RCC/The Bank of the United States in North Carolina

The Bank of the United States in North Carolina

Federal paper money wasn't issued in a significant way until the Civil War era. At that time the abundance of paper money issued by banks, states (in the South), municipalities, and merchants of all sort was taxed out of existence, and the first federal paper money was left with little competition.

But in a way, the Unites States did issue some paper money prior to that time, and part of it came from North Carolina!

The Bank of the United States existed in three incarnations, discontinuously from 1791 through 1841. The home location of these banks was Philadelphia, and there were branches in many states. The First Bank of the United States, 1791-1811, was chartered by Congress for twenty years. The Bank was organized by Alexander Hamilton, and it was well-managed and successful. Its notes were well regarded and could be exchanged for specie. Many later bank notes and other paper money could only be redeemed in "current funds," meaning other paper money of equally dubious value. But in early America, banks and use of paper money were highly controversial, and the "hard money" faction-those favoring only use of coins of intrinsic value-succeeded in ensuring that Congress did not renew the Bank's charter upon expiration. Examples from the First Bank are almost non-existent today, because most were redeemed. Most of what did survive are contemporary counterfeits.

The Second Bank of the United States, 1817-1836, like the First, was well-managed and issued sound paper money. Among its duties were the handling of fiscal affairs for the federal government and funding, through loans, of projects for economic development of the frontier. But this bank also ran into political opposition, both by the "easy money" faction-those who believed that the Bank's policies were too conservative, and by the "hard money" faction. Andrew Jackson, one of the "hard money" advocates, doomed the Second Bank when he was elected president in 1828. In 1833 he suspended deposit of federal funds in the Bank, curtailing its funds, and causing its demise and liquidation in 1836.

Figure 1

But the Bank continued to have a life. It was reorganized under a charter from the State of Pennsylvania and continued business until 1841. While this is frequently referred to as the Third Bank of the United States, it was not a federal entity like the First and Second Banks.

Where does North Carolina fit into this story? Among the 28 branches of the Second Bank of the United States was one in Fayetteville, operating between 1817 and 1835. Each branch and the main office issued paper money, all using common designs with the place name filled in. Most branch issues are today scarce to rare, with contemporary counterfeits comprising many survivors. Figure 1 is a note issued by the Fayetteville branch in 1829. I don't know if it's genuine or fake. This note is actually a "draft" or check issued by the branch. The only design difference between the draft and the note is the phrase "Cashier of the" on the draft. Notes say "The President and Directors" in its place.

Figure 2

Figure 2 shows a note issued by the main office of the Second Bank in 1835. It is a note, not a draft, and Philadelphia issues are fairly common. Again, I don't know if it's genuine. Figure 3 shows a note from 1839, of unknown genuineness, from the Third Bank. Third Bank notes are the most available of the three banks.

Figure 3

Because of the scarcity of Fayetteville issues of the Second Bank of the United States, examples are missing from many North Carolina collections. But for completeness, any collection of North Carolina bank notes has to include an issue of the Bank of the United States at Fayetteville as one of North Carolina's banks.

To read more articles from the Odd and Obsolete series visit Bob's webpage at http://www.unc.edu/~rcs/odd/index.htm

The RCC grants permission to reprint any articles not copyrighted by the author for non-profit educational purposes only, provided the Raleigh Coin Club and the author are cited as the original source.