Collectors are sometimes confused by who actually issued Civil War
era fractional scrip.
Sometimes merchants and other commercial interests issued the notes
and also took responsibility for redeeming them. In this situation,
let’s say that the “Smith Brothers Mercantile Store” decided that it
needed to have a means of making change for its customers.
A local printer was hired to print up perhaps several hundred
dollars in fractional notes of various denominations, typically 5
cents, 10 cents, 25 cents, and 50 cents. Then someone from the store
signed the notes that were subsequently paid out across the counter to
customers who were due change on purchases.
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These notes were typically redeemable in sums of even dollars
(usually $1 or $5) in current bank notes or in merchandise. Smith
Brothers actually would have had a pretty strong motivation to redeem
the notes in goods, since a dollar’s worth of goods perhaps cost the
store only 50 or 60 cents.
The main problem with this arrangement was that the issuer was
responsible for all of the bookkeeping associated with the issuance
and redemption of these change notes. In most cases, these notes
indicate the issuer name and are signed by the issuer or his agent.
Other merchants took a different approach because they didn’t want
to be bothered with the work required to redeem notes. In this case,
let’s say that Smith Brothers’ competitor, the “Jacobs General Store,”
deposited money with its bank, the “Merchants Bank of Centerville.”
As a customer accommodation, the Merchants Bank of Centerville then
served as the redemption agent for Jacobs, who paid out scrip notes
indicating that the Merchants Bank would pay to the bearer the face
value of the note in current funds when presented in sums of (usually)
$1 or $5. When Jacobs’ customers presented his notes for payment at
the bank, an equal amount was deducted from Jacobs’ account at the
bank. In essence, these scrip notes were treated as denominated checks
charged against the merchant’s special deposit account for such notes.
These notes typically have the bank name prominently displayed and
are signed by the merchant (so that the bank knew whose account to
charge them against). Collectors often mistakenly assume that these
are issues of the bank when, in fact, they are actually merchant
issues payable at the bank.
So read the fine print; you might be surprised who issued the note.