Unlike today's paper money that is backed only by the goodwill of the government that prints it, American paper money used to really be cold hard cash--it could be redeemed for silver or gold coins at your local bank on demand. Heritage Auctions will be offering a wonderful piece of banking and Gold Rush history as part of the November 4th Michael Coltrane Paper Money Collection, Auction #3575: an 1870 $5 National Gold Banknote from San Francisco.
National Gold Bank Notes were a western phenomenon and staple of the Gold Rush-era currency. It was a hard money economy, and other United States paper money (such as Legal Tender notes) was not payable in specie on demand. These issues were created by their own act of July 12, 1870, authorizing nine chartered California banks (and one Boston bank that did not circulate notes) to issue them. Like all national banks created by the initial National Banking Act of 1863, their circulation was backed by bank deposits made to the Treasury Department in U. S. bonds.
These notes have a very distinctive look compared to other National banknotes that were not redeemable in gold due to their golden-yellow paper (the color of gold itself!). Their coloration is notable, and the obligation "Will Pay to Bearer on Demand FIVE DOLLARS IN GOLD COIN" at the bottom sets them apart from other paper money of the period.
While the obverse design was similar to that of other paper money from the period, the reverse design featuring several gold coins was unique to the series. A realistic design showing several different United States gold coin obverses and reverses delights collectors on the reverse, making these notes very popular with both paper money and coin collectors alike. As a quirky side note, one of the coins is dated 1871 even though these notes were first issued in 1870!
Not only do these notes offer an iconic design, but they are usually very worn or have damage. Most examples available to collectors today have condition problems or many heavy folds. This example up for bid is far superior to many other surviving examples. Graded Choice Very Fine 35 by PMG, this note would be a stunning example of Gold Rush paper money for collectors who seek out Wild West memorabilia, financial history, or numismatics. While PMG mentions that the note was previously mounted, it retains wonderful color and far nicer eye appeal than is typically seen for these issues.
Check it out here and place your bid on a note worth its weight in gold!
Source: Heritage Auctions