Maybe this bank really wasn’t all that broken…

Part of the “cool” factor of being in the coin and paper currency business is the history of what you come across either at the shop, shows, markets or just out there anywhere. It never seems to fail that at least twice a month, and usually more often, something I come across adds to historical knowledge of someplace or another. It can be right here, some other part of the United States or some other place in this world. It can happen for anyone, you just need to keep your eyes open.

My dad was born and raised in the small corner of Wisconsin so I find myself actively looking for cool and interesting things from his boyhood home. In the past few years, I’ve found a Masonic penny from a no longer existent lodge and a book style bank from a local bank, which again, no one in the area knew about or had seen. I found both these items hundreds of miles away from the area from which they originated, which leads me to wonder how and why they traveled so far. By the way, both items have been donated to the county historical museum back where they originated.

The cool factor in this find was that the Masonic Penny from the forgotten lodge led to more local research about the history of the town, the lodge’s physical location in town, and the time frame the lodge existed. Similarly on the book bank, others have donated early marketing materials of that bank, and thus historical knowledge, albeit in a small way, has advanced.

That’s my lead-in to today’s “cool” historical discussion. A few weeks ago I found a “broken” banknote in a group of fractional currency I purchased. A “broken” banknote is currency issued by banks, small and large, and allegedly, but usually not, backed by assets of the bank. The vast majority of these banks went bust due to any number of reasons, leaving the currency these banks issued, worthless and thus the bank dubbed “broken bank”. (As an aside, we buy these broken banknotes.)  This particular “broken” banknote is in rough shape so I initially focused on the fractional currency.  While working on the fractional currency I found myself coming back to the “broken” banknote as something about it seemed different.

The banknote is for $100 and was issued in 1856 by The Bank of Commerce of Savannah, Georgia.  The banknote had been cut cancelled and not printed on the best of paper.  The denomination is good as $100 denomination broken banknotes are difficult to find.  The other, more interesting thing that catches my attention, is the two lines of red text that bled through to the front of the note, apparently from a stamp on the back.  The stamp on the back alone is not uncommon as often these broken banknotes and similar Confederate notes paid interest, and when interest was paid, the note was stamped on the reverse to indicate that interest had been paid.

Broken Banknote Combined

However, turning the banknote over revealed there had been stamped on the reverse, in red ink, the following text: “OR REDEEMED BY BANK REPUBLIC (SIC) NEW YORK AT ¾ P.CT. DISCOUNT”.

This phrase, inked in red on the reverse of this broken banknote is interesting. The issuing bank –The Bank of Commerce of Savannah, GA – might not have been so broken after all. The Bank of Commerce must have had a relationship with Bank Republic, a major bank at the time in New York City, and that relationship must have been good enough, and Bank of Commerce must have been strong enough, to merit the backing of Bank Republic to accept and pay out on this note $99.25 out of $100.

When I brought this to the attention of the historians in Savannah, they were aware that Savannah’s Bank of Commerce existed then, but they were not aware that the Bank of Commerce had strong ties to a substantial New York bank. This led to discussion and we came to conclusion that Bank of Commerce along with Republic New York were probably working together in financing the cotton trade, both domestic and export, which was then thriving at the port of Savannah. This joint financial endeavor was likely the reason for the additional red inked text on the back of this broken banknote indicating that Republic New York secured the note for $99.25 on the $100. So, maybe Savannah’s Bank of Commerce really wasn’t broken after all.

Got a broken banknote?  We’d love to see it and would be interested in purchasing it if you would like to sell.

Next Blog: Republic of Poland Bonds and everything you want and need to know about yours…and ours.

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