Fr. 1152 $20 Dollar National Gold Bank Note

One of the most spectacular types of U.S. paper money available to collectors is the Fr. 1152 $20 National Gold Bank Note, a true artifact of the old west gold mining regions. In fact, a standard catalog calls these rare bills “the most romantic of all our currency issues.”

Specifications

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Background
National Gold Bank Notes are real First Charter National Currency, but unlike their more common siblings which were generally issued during the specie suspension of the Civil War and post-Civil War era and thus were redeemable in other paper currency only, these heavyweights could be exchanged for genuine United States gold coins on demand. Reasons for this seeming disparity stem from the history of the region from which they come. While easterners were caught up in the coinless commerce stemming from wartime hoarding and paper inflation, Californians continued to enjoy the fruits of the region’s vast precious metal deposits. Gold and silver coins continued to circulate there, and many Californians eschewed paper currency. Thus after six years no national banks had been organized in California.

Recognizing however that carrying cold hard cash could be cumbersome, and desirous of establishing new banks in the western region, Senator John Sherman of the Senate Finance Committee reported favorably S. 378 “A Bill to provide a national currency of coin notes, and to equalize the distribution of circulating notes” on Jan. 11, 1870. Principal considerations of the legislation was establishing national banks, and national currency not less than $5 “which notes shall bear upon their face the promise of the association on which they are issued to pay them upon presentation. . . in gold or silver coin of the United States.” Congress passed this law July 12, 1870.

The legislation also required each association chartered under this law to keep on hand in specie at least 25% of its outstanding circulation at all times and to redeem at par notes of other banks chartered under this legislation. This assured a currency convertible to gold coin on demand. Only a handful of banks were organized and issued these First Charter Nationals. Nine banks received this special charter in California and issued the gold-backed currency: First National Gold Bank, San Francisco (charter no. 1741), National Gold Bank & Trust Co., San Francisco (charter no. 1994), National Gold Bank of D.O. Mills & Co., Sacramento (charter no. 2014), First National Gold Bank, Stockton (charter no. 2077), First National Gold Bank, Santa Barbara (charter no. 2104), Farmer’s National Gold Bank, San Jose (charter no. 2158), First National Gold Bank, Petaluma (charter no. 2193), First National Gold Bank, Oakland (charter no. 2248), and Union National Gold Bank, Oakland (charter no. 2266).

History
National Gold Bank Notes (with few exceptions) were printed on a special yellow-tint paper to distinguish them from regular National Currency. Face designs of the notes are similar to normal First Charters with the exception of the important clause at the bottom of the note face, which, for example, on the note illustrated reads: “. . . will pay Twenty Dollars to Bearer in Gold Coin on demand.” Vignettes on the $20 note illustrated are “Battle of Lexington” at left engraved by Joseph I. Pease, and “Loyalty” at right engraved by Alfred Jones.

The big difference in note design is on the National Gold Bank Note backs, where for example on the $20 shown an engraving of the “Baptism of Pocahontas” is replaced by James Smillie’s decorative vignette of an assemblage of gold dollars, quarter and half eagles, eagles and double eagles. This is surely one of the most numismatically pleasing paper money vignettes of all time, and makes these notes a most desirable addition to any collection.

This same array of U.S. gold coins appears on all National Gold Bank Notes in denominations from $5-$500. The principal coins shown are an 1871 double eagle, two 1867 eagles, an 1864 trey, and two 1870 gold dollars. In all, Smillie depicts 34 gold coins with face value of $210. Included are four $20s ($80), six $10s ($60), eight $5s ($40), four $3s ($12), four $2.50s ($10), and eight dollars ($8). The number of coins shown (34) may be symbolic, since there were 34 states in the Union when the war that created National Banks commenced.

Smillie’s placement of the coins for his vignette on the note backs was purposeful. A second model for this design exists, which the present writer cataloged for a major auction several years ago. The unused photographic model had been handed down as a family heirloom in the Smillie family. Coin placement on this alternate model is different and the currency design it would have produced is not nearly so attractive as the version actually used.

A pencil notation on the back of the rejected design reads: "This die was engraved by James Smillie for [the] American Bank Note Co. of N.Y. Sold by the Co. to U.S. Govt. Trasy. (sic) Dept. and destroyed by the Bureau of Engraving and Printing under condemnation process -- which shows the measure of intelligence exercised in the government management." The message was in the hand of G.F.C. Smillie, who ironically once was chief picture engraver at the Bureau of Engraving and Printing. National Gold Bank Notes were issued in two series, Original Series and Series of 1875. Not all banks issued all denominations, however all nine California gold banks did issue $20 Original Series bills, and four of them also issued Series 1875 twenties. The extent of $20 issues was 36,129 total notes. The First National Gold Bank, San Francisco, circulated about 30% of these. The note depicted is one of 31 known examples extant on this bank, according to a recent census. Total survivors of the double eagle denomination are 70+ known notes. Fortunately for collectors surviving examples of all denominations total nearly 600 notes. All denominations (except the $500) have survived, but unfortunately almost all are pretty much worn out in terms of eye appeal. Surviving examples of many of the varieties are very rare, unique, or unknown.

Collecting
You name it, catalog values are in the thousands for even the most common skudzy examples up to six figures. As a postscript, a tenth National Gold Bank was organized far from the gold fields, and it actually was the first one chartered. On Aug. 15, 1870, the first national gold bank, Kidder National Gold Bank, Boston deposits its securities to receive a charter under the act passed a month earlier. The bank received charter no. 1699. On March 11, 1871, first shipment of National Gold Bank Notes was sent to Kidder NGB. On April 8,1871, the last National Gold Bank Notes were sent to Kidder NGB. And on Dec. 4, 1871, the Comptroller of the Currency redeemed all National Gold Bank Notes delivered to Kidder NGB, Boston. It is believed the bank’s entire issue was recalled and destroyed. Only two specimen notes from the bank are believed to exist. Finally, the bank was liquidated on Nov. 8, 1872.

Congress approved resumption of specie payments Jan. 14, 1875, with a target date of Jan. 1, 1879. With the resumption of specie payments, the need for National Gold Banks and National Gold Bank Currency ceased. On Feb. 14, 1880, Congress enabled National Gold Banks to eliminate “Gold” from their names but keep their charter numbers and convert to regular National Banks.