Fr 831 Panama Canal Note

One of the great engineering marvels of world history is the Panama Canal which transverses the isthmus of Panama and connects sea lanes in the Atlantic and Pacific Oceans. An allegorical representation of this feat depicting a female figure holding a caduceus and draped in “Old Glory” astride a pediment labeled “Panama” shows warships, merchant and sailing vessels and graces the entire back of the Fr. 831 Panama Canal Note.

Specifications

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Background
This rarity was only issued by the St. Louis Federal Reserve Bank. A few dozen notes are reported outstanding on the Treasury’s account books, and thus few are available to type note collectors today. Current census on this note is 55, but more than a dozen are permanently impounded in museums. Thus only 30-40 are available to collectors. Since this note represents a one-note type, when an example comes up at auction a price of $10,000 to $20,000 is readily obtained from type note collectors.

The first nation to have a notion that a canal across Panama would be a good idea was Spain in the 16th century after mineral deposits were discovered on South America’s Pacific coast. Hauling silver from Lima, Bogota and Potosi in northwestern South America back to ports in Spain was difficult and expensive.

It quickly became apparent to the Spaniards that nipping a cut through the narrow land mass that connected Central and South America would greatly speed up the process, lessen hardships and expenses. Accordingly plans were begun for a canal route approximating what is present today, but had to be abandoned by more pressing needs.

Nearly 300 years later in 1819, The Spanish government finally authorized creation of a company to build such a canal. Discovery of gold in California in 1848 stimulated American interest in the project also since a voyage by sea from New York to San Francisco would be shortened by 7800 miles. In 1879 Ferdinand de Lesseps, builder of the Suez Canal, became interested in a sea level canal across Panama but failed to complete the project from 1881-1888. It is estimated 22,000 workers died during the French construction period.

The U.S. Congress became interested in the project in 1899, and negotiated a 100-year lease to a 10-mile wide strip which became the Canal Zone, with payments made to Panama. Construction of the canal was restarted by Americans Nov. 11, 1904, on a canal lock system with artificial lakes created by dams. Another 5,600 workers died during the American construction period. The 51-mile canal was formally opened to shipping on August 15, 1914.

History
In the meanwhile Congress passed the Federal Reserve Act Dec. 23, 1913, to establish Federal Reserve banks, to furnish an elastic currency, to provide a means of rediscounting commercial paper, and oversee banking in the United States. Originally it was anticipated Federal Reserve Bank Notes would replace National Bank Notes, and new designs were clearly in order.

American pride in its accomplishment is evident in the patriotic currency illustration on the $50 Federal Reserve Bank Note created by BEP engraver Marcus Baldwin in the year the canal opened. The vignette on the currency back celebrates this great American engineering, construction, and medical achievement (since U.S. Army surgeon Walter Reed’s cure for the scourge of yellow fever made it possible for the Americans to succeed where the French had failed).

Only 4,000 of these $50 Federal Reserve Bank Notes Fr. 831 were issued under the Acts of Dec. 23, 1913, and April 23, 1918, making it a key 20th century large size U.S. type note. All were obligations of the Federal Reserve Bank of St. Louis. Civil War hero and President U.S. Grant is shown on the note’s face as engraved by John Eissler, as is the legend “National Currency.” U.S. Treasury seal and serial numbers are blue.

According to the legend on its face, the note was “secured by United States bonds or United States certificates of indebtedness or United States one-year gold notes, deposited with the Treasurer of the United States of America.” Facsimile signatures of Register of the Treasury Houston B. Teehee and U.S. Treasurer John Burke appear at top center, and those of St. Louis fed bank Governor Rolla Wells and cashier at lower right. At the time St. Louis was the nation’s fourth largest city, with major fur, livestock markets, railroad hub and brewing center.

Although this key one note type is scarce, fortunately for collectors, they can still obtain a $50 “Panama Note” less expensively by purchasing a Series 1914 $50 Federal Reserve Note (Fr. 1012-1071), which shares this evocative design on its back.

Issue of large size Federal Reserve Bank Notes was authorized to replace bond-based National Bank Notes, while the economy was adjusting to the more elastic Federal Reserve Notes. Circulation of all denominations ($5-$50) of large size Federal Reserve Bank Notes peaked at $370 million, but most notes were withdrawn quickly, as the new Federal Reserve Notes became commonplace. Federal Reserve Bank Notes were never intended to become a permanent part of our currency stock in circulation. By 1924 all but $15 million had been redeemed.

The Federal Reserve Act had provided for two classes of currency: Federal Reserve Bank Notes and Federal Reserve Notes. The principal differences between the two classes of currency besides design variations (the face of the Federal Reserve Note also bears a Federal Reserve district seal, in addition to redistributed design elements) are the backing requirements, and the tender purposes of the two notes. Federal Reserve Bank Notes were obligations of a particular fed bank, while Federal Reserve Notes were obligations of the fed as a whole and thus do not have individual fed bank officers signatures.

Additionally, Federal Reserve Bank Notes were receivable in payment of all taxes, excises and other dues to the United States EXCEPT duties on imports (customs) and interest on the public debt, while Federal Reserve Notes were receivable for customs and also had a gold clause.