National Currency Blog – Lessons Learned The Hard Way


Now that we are four years into this blog, I think it is time to have a frank (one-sided) conversation about national currency. A lot of people from outside the specialty, but inside the field of numismatics like to think that just because they have a reference book that they are ready to buy and sell national bank notes. Below are some lessons that I have learned the hard way that I would like to share here:

Original Series vs. Series of 1875
This point also applies to 1902 date backs and 1902 plain back. Simply put, there is no premium for an original series note over a series of 1875 note. Collectors just don’t care. We all realize that original series notes are older and often times rarer, but it just doesn’t matter. It is all just a first charter to collectors. There is no premium in the current market. 1902 date backs are multiples rarer than 1902 plain backs, but it just doesn’t matter. Right now 99% of people are collecting by bank. Type matters when it comes to brown back vs red seal, etc. However, seal type varieties being important are a thing of yesteryear.

$5, $10, or $20 Is Meaningless
Back when national bank note collecting first started it was popular to collect all denominations and all types of notes from a bank, especially if that was the only bank you collected. This was possible back then because the price to play was usually a small percentage over face value. Today even the most common notes start at about $200. There is no motivation to collect duplicates, even if they are different denominations. This concept can be especially difficult for coin people to understand. In the world of coins the denomination is exceedingly important. For example, one 1885 $10 gold piece could be common and sell for $1,000, but the $20 piece could be an extremely rare variety and sell for hundreds of thousands. You will often times see a note on ebay advertised as “1 of 4 $10 plain back.” While that may be true, it certainly should not affect your buying decision. Even if the denomination is unique, like they are six tens and one twenty, the twenty should sell for the same as the ten. Ones, twos, fifties, and hundreds are exempt from the above statement.

Kelly Is Obsolete
And I don’t say that with any malice or disrespect to the author. However, the last edition of the Kelly book was published in the summer of 2008 which was just a couple months after the official high of the market, and right before everything with the economy happened. If you want to lose your ass, then pay Kelly premiums for common blue seals in fine condition. That is the fastest way to go broke in this hobby. If someone approaches me with a semi-common 20 known blue seal in fine condition with no signatures and no eye-appeal, I might consider paying 25% of Kelly. And in most cases it is just better to not make an offer. You likely won’t be able to buy something like that for what it is really worth and you are likely to upset someone who doesn’t understand the difference. Red seals are also priced extremely high in the Kelly book. Brown backs are pretty accurate, as are small size notes and first charters. The real landmines lie in the third charter area.

Auction Is The Benchmark
“I paid $3,000 at auction in 2005, so I will need at least that.” Sorry, it just isn’t going to happen. And remember, I am specifically talking about national bank notes here. So many more national bank notes are being discovered every year that what was rare in 2005 could easily be common today. And even if the rarity level is the same today, the odds are that the under bidder has filled the hole, is no longer collecting, or is dead. We are losing collectors at an alarming rate. Furthermore, auction records set the price for a national. Once something has sold for $3,000, then that is the value. If you have something really fresh that doesn’t have an auction result, then as a dealer I can set the price, and probably do pretty well with it. If I am selling an auction retread then the best I can do is probably get the same price. The same people who are collecting today, likely collected in 2005. If they wanted the note then they would have bid. And I don’t say the above statements to suggest that prices at auction are so high that a dealer can’t compete. That simply isn’t true. The fact is just that as a dealer I can get more from a collector than an auction house can, assuming the item does not have an auction history. Collecting national bank notes is fun, but if you only buy out of auction then you will lose a lot of money when it comes time to resell.

Shopping Doesn’t Help, It Hurts
This is a concept that most people don’t understand, so I am going to try to change the example. Imagine there are twenty Chevy dealerships within 50 miles of you. You want to sell your 2004 Malibu. You certainly are not going to just walk on the lot and take your first offer and call it a done deal. You are probably going to do a little homework, visit two or three dealers who appear to stock at least some Malibus, and take the best offer between that group. Hopefully you aren’t going to visit all 20 dealerships. And surely you don’t think that by visiting an extra 17 dealerships that someone is going to pay you $10,000 for a $4,000 car. However, when we change this to currency, people assume that by shot-gunning an email to 100 dealers that they are somehow going to get more money. The fact of the matter is that currency collecting is a small hobby and the network of dealers is very tight. We know that we aren’t they only people competing for a deal. If you work with three dealers, you will probably get three similar offers. There isn’t a rogue dealer or collector paying twice market value. So when trying to sell your note or collection, certainly talk to more than one person, but there is a diminishing return once you start shopping the deal to a fourth, fifth, and twentieth person. If you shop to too many people then everyone will realize the deal is no longer fresh and desirable and your high offer is likely to walk away.

I am sure I will think of some more hard lessons, but those are five good ones for now.