One fun thing about writing historical fiction is that you never know what interesting little research rabbit holes you’re going fall down. One that I’ve ended up spending quite a bit of time on over the past couple of days is what kind of money my characters (in 1910) would use. You’d think it would be pretty straightforward, but that’s because you live in 2012, when there is only ONE kind of paper currency. But in 1910 there were four. Count ’em! Four! And the one kind of paper currency we are familiar with today—Federal Reserve Notes—was not one of them. Federal Reserve Notes did not exist until after the passage of the Federal Reserve Act in 1913.
So, what would they have used? Well, for day-to-day purchases they would probably have used coins, given that in 1910 a pocketful of quarters could keep you going comfortably for a week or more (depending on your particular standard of living, of course).
These coins would also be substantially different from the coins we know today. In 1910, America was still on a “hard money” standard—which meant the value of currency was backed by a precious metal—that precious metal being gold. Silver wasn’t technically a reserve metal, but there were a lot of people who wanted it to be, and they caused all sorts of silly little headaches and hassles. And so it ultimately kind of ended up getting treated like one but not really. Anyway. Moving on. My point is, coins were not the cheap crappy debased trinkets we use today, but were actually silver, bronze, and gold. Among the silver coins were the Barber dime, quarter & half dollar. There was also the Liberty Head nickel, and apparently the 1910 mintage of the Liberty Head nickel was so low that it’s now next-to-impossible to find them. And as far as gold was concerned, this was the era for it—have a look at the beautiful $20 gold Liberty coin, the quarter eagle ($2.50), the half eagle ($5.00), the eagle ($10) and the double eagle (you guessed it … $20) if you doubt me.
But what if my intrepid characters had to carry, let’s say, ten thousand dollars. That would have been a lot of damn change to lug around, no matter how beautiful. Well, they didn’t have to actually lug around the physical metal. They could carry gold certificates or silver certificates. The gold certificate was used as US currency from 1882 to 1933. When the U.S. was taken off the gold standard in 1933 (which is a whole ‘nother post … and a matter of fact, a whole ‘nother BOOK), gold certificates were withdrawn from circulation and it was illegal to own them—oh, and also GOLD—until the 1960s. Silver certificates, interestingly enough, actually stuck around in constant use until 1968 (take THAT, Cross of Gold!) One thing I didn’t know, and is completely useless to me at the moment but is interesting nonetheless: all small $1 bills until 1963 were Silver Certificates. Starting in 1934, these simply said they were redeemable “in silver” instead of “in silver dollars” and they could be redeemed in silver (small bars) at the United States Treasury all the way until 1968—the last hard money activity of the United States government.*
Our characters might also have opted for United States Notes. These were available in denominations up to $1,000 (the $5,000 and $10,000 bills having been discontinued after 1878). These were produced in a larger size (7.5 x 3.25 inches, often referred to as “horseblanket” or “saddleblanket” format) than today’s currency, and were printed from 1861 through 1923. The United States Note represented a demand draft drawn directly on the US Treasury. It was released directly into circulation free of interest—so no private corporation was in the middle of the transaction making a profit on it, as they would with National Bank Notes, and later, Federal Reserve Notes.
National Bank Notes were currency issued by private, federally chartered banks (many of which would eventually become the component banks of the Federal Reserve System.) These federally-chartered banks would deposit government bonds in the U.S. Treasury, then issue their own private currency against the value of those bonds. The advantage to this for the US Government was that National Bank Notes didn’t represent a direct draw on the funds in the Treasury. They didn’t “hit the bank account”, so to speak. They were more like a cash advance. The government could issue treasury bonds all day long, and the banks made a tidy little income on something called seigniorage, which I don’t want to even get into. All in all, it was a neat system, and one which would be replicated on a grander scale when the Federal Reserve came along in 1913 and basically replaced all those messy little privately-owned National Banks with one nice big huge tidy privately-owned Central Bank. Except the National Bank Notes didn’t actually go away until the 1930s.
And then, in 1913, came the Federal Reserve Notes that we all know and love. Actually, there were also Federal Reserve BANK notes, which were identical to National Bank Notes in form and function but issued by Federal Reserve Banks, but these notes were retired in 1945 and by God I’m tired of typing about currency at the moment. If you want to learn more, go here. You will find everything you ever wanted to know and even more that you didn’t.