Demand Note

Top row: The distinctive green ink used on the backs of Demand Notes gave rise to the term "greenbacks"
Bottom row: Prominent design elements used on the front of $5 and $20 Demand Notes (located respectively under their denomination); pictured in the middle is the front of a $10 Demand Note with prominent design elements listed

A Demand Note is a type of United States paper money that was issued between August 1861 and April 1862 during the American Civil War in denominations of 5, 10, and 20 dollars. Demand Notes were the first type of paper money issued by the United States in the sense that they were the first in the series of emissions which has continuously achieved wide circulation down to the present day. The U.S. government placed the Demand Notes into circulation by using them to pay expenses incurred during the Civil War including the salaries of its workers and military personnel.

Because of the distinctive green ink on their reverse, and because state-chartered bank and Confederate notes of the day typically had blank reverse, the Demand Notes were nicknamed "greenbacks", a name later inherited by Legal Tender and Federal Reserve Notes. The obverse of the Demand Notes contained familiar elements such as the images of a Bald Eagle, Abraham Lincoln, and Alexander Hamilton, however the portraits used on Demand Notes are different than the ones seen on U.S. currency today.

When Demand Notes were discontinued, their successors, the Legal Tender Notes, could not be used to pay import duties - a large part of the U.S. federal tax base at the time - and thus Demand Notes took precedence. As a result, most Demand Notes were redeemed, though the few remaining Demand Notes are the oldest valid currency in the United States today.

Pre-issuance

Federal finances had not yet recovered from the Panic of 1857 when the election of President Lincoln in 1860 made it even more difficult for the Federal government to raise money in the bond market due to the increased threat of Southern secession and a possible war. At the outbreak of the Civil War the Union was depending upon hand-to-mouth borrowing to meet expenses and with the beginning of hostilities at Fort Sumter in April 1861 the burden of funding the war effort and paying employees, including soldiers in the field, offered no small challenge. One response from Congress was the Act of July 17, 1861 which allowed for $250,000,000 to be borrowed on the credit of the United States. Of this sum, up to $50,000,000 was authorized as non-interest bearing Treasury Notes, payable upon demand, in denominations less than fifty dollars and not less than ten dollars. These were called Demand Notes to distinguish them from the interest-bearing Treasury Notes in existence at the time. The promise to pay "on demand" was a new obligation for Treasury Notes (though common on private banknotes) but would spare the cash-strapped Treasury the intermediate step of selling an equivalent amount of debt by allowing it to use the notes as a currency to pay creditors directly. The notes were to be redeemable through the Assistant Treasurers' offices at Philadelphia, Boston, and New York. They were to be hand signed by the First or Second Comptroller of Currency or the Register of the Treasury; they were also supposed to be counter-signed by any other treasury officials designated by the Secretary of the Treasury. These signature provisions would later be altered several times. This act also stipulated that prior to December 31, 1862, an individual Demand Note could be re-issued into circulation after it was presented for redemption.

Just before they were to be released, the Act of August 5, 1861 stipulated several changes to the issuance of Demand Notes. It allowed for Demand Notes to be issued in denominations of not less than $5 and be redeemable through the Assistant Treasurer's office at St. Louis or the bullion depository in Cincinnati. This act also stated that the Treasurer of the United States and Register of the Treasury or any treasury official appointed by the Secretary of the Treasury should sign the notes. Under this act, Demand Notes did not need to carry the Seal of the U.S. Treasury. Importantly, this act also granted a traditional privilege of Treasury Notes to the Demand Notes in that they were to be receivable in payment of all public dues, a privilege which was to figure prominently in their eventual disposition.

Because the Bureau of Engraving and Printing did not exist at the time, the American Bank Note Company and National Bank Note Company were contracted to create Demand Notes. Both companies were prominent printers of banknotes for private and state-chartered banks throughout the country. Most likely, the American Bank Note Company engraved the printing plates for $5 and $10 notes while the National Bank Note Company engraved the printing plates for the $20 notes. All of the Demand Notes were printed by the American Bank Note Company. As designed, they were of the same size, and in appearance closely resembled banknotes.

Post-issuance

Secretary of the Treasury Chase began distributing the notes to meet Union obligations in August 1861. Initially, various merchants, banks and especially the railroad industry accepted the notes at a discounted rate or did not accept them all. In order to ease public distrust in the newly issued notes Secretary Chase signed a paper agreeing to accept the notes in payment of his own salary and on September 3, 1861 Union General-in-Chief Winfield Scott issued a circular to his soldiers arguing the convenience of the notes for those wishing to send home a portion of their pay. In mid-September Secretary Chase issued the following circular to the Assistant Treasurers to remove all doubt about the monetary status of the new notes:

Under the acts of July 19th and August 5th last, Treasury notes of the denomination of $5, $10, and $20, have been, and will continue to be issued, redeemable in coin on demand at the offices of the Assistant Treasurer at Boston, New York, Philadelphia, St. Louis, and at the Depository of Cincinnati. These notes are intended to furnish a current medium of payment, exchange, and remittance, being at all times convertible into coin at the option of holder, at the place where made payable, and everywhere receivable for public dues. They must be always equivalent to gold, and often and for many purposes more convenient and valuable.

A sufficient amount of coin to redeem these notes promptly on demand will be kept with the depositaries, by whom they are respectively made payable. And all depositors and collecting officers will receive them, enter them on their books, and pay them to public creditors as money. Large amounts of the notes of small denominations are rapidly being issued and distributed.

