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Collect them before they are gone

This article was originally printed in Numismatic News.
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When it comes to starting a new collection, the most likely place to start is the lowest denomination. That is the historical path trodden by generations of coin collectors who started with the Lincoln cent. It makes sense. As people gradually become more comfortable with collecting, they increase the money they put into the hobby, but at least initially many want to go slow.

But this is not a Lincoln cent story. It is about paper money. Many coin collectors give a shudder at the idea of collecting paper money because it sounds expensive. After all, the face value of the bills is far higher than the face value of coins. Right?

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While that is true, collectors know that the value of most collector coins has long been divorced from face value. Paper offers some reasonably priced entry points as well and at prices comparable to those of coins.

The best one in the case of current notes is the $1 Federal Reserve Note. It can be the starting place for many new collectors. For many years, Federal Reserve Notes in general were overlooked. That lack of interest has been changing since the first large head $100 Federal Reserve Note was introduced in 1996, but when one considers generational shifts in collecting patterns, this one is still fairly new.

In the lifetime of many collectors the $1 Federal Reserve Note has gone from basically a small easily assembled collection to what has become a large collection with some surprisingly good notes in it. In fact, if there ever was a classic case to show collectors the importance of assembling nice collections of notes as they are released, it would be the $1 Federal Reserve Note. If you had acquired a regular and a star replacement note from each district since the 1960s, the cost would have been minimal, but apparently not that many did as there are surprisingly few complete sets of $1 Federal Reserve Notes to be found today.

With each passing year and with each new series date, the $1 Federal Reserve Note becomes a bigger challenge to complete. When you consider the potential for numbers of new collectors, the message is clear in that a $1 Federal Reserve Note is not going to get any easier to complete, meaning if you want a complete collection further delay is not a good idea as $1 Federal Reserve Notes are looking better and better.

One of the things that probably held many back from collections of $1 Federal Reserve Notes is that they probably seemed like no challenge at all. That was a natural feeling as the $1 Federal Reserve Note was not even introduced until 1963. When the change to small-size notes had been made back in 1929, the role of the Federal Reserve Note had been expanded, but it did not include the $1 and $2 denominations.

It was interesting as Silver Certificates were being released in small-size in fewer denominations, but that decision appears in part to have been based on the idea that $1 notes would be entirely Silver Certificates. That was in stark contrast to the fact that in large-size, notes issued from 1861-1929, there had been $1 United States Notes, Silver Certificates, Federal Reserve Bank Notes and earlier $1 National Bank Notes and Coin Notes.

For the $1 to simply be Silver Certificates represented a significant change, but initiative changed quickly as the emergency of the Great Depression saw a small number of $1 United States Notes produced. These had red Treasury seals on them and we not backed by any metal. Even so, the United States Note $1 had a small printing and very unusual release pattern, making the $1 Silver Certificate basically the only $1 note many Americans would see until the 1960s. These notes had a blue Treasury seal on them.

There is little doubt that at least through the 1950s, there appears to have been very little interest on the part of officials in changing matters. The combination in circulation by that time saw basically a $1 Silver Certificate and a $2 United States Note. The latter was not seen in circulation in significant numbers. The vast majority of other denominations were Federal Reserve Notes despite the fact that there were other denominations of Silver Certificates and United States Notes.

Introduction of the $1 Federal Reserve Notes was something that was forced on the government as the clad coinage alloy was forced on the government in 1965. It was part of a sudden realization on the part of many that holding silver was a good idea. Where just a few years earlier the silver stockpile of the government was seen as virtually endless, at some 2 billion troy ounces, suddenly the government was faced with the prospect of not having enough silver to back Silver Certificates.

Hundreds of millions of silver dollars had been paid out of Treasury vaults in the early 1960s and at minimum the idea of redeeming Silver Certificates for silver dollars was going to have to change unless more silver dollars were minted. That option was considered, with test strikes of a 1964 Peace dollar being made and in Denver then melted.

There was a period of confusion as officials tried to determine what would be a viable silver policy and one of the logical conclusions was that Silver Certificates had to be eliminated as having hundreds of millions of dollars in silver obligations in circulation in the face of more volatile silver markets was not a sound idea.

