The oldest known United States paper money in existence today is the Demand Note that was issued in 1861. Demand Notes were a type of interest-free loan to the federal government that were payable “on demand” in coin at certain Treasury facilities. These early paper currency notes helped fund the Union’s efforts during the American Civil War in lieu of paying for goods and services with gold or silver coins. Let’s take a closer look at the history of Demand Notes and their status as the oldest surviving examples of US paper currency.
When were the first Demand Notes issued?
The first Demand Notes were authorized by the Legal Tender Act of 1861 and issued shortly thereafter in denominations of $5, $10, and $20. They were printed by the American Bank Note Company and the National Bank Note Company. The intent behind Demand Notes was to help finance the Civil War, which had just broken out. The federal government needed a way to pay for wartime expenditures that didn’t rely on gold and silver coins. Demand Notes were essentially IOUs that allowed the government to purchase necessary war materiel.
Why were Demand Notes needed?
Several factors led the United States government to begin issuing Demand Notes in 1861:
- The country’s gold and silver reserves were already strained by the need to back regular currency in circulation
- War efforts required huge sums of money beyond what current reserves allowed
- Transporting large quantities of metal coins was risky during wartime
- A national paper currency was needed to streamline commerce and finance
By issuing paper Demand Notes, the government aimed to free up precious metal coinage for more vital wartime transactions while also financing massive defense expenditures.
What made Demand Notes unique?
Demand Notes had several unique features that distinguished them from later US paper currency:
- They were interest-free and payable “on demand” for their face value in coins
- They were intended for temporary circulation to address a specific need
- They lacked legal tender status and were not declared as national currency
- They were printed in small amounts totaling just over $60 million
These characteristics meant Demand Notes served more as a short-term war financing mechanism rather than true paper money in widespread circulation. But they set important precedents for US currency going forward.
How long were Demand Notes in circulation?
Demand Notes circulated for a relatively brief period from 1861 to 1862 before being discontinued:
- First issued in August 1861
- Replaced by United States Notes starting in 1862
- Ceased to be payable on demand in January 1863
- No longer redeemable for coins by 1876
So in just over a year, Demand Notes went from first issuance to replacement by the first national US paper currency in the form of United States Notes or “greenbacks.” But Demand Notes continued to circulate in parallel for several more years before being demonetized.
Why were Demand Notes discontinued?
There were several reasons why Demand Notes had such a short lifespan:
- They were intended as a temporary financing measure, not a permanent currency
- The federal government transitioned to issuing national banknotes and greenbacks
- Redeeming them became too costly in scarce metal coins
- They lacked legal tender status unlike newer currency
By early 1863, the original purpose of Demand Notes had been served. And the costs and logistics of paying them out in coin on demand proved problematic. So they were phased out in favor of more practical paper money.
How many Demand Notes exist today?
Due to their age and extremely limited original issuance, very few Demand Notes have survived to the present day. Current estimates indicate only:
- 9 known $5 Demand Notes
- 16 known $10 Demand Notes
- Over 100 known $20 Demand Notes
This adds up to around 150 total examples across all denominations as of 2022. Many are held in major institutional or private collections and rarely come up for public sale. Their extreme rarity makes surviving Demand Notes highly prized by currency collectors and dealers.
Why did so few Demand Notes survive?
There are a few reasons for the incredibly small number of Demand Notes still in existence:
- They were heavily used in circulation and worn out
- Relatively small amounts were issued initially
- Many were redeemed or destroyed after becoming obsolete
- Paper money received little preservation in the 19th century
Notes issued during the Civil War tend to have very low survival rates in general. Combined with their short issuance window, this made Demand Notes unlikely to remain in pristine condition over 150-plus years.
What is the value of existing Demand Notes today?
The value and price of outstanding Demand Notes varies by denomination, condition, and other factors. In general:
| Demand Note | Typical Value Range |
|---|---|
| $5 Demand Note | $70,000 – $120,000 |
| $10 Demand Note | $40,000 – $85,000 |
| $20 Demand Note | $15,000 – $50,000 |
Those in very fine or extremely fine condition can sometimes sell for much higher prices at auction. Even badly damaged Demand Notes carry four-figure values due to their rarity.
What factors affect Demand Note value?
Some of the key factors that impact the value and pricing of Demand Notes include:
- Overall age and condition
- Centering and margin size
- Signature combinations
- Quality of engraving details
- Historical notability
- Publicized auction appearances
Like all collectibles, the individual attributes and provenance of a Demand Note drive Much of its desirability and market price apart from the date and denomination.
Where can I see an example Demand Note today?
Here are some of the top places to view a Demand Note in person or online:
- Smithsonian National Numismatic Collection
- American Numismatic Association’s Money Museum
- Federal Reserve Bank of San Francisco Museum
- Privately owned specimen periodically at auction
- Reproductions available from collectors societies
Very few people will ever hold a genuine Demand Note due to their scarcity. But museum exhibits and reproductions allow the public to still admire their historical design.
Notable public collections of Demand Notes
Some prominent public institutions housing Demand Notes include:
- Smithsonian National Numismatic Collection – Contains 7 Demand Notes including a Friedberg-15 $5 note and 2 Friedberg-17a $10 notes.
- Federal Reserve Bank of San Francisco – Holds a Friedberg-15 $5 Demand Note with exceptional centering and margins.
- American Numismatic Association’s Money Museum – Displays a Friedberg-17a $10 Demand Note among thousands of other bills.
Having a Demand Note in these collections demonstrates its importance in the evolution of US paper money.
Conclusion
In summary, the Demand Notes issued in 1861 represent the earliest surviving examples of printed US paper currency. Though only used briefly to help fund the Civil War, they pioneered concepts that influenced all later Federal Reserve Notes and bills. Today, probably less than 150 Demand Notes are known to remain from their short period in circulation over 160 years ago. Those that still exist are highly valued by collectors and historians for their age, rarity, and historical significance. Examining one of these fragile documents provides a tangible connection to the earliest days of American paper money.