These actions also created a willingness on the part of banks to redeem the notes for coin as well. This put Demand Notes on par with the value and purchasing power of gold coins and they circulated widely among the public for private transactions. They could be redeemed for silver coinage as well.

The law allowed for the notes to be hand-signed by F.E. Spinner (Treasurer), and L.E. Chittenden (Register of the Treasury). This proved unfeasible, however, and Congress also authorized the notes to be signed by procurators. Seventy women were hired at an annual salary of $1,200 to sign the notes. A distinction of "for the" was written after a signature to indicate that it was being used in place of Treasury officials. Apparently, some skilled women could even imitate the signature of F.E. Spinner. In late August "for the" was added to printing plates to simplify the hand-signing operation. The American Bank Note Company stopped printing notes payable at St. Louis and Cincinnati several days after revising printing plates with "for the".

Suspension of Specie Payment

The ability of the government to redeem the Demand Notes in specie came under pressure in December 1861. On December 10 Secretary Chase indicated that war expenditures were far exceeding projections while Federal revenues were falling short. Then on the 16th, news of the British reaction to the Trent Affair reached New York and the major banks, which had been supplying gold to the government in exchange for seven-thirties Treasury Notes and bonds which they had been in turn reselling, saw the demand for their offerings of Union securities drop precipitously. By the end of the month the banks had suspended specie payment on their own banknotes. The Demand Notes then began to appear at Assistant Treasurers' offices in great numbers for redemption, but since the government could not obtain adequate supplies of coin it was forced to follow suit and suspend redeeming the Demand Notes for gold in the first few days of 1862.

Design

Common features among denominations

The obverses of all denominations Demand Notes contained the following common features printed on them:

• A statement that the United States would pay the bearer the denomination on demand (written uniquely per denomination)
• A phrase stating the note was payable by the assistant treasurer (written uniquely per denomination)
• Stated location of payment (redemption):
  • New York
  • Boston
  • Philadelphia (abbreviated as Philad. on $10 and $20 notes)
  • Cincinnati (but $10 and $20 notes were described as payable by the depositary instead of an assistant treasurer)
  • St. Louis
• "ACT OF JULY 17, 1861", the act that first authorized emergency Civil War paper money
• The phrase RECEIVABLE IN PAYMENT OF ALL PUBLIC DUES (meaning the notes were a form of monetary exchange for government payment)
• "AMERICAN BANK NOTE CO., NEWYORK", the company that printed Demand Notes
• "Washington" and the date "August 10th, 1861" printed in a cursive font (the date, however, was written uniquely per denomination)
• "Patented 30 June 1857." referring to a patent held by the American Bank Note Company for "Canada" green ink used on the obverse of the note
• The serial number printed only once in red ink.
• Face plate letter – A, B, C, or D (indicating the position on the metal plates used to print four notes at a time)
• Lines above "Register of the Treasury" and "Treasurer of the United States" where the officials' signatures would normally be
• Lack of a United States Treasury Seal (with the exception of fractional currency, this is unlike any other U.S. federally-issued currency)

The reverses of all Demand Notes contained UNITED STATES OF AMERICA, a large numeral of the denomination, and an indication of the denomination (as a small numeral or Roman numeral) repeated many times in a small geometric shape; all of the reverses were printed in green ink.

Common varieties among denominations

Variations of "For the" on a $10 Demand Note

• The various signatures of authorized treasury personnel who signed for L. E. Chittenden and F. E. Spinner
• For the was used to indicate that a person was authorized to sign in place of treasury officials and is either hand written or engraved with the following varieties:
  • Handwritten as either "for the", "For the", or "For The" above the line for the signature
  • Engraved as either "For the" or "for the" next to "Register of the Treasury" and "Treasurer of the United States"
• Either SERIES followed by a number and period or no series indication at all. The first 100,000 notes printed for a given denomination and payment location bore no series identification; for each 100,000 subsequent notes the serial number reset to 1 and the series number advanced by 1.

Production figures and collecting ability

Demand Notes are no longer found in circulation, but are instead in the hands of collectors. Of the surviving Demand Notes, the vast majority are $5 and $10 notes with "For the" engraved on them and from the locations of New York, Boston, and Philadelphia. No notes are known with the actual signatures of F. E. Spinner and L. E. Chittenden. Because of their rarity, Demand Notes are mainly collected by acquiring a single example of the $5 and $10 denomination. Facsimile reproductions are also available.

The price and value of a Demand Note depend primarily on its rarity (which location and "for the" handwritten or engraved) and secondarily on its condition. The more common five dollar notes usually range in price from $1,000 to $40,000. Ten dollar notes of the more common varieties usually have a value range of $2,500 to $60,000. Price ranges of the twenty dollar notes with "for the" engraved and from New York, Boston, and Philadelphia usually vary from $25,000 up to $100,000. Notes of any denomination with "for the" handwritten change hands at prices between $25,000 and $100,000. Notes from Cincinnati and St. Louis only very rarely change hands. Apart from the more common types, Demand Notes are usually only available for sale at auction.

Notes:
*: More common is used as a relative term to describe the percentage of notes of the $5 and $10 denominations that remain today
†: 3,000 $10 notes were reissues of redeemed notes thus creating the $30,000 overage of the legislated $60,000,000