The silver changes in 1963 were designed to basically free the Treasury stockpile from backing Silver Certificates and this made the Silver Certificate obsolete. They were phased out by discontinuing the redemption of Silver Certificates for silver dollars in 1964 and in 1968 discontinuing the redemption of Silver Certificates with bullion.

Without other options, the $1 Federal Reserve Note became the choice as dollar coins were part of the problem and they were the only other $1 other than Silver Certificates. Making the coin in copper-nickel clad alloy was years in the future (1971).

The first release of $1 Federal Reserve Notes attracted some attention as the nation was in a very active period in terms of collecting. It had a nice green Treasury seal (as all Federal Reserve Notes did) and serial number and the Granahan-Dillon facsimile signature combination.

While this information might seem interesting now, at the time many collectors were concentrating most of their attention on Silver Certificates and turning a profit on them by redeeming them for silver.
Even so, there was some saving of the first $1 Federal Reserve Notes and we see evidence of that in the fact that the Series 1963 is still $5 in choice crisp uncirculated condition while a star replacement note tends to be somewhat more than $5, ranging anywhere from $7 to $30.

Now for Federal Reserve Notes, there are 12 district banks that issued them, so a full collection of Series 1963 would examples from all 12 banks and then 12 examples of the star replacement notes, for a set of 24 notes.

The star on a replacement note appears at the end of the eight-digit serial number  instead of the usual suffix letter.

Another quirk compared to coins is that paper money does not change dates every year. Policy at the Bureau of Engraving and Printing that prints the notes was that  dates changed only when there was a significant design change.

The low prices of the historical Series 1963 note are part of the fun of the $1 Federal Reserve Note. If you don’t collect all 24, you can collect by type. This drastically reduces the cost. But paper money collectors sometimes expand the series by collecting by serial number blocks.

What this means is they will take a note with high numbers printed and divide it into block categories.

In 1963, the New York Federal Reserve issued three blocks of notes: B00000000A was the first consisting of serial numbers up to B99999999A. The second was B00000000B and B00000000C. The first letter stands for the New York Fed, which is the second district of 12. Each of the Federal Reserve Banks was assigned a letter and that letter appears in the district seal on the note and is the first letter of the serial number. The suffix letter “A” was for the first run of 100 million notes (a star note for the 100 millionth). The suffix letter “B” was used and then “C.”

As you can see, you need a scorecard to help you keep track of the print runs to collect this way. Popularly used is the Standard Guide to Small-Size U.S. Paper Money by John Schwartz and Scott Lindquist. There the serial number blocks are all nicely laid out for you.

The second series of Federal Reserve Notes is the 1963A. The suffix latter was added to the date to denote the change of Treasury secretary Henry H. Fowler succeed C. Douglas Dillon. This series also would consist of 24 notes and more if you collect by serial number blocks.

Not every note is inexpensive. Some of the blocks can bring up to $150, but for the most part, for the first two series if you exclude collecting by block, you are talking 48 notes for under $400.

The cost of tougher districts may not normally be much higher for the first two series, but the fact remains that now after more than 40 years there are some tougher notes as the printings and amount of saving for all 12 districts were not equal. With limited attention over the years, there has not been much publicity given to better districts, but anyone who seriously attempts a complete $1 Federal Reserve Note collection will learn quickly that there are sleepers that are tougher than might be expected.

There are some interesting stories as well. The Series 1963B was third series. The “B” was added because Joseph W. Barr became Treasury secretary in Dec. 21, 1968, just before the administration of Lyndon Johnson left office.

Barr notes, as they were dubbed, became all the rage for a short while. He was in office for such a short time (He left Jan. 20, 1969), that the print runs were limited to just five of the 12 Federal Reserve districts.

Because of all of the hoarding in 1969, collectors today can get these notes for  a reasonable price. A regular issue in Choice CU is $5 while the stars are $20.

The speculation was that there could be very few Barr notes with just one month in office. What disappointed collectors was the fact that while only in office a short period, Barr’s signature was used for a longer time.

