This article is about home-town paper money, money from Back Home in Benton, PA.
The subject of National Bank Notes bring many questions from visitors and customers at Bill Yanchick's popular Benton Coins & Collectibles at Main and Market Street. Many visitors have never heard of national bank notes and are surprised when they find their home towns listed on paper money. The store has a large inventory of national bank notes, both local and regional.
The National Currency Act of 1863, later amended and renamed the National Banking Act, was signed by president Abraham Lincoln. This United States federal law provided for the establishment of national banks and the currency now referred to as national bank notes. The act raised money for the federal government in the American Civil War by enticing banks to buy federal bonds and taxed state bonds out of existence. The act established the Office of the Comptroller of the Currency (OCC) as part of the Department of the Treasury to begin the first steps to a nationwide circulation of standardized currency.
Bill Yanchick explained that there were several reasons for creating a national banking system. One was to increase the "public's faith in paper money, which was at an all-time low due to the haphazard growth of private and state banks. Bank fraud was commonplace. Another reason was to finance the Civil War. The Federal government needed new and broadly based markets for its bonds and went to the people with the money--the bankers. The value of the notes which a national bank could circulate was related to the value of securities it deposited with the Treasurer of the United States."
National bank notes were "backed not by gold or silver, but by US bonds," according to Bill, who told us that "once the bonds were purchased and deposited with the Treasurer of the United States, a bank could circulate national bank notes with a value up to 85 to 90% of the par value of the bonds. A bank that deposited $100,000 worth of bonds, could circulate up to $90,000 worth of its national bank notes. This circulating privilege had the effect of nearly doubling the money supply. For every dollar paid in the government had a dollar to spend and the banker had 90 cents to loan."
Between 1863 and 1935, over 12,000 banks issued national bank notes with hometown names on the note. By October 1866, 1,644 national banks existed. The bank's charter number also appeared on the bank note. For the Columbia County National Bank of Benton that number was 6328.
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John G. McHenry organized the bank in 1902, the year that the Columbia County National Bank was chartered (July 3, 1902). He served as president for many years. This bank was destroyed in the July 4, 1910, Benton fire. The Farmers National Bank of Orangeville, established in 1917, later merged with the Benton bank and the Columbia County Farmers National Bank was created. Prior to the 1910 fire, this bank was located in a frame building on the east side of Main Street next to the building housing the present Kozy Korner restaurant. The site is now a municipal parking lot. |
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Columbia County National Bank of Benton |
There were two sizes of national bank notes issued.
The Large Size notes measure approximately 7.5 inches by 3 inches and were issued prior to 1929. The notes were signed by Robert McHenry and A. R. Pennington. At the time of the issue of this note, Robert ran the Benton bank. Although we don't have complete details, he was accidentally shot and killed in a hunting accident by his brother, T. Carl McHenry, one of the two men who signed the note shown below.
The Small Size notes measure approximately 6.3 inches by 2.6 inches and were issued after July, 1929. The notes were signed by T. Carl McHenry and M.D. Pennington
In July, 1929, the size of US paper money was reduced to approximately 6.3 inches by 2.6 inches and then referred to as "Small Size" notes. The Columbia County National Bank was chartered on July 3, 1902, and both sizes of these nationals were printed.
Another local hometown bank was the Nescopeck National Bank, whose charter number was 12159. Although this bank was chartered in April, 1922, no large size notes were printed and only six small-size notes are known.
National Bank Note from Nescopeck, PA
Many national bank notes from small towns are scarce and difficult to find. This is one of the aspects that makes them fun and challenging to collect.
The end came for the national bank notes on August 1, 1935, when the last bonds with the circulation privilege were called for redemption. Although no longer backed by these bonds, national bank notes are still legal money.
William E. Yanchick owns Benton Coins & Collectibles, 99 Main Street, Benton, 570 925-1055. Business hours are 10 AM to 4:30 PM. The store is closed on Wednesdays and Sundays. Bill continues to add Benton and other local national bank notes to his collection. If you have questions regarding national bank notes or you have any you would like to sell, stop at Benton Coins & Collectibles.
