in the Banks forum and in the Banknotes forum. In addition, there are numerous books on the subject available that are discussed in the Books forum.
Why collect obsolete currency?
I believe there are as many reasons to collect obsolete currency as there are collectors. Some want to touch or protect fragile pieces of history. Some are drawn to the delightful images on these old notes. Some seek a tangible connection to a place or a time gone by. Others may see it as an investment. Whatever your reason, I encourage you to visit the topic entitled Why I collect Obsolete Currency and read why others collect and tell us why you collect.
Is obsolete currency expensive?
As with virtually any collecting hobby, you can spend as much or as little as you want on your collection. Condition and rarity play a large part in determining the value of any collectible and obsolete currency is no exception. It is possible to obtain common pieces in excellent condition for very little money, compared with other numismatic collectibles, because obsolete currency is not as aggressively pursued as other numismatic collectibles. A sage once advised that the best way to make intelligent purchase decisions in any hobby is to begin by investing in information. To that end, this web site and the associated message board have been set up to provide a means of sharing the information we have with one another and building a stronger base for the hobby.