In the end, while the printings were smaller, there were over 42 million Barr notes from New York, nearly 68 million from Richmond, almost 45 million from Kansas City and over 23 million from San Francisco. Of the districts that had Barr notes, only the 15.5 million for Chicago could be called unusually low, but it was not low enough to affect today’s price.

The first date change occurred in 1969 when the Treasury seal was modified and modernized. An old Latin legend was simply changed to read in English, “The Department of the Treasury.”
There was also a new Treasury secretary and treasurer. David M. Kennedy was joined by Dorothy Andrews Elston.

The Series 1969 notes with the Elston-Kennedy signature combination soon gave way to Series 1969A as Kabis-Kennedy. In fact Elston and Kabis were the same person, during her term in office Mrs. Elston married Walter L. Kabis, making her the first Treasurer of the United States to change her name while in office.

John Connally replaced Kennedy for Series 1969B.

In the case of some districts there are potentially scarcer notes. A good example can be seen in the case of the Series 1969C with a Romana Banuelos-Connally signature combination. As a type note, it is not difficult, but it is better than many at current prices around $25 for a Choice CU star note. What must be remembered is that $25 buys you an available Choice CU star as the star printings ranged from under 20 million to over 90 million and that explains why some stars can command prices up to $200 for this series.

Much the same is true of the Series 1974 where a Minneapolis star commands much higher prices than an available district or the Series 1981A where the Dallas Choice CU star is tough bringing $1,250 in CU while other Series 1981A stars are around $15. It is a pattern that can be repeated for many districts in many series as while there is usually an available type note and even an available star there are also many times tougher districts and that is especially true in the case of Choice CU stars where a complete $1 Federal Reserve Note collection would already be a challenge to both your budget and your patience.

The situation with web press notes is even more dramatic. The web press was an idea of the Bureau of Engraving and Printing to find an improved way to print notes. The idea was to print simultaneously both the face and back in a continuous roll of currency paper while adding overprinting during a single pass through the machine. At least in theory it was a promising idea and the Bureau of Engraving and Printing awarded a $10.2 million contract to the Hamilton Tool Co. of Hamilton, Ohio for the construction of the press.

The web press became something of a long running soap opera as everyone waited for dramatic improvements. The initial press run was made in May of 1992. Notes from the press have design differences that include the removal of the face check letters and quadrant number. The check number on the web notes is moved to the right of the word “TRUST” on the back.

The first notes released were Series 1988A with a Villapando-Brady signature combination. They were not issued for every district. Atlanta being the most available at a current Choice CU price of around $40 although there are others at similar levels. The cost tells some of the story as the numbers are small and these are some of the more available web press notes.

In the case of a Series 1988A web press note from New York the price is over $1,500 in Choice CU and an Atlanta star being the only star note available in the series is at $1,400 in Choice CU.

The popularity of the web press notes is seen in rising prices . The 15th edition of the Standard Catalog of United States Paper Money showed a $75 CU price for the New York Series 1988A in yet today it lists for $1,500 in CU and $400 in VF.

What also made the web notes appealing was it provided a circulation finds environment for paper money collectors for a number of years.

There would be additional attempts at web press notes before the project was discontinued. There was a Series 1993 Withrow-Bentsen where New York notes are available in Choice CU for about $20 and the Philadelphia is $15.

The final web press notes were the Series 1995 Withrow-Bentsen notes with notes from Boston, New York, Cleveland and Atlanta being available at similar prices around $20 in Choice CU. Like all web press notes, however, the supplies are small and if the supply available dries up with increased demand web press notes have shown the potential for rapid price increases.

Even without the web press notes, a $1 Federal Reserve Note collection is already an interesting challenge and that is especially true if you attempt a set of stars by district.

The $1 Federal Reserve Note is showing some solid price increases in some cases, but realistically the feeling has to be that this is still a great period for beginning a collection. A complete type set is really easily assembled and very inexpensive, but complete collections are becoming increasingly difficult. As we continue to see the number of notes in a $1 Federal Reserve Note collection increase, having started a collection now when most are available will seem increasingly like a great idea.

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